Minneapolis sibling tax accountants are 'crazy' like Foxes for artist clients

The clever poet, painter and musician characters in Puccini's opera "La Bohème" are wily enough to stiff the landlord out of the monthly rent.

But it would be a bad idea to try to do that with the IRS, even if you are a bohemian artist. Just ask Willie Nelson.

Which is why Fox Tax has been a godsend for the creative community in the Twin Cities.

A Minneapolis accounting firm that specializes in doing taxes for artists, Fox Tax was founded in 2004 by siblings Mark and Alyssa Fox, a pair of hip number crunchers who wanted to combine their love of art with their love of preparing tax returns.

They are the folks to ask if you're a musician and you want to know if that tuxedo you wear to performances is tax-deductible. Or if you're an actor and you're wondering if you can write off a dye job because you need to be blond for a role.

"I like to say taxes are my art," Alyssa Fox said. "Taxes are kind of creative. We can be creative in what we do — within the rules, of course."

They started doing taxes for a few dozen artist friends. Now they have 4,000 clients and a staff of eight tax preparers, including younger brother Paul Fox.

In the middle of tax season, they're working 6½ days a week. But they still can't keep up with demand. They've got a waiting list of about 1,200 people.

The Foxes grew up in Stillwater, the children of an accountant dad and a stay-at-home mom.

They both studied psychology in college. Mark also worked at the former Loring Cafe as a self-taught pastry chef, the most mathematical of the culinary arts, he notes.

But when Alyssa, 38, was in college, she got a part-time job working at a local tax firm. She persuaded Mark, 41, to join her. "We share a brain. I knew it was for him," she said. "We both started there and fell in love with taxes. It spoke to both of our kind of logic and puzzle brains."

Mark admitted, "I may have been in accounting club in high school."

After friends in the art and music world started asking the Foxes to do their taxes, the pair decided to start their own firm. It was initially run out of Mark's Minneapolis townhouse.

Some of those early clients were disorganized when it came to their tax records. So the Foxes built what they described as an improvement on the shoe box that some of their customers used for their tax record-keeping.

They made 1,000 copies of a self-published book called "The Creative Tax Planner: A Guide for Artists & Musicians." It was basically an organizer for self-employed creative types with a glossary of tax terms, work sheets to track income and expenses and slots to store receipts and other documents.

"We had 30 clients at that point, maybe 50," Alyssa said.

They hawked their tax planner at places such as Electric Fetus and at music festivals. Their business grew thanks to the book and word of mouth. They were invited to speak about taxes at New York University and the Minneapolis College of Art and Design, among others.

"That was a new, novel thing, to actually have an accountant who cares about creatives," Mark said.

By January 2007, they had several hundred clients. They opened new offices in a 2,400-square-foot space on 1st Avenue NE. in a former felt factory building near the Red Stag Supperclub.

It was still just a two-person firm. After they put tape on the floor to mark off where their offices were going, they still had a lot of empty room.

"The two of us were sitting on the floor, going, 'What are we going to do?' " Mark said.

They decided to turn half of the space into a gallery for art shows when it wasn't tax season.

Over the years, they added clients and employees and outgrew their offices. Last July, they bought and moved into a 6,500-square-foot building at 1400 12th Av. NE. It used to house a commercial photo studio.

The Foxes now are too busy to run an exhibition space, but art is still all around them. Public Functionary gallery is a tenant in their building. And about 100 pieces of art are displayed on their office walls.

The Foxes estimate that about half of their clients today are in creative fields. Many of the others are former artists, such as "a mortgage broker who used to be in a band 15 years ago," Mark said.

The Foxes became successful by treating artists as serious professionals. For tax purposes, they urge their clients to see their art as a business. "An artist spends their money and their time on what they love, so it's not hard for me to find deductions that apply to their business because that's all they do," Mark said.

But the IRS may not see artistic deductions as legitimate if you're a banker who likes expensive guitars and gigs once a month in a bar.

"If you run your art in a businesslike manner, you will not be considered a hobby," Mark said.

Twin Cities hip-hop producer Aaron Mader, aka Lazerbeak, is a longtime Fox Tax client. He said the Foxes help artists realize they deserve the same tax benefits that traditional businesses have long enjoyed.

"It's almost like a self-esteem boost," said Mader, who grew up in the music business as a high school punk rocker in the Plastic Constellations and now is CEO of Doomtree Records.

Artists can write off such things as tickets to shows in their field or museum memberships because that can be regarded as research and development costs. The business-expense work sheet Fox Tax sends to clients also includes a space where they can write off costumes, props and personal maintenance.

That might include clothing purchases, if the garments are worn only for performances. A tuxedo might not qualify as a business expense because it could also be worn to a wedding. But clown shoes would qualify if you were a professional clown and didn't use them as normal streetwear.

Alyssa said she once had a musician client write off special care he received to strengthen his banjo-picking fingernail.

"It's not a typical manicure," she said. "There's a business purpose for that."

The new federal tax law may mean a tax break for freelance artists because of a 20 percent deduction in self-employment income in the so-called "pass-through" provision, the Foxes said.

"I have a lot of clients look at their decrease in taxes and tell me they're going to donate that much more because there's going to be underfunded arts organizations," Alyssa said.

The Foxes don't do financial advising or bookkeeping. They want to focus on the part of accounting they find most interesting.

"We like the tax puzzle," Mark said.

"You get to develop a relationship with somebody over the years," Alyssa said, "because everything comes out in a tax return: birth, deaths, job changes, moves, divorces, marriages. All of it is kind of compiled in your tax returns every year."

Amy Anderson, a Minneapolis commercial and art photographer, said the Foxes make a left-brain task easier for right-brain people.

"I love filing my taxes. When I tell people that, they laugh out loud," she said.

Specializing in tax preparation, however, means a three-month slog of extra-long days during tax season. But in return, the Foxes work only four days a week for the rest of the year.

This year's tax return deadline is April 17. On April 18, the Foxes will take the staff out to brunch, mimosas and massages in what they call the Accountant's New Year celebration.

"Our biggest difficulty is finding employees," Mark said. "We find people that know tax, but have no personality and can't talk to clients."

Some of their young staff of tax accountants come from creative backgrounds themselves, including graduates from MCAD and the McNally Smith College of Music.

"We're not the average, normal CPA firm," Alyssa said. "We're a little crazy. We like people. We like to be with people. We do a lot of work in front of people."

Sasha Andreev, who uses Fox to help him deal with the multiple W-2 and 1099 forms he collects each year as a Minneapolis actor, said, "I think there's a certain vocabulary that's necessary for an accountant when they're working with artists. I think Fox speaks that language."

Richard Chin • 612-673-1775