Ebb & Flow Hosted a Drag Brunch. Now, Texas Might Tax it Like a Sexually Oriented Business

The letter said the comptroller was inquiring about whether the business should be considered sexually oriented and therefore pay required fees as such. Under Texas law, sexually oriented businesses are required to pay a $5 per patron fee to the comptroller’s office. The letter said even if an establishment only occasionally hosts sexually oriented events, it could still be required to pay the fee for these events.

The office told Ebb & Flow to fill out a Sexually Oriented Business Fee Questionnaire within 30 days to set up an account to pay the fees. However, it also said if the business didn’t think it is subject to the fee, it could provide a description of the establishment and its reasoning to be considered by the comptroller’s office.

In an emailed statement to the Observer, a spokesperson for the office said the comptroller wouldn’t comment on a pending inquiry. However, the spokesperson sent a statement from Texas Comptroller Glenn Hegar about the role his office plays in administering the sexually oriented business fee.

Hegar said in the statement, “As the Legislature takes critical steps to protect Texas children and strengthen statutes to restrict sexualized performances, my office will continue to work within the confines of existing law and investigate performances to determine if an entity must pay the fees associated with operating a sexually oriented business.”

Reached for comment, an employee at Ebb & Flow’s Plano location said they weren’t allowed to talk about the investigation and recommended reaching out to the corporate office. No one else with the company responded for comment.

The bar and restaurant received backlash after one of its monthly drag brunches in October last year. There was some adult-themed content on display at the drag brunch, and a child was in attendance. The event was advertised as being for mature audiences. But owner Dallas Hale told the Observer and several other publications at the time that the parents were warned before purchasing their tickets for the event online and at the door that it would include adult content.

On the backlash, Hale said, “The best way to handle this is to keep moving forward, keep performing.”

The comptroller’s office tried pulling the same move on Dallas gay bar Mr. Misster for hosting its drag shows. “As a father, I take this matter especially seriously and am committed to ensuring my agency does everything in its power to ensure this establishment as well as others are fully compliant with Texas law,” Hegar said in a statement about Mr. Misster at the time.

But when it was all said and done, the comptroller ultimately said state laws surrounding sexually oriented businesses didn’t allow him to tax the bar. It’s uncertain what exactly is different about the comptroller’s investigation into Ebb & Flow.