Court: Lap dances aren't tax-exempt
Decision comes after Latham adult bar fought hefty sales tax bill
Published 12:01 a.m., Friday, June 10, 2011
ALBANY -- While a lap dance might prompt a strong reaction from an audience, it doesn't rise to the level of art -- at least according to a state appellate court.
Thursday's ruling said entertainers at a local strip club are subject to sales taxes, and their expressions are not considered choreographed artistic performances that would be exempt.
Nite Moves, an adult "juice bar" on Route 9 in Latham, has been fighting the tax law -- first in an administrative hearing and then in court -- following a 2005 audit by the state Division of Taxation that concluded the club owed nearly $125,000 in sales tax, plus interest for door admission charges and private dance sales. The Appellate Division of state Supreme Court upheld that decision in an unanimous opinion.
Patrons at Nite Moves "view exotic dances performed by women in various stages of undress," the decision said. Revenue is generated from admission charges, "couch sales" -- the fee charged when a dancer performs for a customer in one of the club's private rooms -- as well as register sales from the non-alcoholic beverages sold and house fees paid by the dancers to the club.
Nite Moves is operated by 677 New Loudon Corporation, which after the audit sought a determination at a hearing by an administrative law judge. New Loudon contended the dances "both on stage and in the private rooms qualified as 'dramatic or musical arts performances'," making them exempt under the state's Tax Law.
The hearing officer agreed that the door charges and private dance fees were not taxable. The Tax Division filed the case with the Tax Appeals Tribunal, which reversed the hearing officer, concluding the sales tax could be imposed under subdivisions of the state law. The club's management then filed a so-called Article 78 proceeding challenging the Tribunal's determination.
Associate Justice John C. Egan Jr. wrote a nine-page ruling that cited numerous elements of tax case law and went into exhaustive detail defining aspects such as dramatic or musical arts, choreography and whether Nite Moves qualified as a "place of amusement."
"Hence, the issue distills to whether the club's admission and private dance fees constitute charges for admission to a 'live dramatic, choreographic or musical performance,'" he wrote.
The club sought expert testimony from a cultural anthropologist who researched the field of exotic dance, visited the club and reviewed the dances depicted on the Nite Moves DVD. She offered an opinion that "the presentations at Nite Moves are unequivocally live dramatic choreographic performances."
The unnamed expert further concluded that the private dances performed at the club, such as lap dances, involved "similar kinds of movements" as those portrayed by the dancers on stage and therefore also "qualified as choreographed performances."
The five-member court disagreed. The record from the Tax Tribunal hearing showed the club's dancers were not required to have formal training and relied on videos or suggestions from other dancers "to learn their craft."
The appellate court found no merit to the club's argument, and lacked sufficient proof to sustain a tax exemption. The dances offered at the club "did not constitute 'live dramatic or musical arts performances' within the meaning of the statute," the court held.
Further the court said there was nothing in the record to suggest the taxing was being applied in a discriminatory manner.
The club was represented by attorney W. Andrew McCullough of Utah. The state attorney general's office with attorney Robert M. Goldfarb represented the Taxation and Finance commissioner.
Hope you don't mind that I smoke.