Lap Dancing Subject to Sales Tax in New York
- Sales Tax News
- Oct 24, 2012 | Gail Cole
Update, 10.16.13: Nite Moves petitioned the United States Supreme Court for a writ of certiori. The question presented to the court was “Whether the government may deny an entertainment tax exemption for live dramatic, choreographed, or musical performances through the exercise of New York State’s content-based aesthetic preferences.” On October 15, the Supreme Court denied the petition for a writ of certiorari in the case of 677 New Loudon Corp. (d/b/a Nite Moves) V. New York Tax Appeals. In other words, the decision from the New York Court of Appeals, discussed below, stands.
Is lap dancing in a strip club a form of art? The New York Court of Appeals recently found itself wondering just that, thanks to the case of 677 New Loudon Corporation b. State of New York Tax Appeals Tribunal. It's an interesting case, and one that was hotly debated by the judges.
New York Tax Law 1105 (f) (1) imposes sales tax on "[a]ny admission charge … in excess of ten cents to or for the use of any place of amusement in the state, except charges for admission to … dramatic or musical arts performances… ." (Emphasis mine). The Court notes that this exemption was created "with the evident purpose of promoting cultural and artistic performances in local communities."
The strip club claimed that "the Legislature intended to give the adult entertainment business a tax break because the exotic stage and couch dances that are featured at the premises qualify as musical arts performances." An article in Forbes.com points out that this compelling argument should come as no surprise, given that "the vast majority of strippers are dancing their way through law school." The Court, however, disagreed.
In a 4-3 vote, the Court of Appeals determined that "it was not irrational for the Tax Tribunal to conclude that a club presenting performances by women gyrating on a pole to music, however artistic or athletic their practiced moves are, was not a qualifying performance entitled to exempt status."
Judge Smith, dissenting, wrote that the "ruling of the Tax Appeals Tribunal … makes a distinction between highbrow dance and lowbrow dance that is not to be found in the governing statute and raises significant constitutional problems." Judge Smith continued by saying that "[i]t does not matter if the dance was artistic or crude, boring or erotic. Under New York's Tax Law, a dance is a dance."
To support his argument, Judge Smith drew a parallel between pole dancing and Hustler magazine. He noted that "if the State were to exact from Hustler a tax that the New Yorker did not have to pay, on the grounds that what appears in Hustler is insufficiently 'cultural and artistic' … [that] would surely be unconstitutional. … It is not clear to me why the discrimination that the majority approves in this case stands on any firmer constitutional footing."
Tony Nitti, writing for Forbes, wryly remarked that "the New York Court of Appeals may well have dealt America's economic recovery a crippling blow."
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