Strip Club Fees, Lap Dances Aren’t Tax-Exempt, N.Y. Appeals Court Rules

Rhett Pardon

LATHAM, N.Y. — Strip club cover charges and payments for lap dances aren't exempt from state taxes because they don't promote artistic performances in local communities, the New York State Court of Appeals ruled today.

The appeals court ruled, 4-3, that Latham, N.Y.'s Nite Moves strip club didn’t qualify for the state’s tax exemption for “dramatic or musical arts performances” because performances at the club didn't fall in line with the Legislature's "evident purpose" of the tax break.

"In this case, petitioner claims, and the dissent agrees, 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, rather than as more generalized amusement or entertainment activities that fall within the broad sweep of the tax," wrote Judges Carmen Beauchamp Ciparick, Victoria Graffeo, Eugene Pigott Jr. and Theodore Jones Jr. in their affirming opinion. "We disagree."

The majority on the state's highest court also said that "it is not irrational for the [state] Tax Tribunal to decline to extend a tax exemption to every act that declares itself a dance performance" and that other forms of entertainment, such as baseball games, carnivals, ice shows and animal acts, are not exempt from taxes in New York.

But Judge Robert Smith, in a sharply worded dissent to the state's top court, wrote that it doesn't matter if the dance was artistic or crude, boring or erotic.

Under New York’s tax law, a dance is a dance, he wrote.

"Like the majority and the Tribunal, I find this particular form of dance unedifying — indeed, I am stuffy enough to find it distasteful," Smith wrote. "Perhaps for similar reasons, I do not read Hustler magazine; I would rather read the New Yorker. I would be appalled, however, if the state were to exact from Hustler a tax that the New Yorker did not have to pay, on the ground that what appears in Hustler is insufficiently 'cultural and artistic.'

"That sort of discrimination on the basis of content 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."

The appeals court ruling trumps an earlier decision that determined that Nite Moves' revenue from admissions and lap dances aren't subject to state sales taxes.

The judge in the case, Catherine Bennett, made her ruling after reviewing DVDs of exotic dancers and getting a tutorial from She also heard testimony from a University of Maryland dance scholar.

"The fact someone may believe that this entertainment is not appropriate for any audience is not the issue," she ruled at the time. "The fact that the dancers remove all or part of their costume during the performances, that the dance routines are seductive in nature and titillation of a patron is the outcome, simply does not render such dance routines as something less than choreographed performances, or remove them from the exception to the general rule of Tax Law §1105(f)(1)."

Bennett, in the lower court ruling, cited the submissions by Nite Moves as demonstrating that the strippers were engaged in intricate, choreographed routines that elevated them into the realm of art.

On Tuesday, the appeals court ruling tossed Bennett's earlier ruling.

According to a court filing, Nite Moves owed $129,000 in taxes. A majority of the all-nude club’s revenue came from the $15 it collected on $25 private dances, with the balance going to the dancer. Nite Moves charged $10 for admission.

Adult industry attorney Joe Obenberger told XBIZ that the New York case is similar to the Pooh Bah case litigated in Illinois three years ago.

"It used different reasoning in reaching that same result," said the Chicago-based attorney.

On his blog, Obenberger called the Nite Moves case "awful."

"The investigators didn't even bother to look into what takes place in private dances — the court upheld their guesses, dressed up as 'opinions' as to what they never saw."

Obenberger went on to say that "it's just not the role of government to distinguish what is and what is not 'art'"

"And it is not the proper role of courts to legitimate a top-down government government role in the development of culture," he said. "That's what equal protection of the laws means in the end."

View Nite Moves ruling