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Nevada Rejects Strip Clubs' Tax Refund Request

Nevada Rejects Strip Clubs' Tax Refund Request
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Aug 6, 2007 5:45 PM PDT    Text size: 
CARSON CITY, Nev. — The Nevada Tax Commission unanimously rejected arguments that a state entertainment tax unconstitutionally targets strip clubs, refusing to refund nearly $1.8 million in entertainment taxes collected from six Las Vegas clubs in early 2004.

Attorneys for the strip clubs, contending that strippers' dancing is constitutionally protected freedom of expression that should be tax-exempt, appealed the imposition of the 10 percent entertainment tax on admissions, drinks and food.

The businesses originally had filed suit in federal court, arguing they were exempt from the tax, and a judge directed the clubs to first pursue "administrative remedies" with the state.

The state Taxation Department denied the requested refund of January-April 2004 taxes, on grounds the dancing fit the definition of taxable entertainment. The appeal was filed at that point.

Attorney Brad Shafer, representing the clubs, argued that commissioners could "bury your head in the sand all you want," but, he said, the tax is invalid because it discriminates among types of live entertainment.

Shafer noted the tax does not apply to live entertainment in a nongambling facility that seats fewer than 200, and exempts some sporting venues including boxing, minor-league baseball and NASCAR races. The exemptions are "content-driven," Shafer said, and tend to favor family entertainment.

"This was to get the adult cabarets, and everything else was exempted out," Shafer added, noting the state law has more than two dozen exemptions.

Attorneys Dennis Belcourt and David Pope, representing the Taxation Department, argued that the tax was an existing levy that had been revised in 2003 to include strip clubs and other forms of entertainment, and did not amount to unconstitutional censorship. Pope called the tax "content-neutral," and said that more than 50 noncasino businesses and enterprises were subject to the tax and only 11 were strip clubs.

Shafer pointed out that the strip clubs accounted for most of the noncasino entertainment tax revenue.

The clubs appealing the taxes were the Spearmint Rhino, Treasures, Sapphire, Jaguars, Olympic Garden and Crazy Horse Too.

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