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Texas Strip Club Tax, Declared Unconstitutional, Still Being Collected During Appeal

Texas Strip Club Tax, Declared Unconstitutional, Still Being Collected During Appeal
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Apr 18, 2008 1:00 PM PDT    Text size: 
AUSTIN, Texas — State District Judge Stephen Yelenosky has told attorneys for Texas strip clubs that the state can continue to collect a controversial strip club fee — which was struck down as unconstitutional three weeks ago — while the state appeals the ruling.

Texas Entertainment Association attorney Stewart Whitehead said the state is insisting on collecting fees that it knows are unconstitutional. The Texas Entertainment Association membership includes more than half the topless clubs in Texas.

"It's a grave injustice that the attorney general and the comptroller would use procedural court technicalities to continue to trample on the rights of these business owners," Whitehead said.

The $5 cover fee on strip club patrons was approved by the Texas legislature last year, which earmarked the expected $40 million in annual revenues for sexual assault services and health insurance to the poor.

Club owners sued, and on March 28, state district Judge Scott Jenkins found that the fee was an illegal tax on "expression that, while politically unpopular, is nevertheless protected by the First Amendment." Declaring the law invalid, Judge Jenkins issued an order that included an injunction against collecting the fee.

On April 7, the attorney general's office filed an appeal, which automatically suspended Judge Jenkins' judgment and the injunction. The state comptroller sent out a letter to strip clubs saying that the fee is active, and that the first reports and payments are due Monday. If they aren't sent in, a 5 percent penalty takes effect.

On Thursday, Judge Yelenosky declined to issue an order that would keep the injunction in place during the appeal, effectively continuing collection of the tax.

Texas Entertainment Association attorney Whitehead said that the businesses will continue to fight, and will appeal Thursday's ruling.

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