The New York Court of Appeals has affirmed a previous judgment by the state’s Appellate Division that lap dances are not art, and thus are not exempt from state sales taxes.
In New Loudon Corporation v. State of New York Tax Appeals Tribunal, the plaintiff, Nite Moves, an adult “juice bar” in Albany, argued that fees for admission to the strip club and for private dances are exempt from sales tax. Night Moves maintained that lap dances are covered by the state’s exemption from sales tax for “dramatic or musical arts performances.”
In a 4-3 decision, the Court said taxes apply to many entertainment venues, such as amusement parks and sporting events. The Court ruled the club had failed to prove it qualified for the exemption for “dramatic or musical arts performances” that was adopted by the Legislature “with the evident purpose of promoting cultural and artistic performances in local communities.”
If ice shows presenting pairs ice dancing performances, with intricately choreographed dance moves precisely arranged to musical compositions, were not viewed by the Legislature as “dance” entitled a tax exemption, surely 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 also not a qualifying performance entitled to exempt status. To do so would allow the exemption to swallow the general tax since many other forms of entertainment not specifically listed in the regulation will claim their performances contain tax-exempt rehearsed, planned or choreographed activity.
The Court also held that,
Petitioner failed to meet this burden as it related to the fees collected for the performances in so-called “private rooms”; none of the evidence presented depicted such performances and petitioner’s expert’s opinion was not based on any personal knowledge or observation of “private” dances that happened at petitioner’s club. Thus, the Appellate Division properly concluded that the activities conducted in the private rooms failed to qualify for the exemption.
The New York State Department of Taxation and Finance has maintained throughout the legal proceedings that the Nite Moves did not qualify under New York’s current tax exemption for dramatic and performing arts.
To read the New York Court of Appeal’s decision, click here.
