New York strip clubs demand tax exempt status as art

Customer paying for private dance 
By: Sarah Weiss 

A New York strip club thinks it has found a tax loop hole that will enable it to be classified as a tax exempt organization.

They call nude dancing an art. The highest court in New York, will consider the legal arguments of a strip club and if it deserves a tax exemption status as such.

The case is set for oral arguments this week and involves Nite Moves, an adult entertainment club in suburban Albany, which is disputing a tax bill of more than $124,000 following an audit.

Officials say sales tax was paid on soft drinks that were sold in the club, but not on income from so-called "couch sales", where customers pay for private lap dances.

Nite Moves claims that the dances are tax exempt under state law as "live performances of music and performing arts." The exemption also applies to the theater or ballet. The club’s argument is based on the testimony of a cultural anthropologist who has studied exotic dance and visited Nite Moves.

W. Andrew McCullough, an attorney for Nite Moves, said the impact of any decision by the court is not likely to be widespread, because most establishments offering exotic dancers sell alcohol where other tax rules apply.

An administrative law judge agreed with Nite Moves, saying that "the fact that the dancers remove all or part of their costume does not make this type of dance routines any less than choreographed performances."

However, the Court of Tax Appeals said the club did not sufficiently prove that it qualifies for the exemption, and a mid level court upheld the ruling last year.

The appeals court said the club's dancers are not required to have formal training in dance and the anthropologist did not see any of the dances performed in private rooms.

The court usually takes about a month to issue a decision.



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