No Taxation For Suggestive Gyration

September 7, 2012

Currently before the New York Court of Appeals is a case involving the strip club, Nite Moves, seeking a tax exemption for admission fees and lap dances. Nite Moves’ attorney W. Andrew McCullough argued that exotic dancing is an art form and, consequently, qualifies as “dramatic or musical arts performances.” (McKinney’s Tax Law § 1115(x)(1)) Furthermore, he averred the state is not qualified to make such determinations, and that making such distinctions violates the First Amendment.

An underlying issue that arose is the use of the term “choreographic.” (McKinney’s Tax law § 1101(c)(5)) The state argued that table and lap dances offered are not choreographed. However, Judge Robert Smith opined that he interpreted “choreographic” as a synonym for dance. Additionally, there’s an issue surrounding refreshments. Under New York state law, a cabaret or other similar place may be taxed depending on refreshment receipts. (McKinney’s Tax Law § 1123). This is the case even if there are dramatic or musical arts performances.

While the Nite Moves case is likely one of the more sexually charged tax cases to go before the New York Court of Appeals, it is not the only one of its kind. It appears there are comparable cases in Pennsylvania, Texas and Nevada. In Combs v. Texas Entertainment Ass’n, Inc., the Supreme Court of Texas ruled that a state statutory fee (V.T.C.A., Bus. & C. § 102.052) on businesses offering live, nude entertainment in the presence of alcohol did not violate the First Amendment. (347 W.W. 3d 277) The court reasoned that the statute was content-neutral and survived the four-part test established in United States v. O’Brien, 391 U.S. 367. The test states that government regulation of conduct is sufficiently justified:

if it is within constitutional power of government;
if it furthers important or substantial governmental interest;
if governmental interest is unrelated to suppression of free expression;
and if incidental restriction on alleged First Amendment freedom is no greater than is essential to furtherance of that interest.

The New York Court of Appeals ruling will impact strip clubs throughout the state, and may even be persuasive authority in foreign jurisdictions.

For additional materials on this issue, the following searches may be run on WestlawNext:

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Content: Cases
Jurisdiction: All States

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Content: Secondary Sources
Jurisdiction: All State & Federal