Entertainment Law, Free Speech, Nude Dancing, State Judges, Tax Law

New York Judges at Opposite Poles Over Tax Treatment of Nude Dancing

Last month, we discussed an interesting case that was pending before the New York Court of Appeals, the state’s highest court. The question presented: whether an adult entertainment club is entitled to a sales tax exemption for admission and lap dance fees under the theory that these dances qualify as “dramatic or musical arts performances.”

Flying with the speed of boobie tassels attached to a stripper gyrating furiously around a pole, the court handed down its ruling just a few short weeks after oral argument. Here’s what the court held….

The court ruled in favor of the state and against Nite Moves, an Albany-area strip club. Like a stripper’s supple breasts, the court split right down the middle, 4-3. You can access the majority and dissenting opinions here (via How Appealing).

The majority consisted of Judges Carmen Beauchamp Ciparick, Victoria Graffeo, Eugene Pigott Jr., and Theodore Jones Jr. Their opinion begins by noting that the taxpayer bears the burden of showing entitlement to an exemption — a burden that the opinion returns to repeatedly, working it for all it’s worth.

But burden of proof is just a threshold issue. Here is where the court shakes its moneymaker:

In order for petitioner to be entitled to the exclusion for “dramatic or musical arts performances”, it was required to prove that the fees constituted admission charges for performances that were dance routines qualifying as choreographed performances. 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.

Two questions. First, how do you qualify as an “expert witness” about strip clubs? (Partner Emeritus, I’m looking at you.)

Second, what kind of self-respecting expert witness about strip clubs lacks “personal knowledge or observation” of lap dances? Heck, even I have been to a strip club. (Indeed, I had a Joycean epiphany at one; as a lovely young woman grinded fruitlessly against me, producing no reaction, I came to a profound realization about what I like and what I don’t.)

In further support of its conclusion, the majority opinion continues:

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….

Look, this is just a nightclub; nobody’s doing any swallowing. You’re not even supposed to put your hands on the dancers.

Now, on to the dissent, which personally I found more persuasive. Judge Robert Smith wrote for himself, Chief Judge Jonathan Lippman, and Judge Susan Read. The dissent begins:

The ruling of the Tax Appeals Tribunal, which the majority upholds, makes a distinction between highbrow dance and lowbrow dance that is not to be found in the governing statute and raises significant constitutional problems. I therefore dissent.

The difference between highbrow and lowbrow dance does feel like one slippery pole slope. As counsel for Nite Moves, W. Andrew McCullough, put it at oral argument, “What we’re saying is the state of New York doesn’t get to be a dance critic.”

Regarding the distinction between choreographed and non-choreographed performances that the majority sought to draw, the dissenters declared this empress to be without clothes (citations omitted):

The dispositive question is whether the charges the State seeks to tax are paid for admission to a “choreographic … performance.” I find it clear that the Legislature used “choreographic” in its statutory definition of “[d]ramatic or musical arts admission charge” merely as a synonym for “dance.” Strictly speaking, it is true, not all dance is choreographed — some may be improvised — but it is absurd to suggest (and I do not read the majority opinion to suggest) that the Legislature meant to tax improvised dance while leaving choreographed dance untaxed. In any event the record shows, without contradiction, that the performances here were largely planned, not improvised.

(I’m not sure following the scent of a twenty-dollar bill to your next target constitutes “plann[ing],” but since I’m no expert witness either, I’ll let that pass.)

The people who paid these admission charges paid to see women dancing. It does not matter if the dance was artistic or crude, boring or erotic. Under New York’s Tax Law, a dance is a dance.

The majority, and the Tribunal, have implicitly defined the statutory words “choreographic … performance” to mean “highbrow dance” or “dance worthy of a five-syllable adjective.” The admission charges for these performances are taxable because the performances are, in the majority’s view, not “cultural and artistic.” The Tribunal took a similar view, finding that the dancers did not put the care into their efforts that high art requires: “We question how much planning goes into attempting a dance seen on YouTube,” the Tribunal remarked.

I don’t really buy this YouTube argument; a tremendous amount of planning goes into the dances performed at my uncle’s prison in the Philippines, all of which you can see on YouTube. In this case, the dissent notes that “[i]t is undisputed that the dancers worked hard to prepare their acts, and that pole dancing is actually quite difficult.”

Apparently these conclusions were supported by record evidence, including video footage. Some of you might be thinking, “This must have been a fun case for the judges and their clerks!” But for the record, Judge Smith wants you to know that lap dances are not his cup of tea (citation omitted):

Like the majority and the Tribunal, I find this particular form of dance unedifying — indeed, I am stuffy enough to find it distasteful. Perhaps for similar reasons, I do not read Hustler magazine; I would rather read the New Yorker.

I would be appalled, however, if the State were to exact from Hustler a tax that the New Yorker did not have to pay, on the ground that what appears in Hustler is insufficiently “cultural and artistic.” That sort of discrimination on the basis of content would surely be unconstitutional. It is not clear to me why the discrimination that the majority approves in this case stands on any firmer constitutional footing.

It strikes me that this discrimination’s constitutional footing is as wobbly as a stripper in broken stilettos. So please, New Yorkers: call your state legislator and ask him to support an amendment to the tax law to provide expressly for a sales tax exemption for lap dances. Because isn’t having a woman shake her buttocks at you already enough of a tax?

677 New Loudon Corp. v. State of New York Tax Appeals Tribunal [New York Court of Appeals via How Appealing]
NY top court says lap dance isn’t art, is taxable [Associated Press via How Appealing]
Lap Dancing Is Taxable, Says NY Court of Appeals [ABA Journal]

Earlier: Stripper Law: A Potpourri of Pleadings From the Pole

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