Court: Juice Bar's Lap Dances Can Be Taxed

Strip clubs that serve non-alcoholic drinks have to pay taxes on fees charged for lap dances and admission to the clubs, a state court has ruled.

The four Appellate Division justices agreed with a Tax Appeals Tribunal that dances onstage or in private rooms at Nite Moves in suburban Albany don't qualify for the tax exemption as "dramatic or musical arts performances."

Nite Moves contested a tax bill of $124,921.94 plus interest. Tax officials said the sales taxes were paid only on drinks. House fees that dancers pay to the club are not taxable.

The club's attorney said Friday they probably will appeal, maintaining they had made the case that Nite Moves is entitled to the tax exemption that also applies, for example, to the theater performances of ballet. W. Andrew McCullough said the impact probably won't be widespread since most places with exotic dancers as entertainment are bars mainly selling alcohol where other tax rules apply.

"We admit the ballet is a little different and maybe a little more finely tuned," McCullough said. Their expert, a cultural anthropologist who has studied exotic dance and visited Nite Moves, testified that these too are choreographed performances that should qualify for the exemption.

The club had to pay the tax bill, which followed a 2005 audit, and has a later, larger bill it is also challenging, McCullough said. "They're in business and they'll stay in business."

"There is no question that the club qualifies as a place of amusement under the expansive definition set form in Tax Law," the court said. "Hence, the issue distills to whether the club's admission and private dance fees constitute charges for admission to a 'live dramatic, choreographic or musical performance.'"

The tribunal concluded Nite Moves didn't present sufficient proof that it deserves an exemption. It noted the dancers were not required to have any formal dance training, that a DVD of onstage dances did not by itself show they qualified as choreographed performances and that the anthropologist didn't actually see the backroom couch dances at Nite Moves.

"It was purely and absolutely a value judgment," McCullough said, citing First Amendment issues about free expression and adult entertainment. "The state didn't put on any evidence of anything."