Who knew there was a tax loophole for lap dances ? They may never be confused with “Swan Lake,” but an upstate New York gentleman’s club says its in the buff lap dances are every bit as much an art form and should be exempt from state taxes. So far, the state tax department and an appeals court disagree and want the Nite Moves club in Albany to pay up $124,000 it says it owes taxes. New York’s highest court gets a shot at the arguments Wednesday when the two sides face off at the Court of Appeals. Tax officials say sales taxes were paid on the club’s nonalcoholic drinks, but are also owed on admission and so-called “couch sales,” where patrons pay for private or lap dances. Nite Moves claims the dances are exempt under state tax law as “live dramatic or musical arts performances.” The exemption also applies to theater or ballet. The club is relying on testimony from a cultural anthropologist who has studied exotic dance and visited Nite Moves. W. Andrew McCullough, an attorney for Nite Moves, said the impact of the eventual court ruling probably won’t be widespread because most establishments featuring freaky dancers sell alcohol where other tax rules apply. An administrative law judge previously agreed with Nite Moves, saying that “the fact that the dancers remove all or part of their costume … simply does not render such dance routines as something less than choreographed performances.” But the state Tax Appeals Tribunal said the club didn’t present sufficient proof that it qualifies for the exemption, and a mid-level court upheld the tribunal ruling last year. “In our view, there can be no serious question that — at a bare minimum — petitioner failed to meet its burden of establishing that the private dances offered at its club were choreographed performances,” the Appellate Division court ruled. The four justices also found “no merit” to the club’s constitutional claims. The appellate court also noted that the club dancers are not required to have any formal dance training and that the anthropologist didn’t see any of the dances done in private rooms. Cary Ziter, a spokesman for the state Department of Taxation and Finance, said the agency is not aware of any other cases in state court similar to the Nite Moves case. He said the tax department doesn’t know how many so-called gentlemen’s clubs operate in New York. Angelina Spencer, executive director of the Association of Club Executives, told CNN recently there are about 4,000 adult nightclubs in the U.S. The top court typically takes about a month to issue a decision. This sounds downright ridiculous but if it works, do you think more young ladies might become “dancers” to avoid paying Uncle Sam? Source
