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New York Strip Club Argues Lap Dances Tax Exempt as Art

A G-string may be the only thing standing between some New York Strip Clubs and the current tax on lap dances.

As the New York Post reports, an upstate strip club says lap dances are an art form that should be exempt from state taxes. Thus far, an appeals court has sided with the state tax department in ordering the Nite Moves club in Albany to pay the $124,000 the state contends is owed in back taxes.

It seems like a strange place to take a stand. The truth of the matter is New York strip club laws are quite complex. And these clubs frequently put legal counsel on retainer to handle issues ranging from liquor law violations to zoning challenges. Most often these clubs are looking to remain in full compliance with the ever increasing number of laws governing their existence. Typically, they are not out looking for a tax fight.

But the tax on lap dances has long been a sore spot among clubs and dancers. Last month, New York’s highest court finally took a look at the issue; a decision is pending. Nite Moves is claiming dances are exempt as “live dramatic or musical art performances.” The exemption is usually applied to the theater or ballet. reports attorney argued “stripper” is just another word for “slutty Ballerina” and is therefore tax exempt as art.

An attorney for the club said any ruling may not have widespread impact because most clubs serve alcohol, triggering other tax laws.

An administrative law judge previously ruled that just because “the dancers remove all or part of their costume… simply does not render such dance routines as something less than choreographed performances.”

An appeals court also found no merit to the club’s argument, noting dancers are not required to have formal training.

In recent years, New York City has been among the most aggressive municipalities in the country when it comes to using legislation and code and zoning ordinances to regulate these establishments. In many cases, businesses labeled “adult entertainment” are not permitted within certain distances of churches, schools and residential areas.

In 2010, Scandals strip club in Long Island City at the foot of the Queensboro Bridge took the city to court to fight zoning changes meant to force the club out of the neighborhood. The lawsuit accused the city of relentlessly shrinking the 21 districts where strip clubs can legally operate.

The club said in the lawsuit it had already been forced to move twice.

In 2010, the city prevailed in the “Ten’s Cabaret” case, which permitted it to enforce a 500-foot buffer between clubs and residential areas. The city’s strip club law was originally passed in 1995 and included what became known as the 60/40 rule. This rule prohibited clubs in residential neighborhoods if more than 40 percent of business was adult entertainment. Consequently, many clubs adopted a 60/40 business model. Ten’s Cabaret Inc. v. City of New York essentially sided with the city in permitting it to regulate those establishments as adult businesses.

The Wright Law Firm is a business law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.

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