The New York Pole Dancing Case: Round 2

There are few tax cases that catch the eye of the public or have as an interesting array of participants. This one is an exception, mainly because it involves pole dancing.

The history of the matter is that the State of New York, in 2005, assessed sales tax on an adult men’s club. The club convinced an administrative law judge that the club’s pole dancing was tax-exempt because of the dramatic or musical content in the performances, thus exempt. There is an exemption from sales tax for “dramatic or musical arts performances.” The State Court of Appeals disagreed and assessed $400,000 in taxes.

Fast forward to subsequent years, another audit, assessment and an appeal to an administrative law judge that was decided earlier this year. What is different are the proofs presented.

The Proofs

The club hired five experts. The experts were from the fields of anthropology, dance and theater, pole dancing/gymnastics and the culture critic from the local Albany newspaper The expert testimony supported the club’s claim that the performances were exempt because the routines were rehearsed and choreographed dance routines.   The administrative law judge heard testimony from two of the club’s performers regarding the requirements that their movements correspond to changes in the pole dancing music.

The state countered with the testimony of state tax auditor who patronized the club between ten and fifteen times so as to provide him with significant personal experience with club and its entertainment. He claimed that the dancers massaged various parts of his body and a lap dance was a full body rub. When the auditor reached that conclusion is not clear.

Split Decision

The administrative law judge rendered a split decision granting an exemption for the club’s cover charge but imposing tax on lap dances because the emphasis was on physical contact rather than choreography. The case is notable because the club was represented by an attorney who was the Libertarian candidate for attorney general of Utah who specializes in representing adult clubs. Both sides have appealed the decision.

Tax cases do not provide intriguing testimony as a general rule; however, there are a few instances that cause one to ponder the meaning of simple words.