Really? Tax-Exempt?

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Note:   The expressions in this post may offend some folks’ senses- but all of our sensibilities.

I run across many a crazy idea to “save money on taxes”. Some folks try to sell me schemes to offer my clients, while at other times, clients come up with their own lame-brained ideas.

No, even if your dog sleeps with you, you can’t deduct it as a dependent. And, no, the fact that you need to lose weight does not mean you can deduct that $ 48,000 swimming pool and lodge you’ve constructed in your back yard. Nor can you deduct your weekly drinking event with your buddies as “psychological services”.

But, given that extensive background, I admit I ran across a new one. One that really is not about income taxes, but sales and use taxes. First, I have to provide a little background.

Tourism, theater, and musical events are critical to the revenue of New York (both the city and state). Because folks- whether local or from afar, don’t just go to the theater or the opera or the ballet- they go out to eat. That generates business. It generates sales taxes (which in New York City are almost 9%) and folks that stay in hotels also pay an occupancy tax (meaning that you will end up paying 15% more than the cost of the room). So, to promote the arts- and the ancillary revenue received- the State of New York exempts dramatic or musical arts performances from sales taxes. (Whew- because at $ 250 a ticket for some performances, that would be a chunk of change!)

Now, enter an “upscale, non-alcoholic, juice bar”. That’s how Nite Moves describes itself. Given the name, it should not surprise you to find out that it’s a “gentleman’s club”- or, as we plebeians speak, a strip joint. One that provides “public” stage dances- and private “couch” dances (you know, lap dances).

Nite Moves

Nite Moves claimed to be exempt from sales and use taxes- because their employees provide choreographed dances- both on the stage and on your lap. Yup, there’s an artistic performance that should merit the famed exemption. (Their tax bill came to $ 125,000 for the years 2002 through 2005.)

When their claim was rejected, Nite Moves appealed. In New York state, that means the case goes to the Tax Appeal Tribunal.  (A real tit for tat move, if there ever was one…) This appeals system involves three individuals appointed by the governor; their entire purpose is to resolve tax and licensing disputes. Nite Moves employed the use of an “expert witness”. Unfortunately, this female witness admitted under questioning that  she had neither observed the dances nor had any personal knowledge of their moves. (Hmm- did that mean she never had seen then or never performed them. Oh, well, we can only guess…) As such, her opinion that ‘the private lap dances were the same as if performed on the main stage’ was at best compromised.  (Again, I did not choose this term…)

You’d think that would be the end of the case. But, then, you don’t know Nite Moves. They appealed- to the New York State Court of Appeals (Albany, NY). [The case is 677 New Loudon Corporation v. NY Tax Appeals Tribunal, 157, NY Court of Appeals, Albany.] But, unfortunately for Nite Moves, the Court of Appeals sided with the Tribunal. One would think that the decision were unanimous- but it won only by a narrow 4-3 decision! [Please note: It is only 7 miles from Albany to Latham. Perhaps, some of the judges went to visit the site for further confirmation of the “performances”. ]

As a matter of fact, Judge Robert Smith (of the Court of Appeals) was disappointed with the majority ruling. He felt that this decision meant that there is a “distinction between highbrow dance and lowbrow dance that is not found in the governing statute”.  Obviously, a strict constitutionalist here!

Nite Moves is considering an appeal to the US Supreme Court.   I can hardly wait!

Roy A. Ackerman, Ph.D., E.A.

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11 thoughts on “Really? Tax-Exempt?”

  1. I was having a discussion, a couple of days ago, about the distinction between pornography and art, and the exploitation of this human condition. (With some spicy remarks on ridiculousness, some sorrow for sisters around the world, etc)

    O yes, I remember, we’re still paying hommages to End Sex Trafficking Day!

    “I’m not touching you, young lady — don’t know where you had this pretty little body of yours before you came here!”

    But the girls are somehow alluring…
    Eleni Poulakou recently posted..When You’re On Stage, Everyone Plays

    1. Yes, Eleni…
      That is exactly the point. I am pretty sure that every time some one complains about the potential exploitation of the folks working there, a few trot out to exclaim how much money they make and how it’s critical for their (education/children/saving their home)… I think the differentiation there is between the “high brow” and “low brow” places- as in the prices and clientele of the establishments.

      Thanks for the comment and the visit.

    1. Glad you liked the story! But, no, us little folks will never get a tax break- except up to $ 100 or so the week before school starts – which is really done to help the shpkeepers increase their sales at a critically slow period for them…

  2. hahaha. We had a local place (strip club) a while back that didn’t wasn’t compliant with zoning laws. They tried to “re-make” themselves into a non-profit called…… “The Church of the Fuzzy Bunnies”. Not sure how many days it took til they were closed….
    Carolina HeartStrings recently posted..CREAMED POTATOES

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