By Marie-Andree Weiss
The New York Court of Appeals ruled on October 23th that a New York club is not exempt from paying sales taxes on pole and lap dances performed there. The case is interesting, as the judges had to question whether exotic dancing may indeed be considered a dramatic or musical arts performance by New York Tax Law and thus exempt from sales tax under Tax Law § 1105(f)(1).
Nite Moves is an adult club located in the Town of Colonie in Albany County. It is described on its own web site as an "Albany Strip Club" and "the hottest gentleman's club in the Capital District with many exotic dancers. It also boasts having "the largest staff of adult dancers in the Albany area" and being "the only gentleman's club in Albany with fully nude private dancers."
Customers have to pay an admission fee to enter the club, where they can see dancers performing on stage, using a pole. They may chose to pay an extra fee for a private lap dance performance in one of the club's private rooms. Dancers perform part of their acts dressed in costumes, which standards are set by the club, and part of their acts in the nude.
Nite Moves was audited in 2005 by the Division of Taxation, which found that both the door admission charges allowing patrons to see dancers on stage, and the sales of private dances were subject to sales tax, which Nite Moves had not paid. The club sought a redetermination, arguing that the dances performed both on stage and in the private rooms were "dramatic or musical arts performances" and thus are exempt from taxation under New York Tax Law § 1105 (f) (1). This law imposes a tax of four percent on admission charges above ten cents for "places of amusement," but provides an exception for "dramatic or musical arts performances."
The Administrative Law Judge agreed with the club's argument, and found that Nite Moves was not taxable under § 1105 (f) (1). The judge also rejected the Division of Taxation's argument that the club should be taxed under § 1105 (f) (3), which imposes a tax on cabaret charges, and under § 1105 (d) (1), which taxes the sale of drinks in restaurants, taverns and similar establishments.
However, that decision was reversed by the Tax Appeals Tribunal (the Tribunal), and the club commenced a CPLR Article 78 proceeding to challenge the Tribunal's determination. The Third Judicial Department of the Appellate Division of the New York Supreme Court affirmed the judgment of the Tribunal and the club appealed.
Are Pole and Lap Dancing... Well...Dancing?
Pole dancing is fast becoming a popular fitness activity in the U.S., and, as mentioned by the appellant's attorney when appearing in front of the Court of Appeals, may soon become an Olympic sport. As such, it is not a discipline which can be learned overnight. Dancers use the pole as a vertical beam to perform a variety of different moves and spins around the pole, and sometimes rather acrobatic inverted moves. However, a new dancer may learn a basic routine in an hour or two, especially if she had former training in other dances.
Under 1105 (f) (1), admission charges for places of amusement are taxable, and such places include carnivals, but also athletic exhibits, according to 20 NYCRR 527.10. Therefore, neither stating that pole dancing is a sport, nor that it is some 'Hoochie Coochie' dance performed at a fair, are efficient arguments for the petitioner.
New York Tax Law § 1101 (d) (5) defines an admission charge for purposes of the tax exemption of New York Tax Law § 1105 (f) (1) as "[a]ny admission charge paid for admission to a theatre, opera house, concert hall or other hall or place of assembly for a live dramatic, choreographic or musical performance."
Are Pole Dancing and Lap Dancing Choreographed?
For the Court of Appeals, in order to qualify for the exemption, petitioner had to prove that the fees paid by patrons to see the dancers "constituted admission charges for performances that were dance routines qualifying as choreographed performances" (Opinion p. 3).
New York Court of Appeals Judge Smith said during the debate that the New York Tax Law uses "dance" as a synonym for "choreographic" (Transcript p. 15).
Chief Judge Lippman asked during the argument in front of the Court of Appeals: "Is there a difference between the ballet dancer and these pole dancers in terms of their artistic value or their benefit to the world? And could that be the basis for what the tribunal found, or does it have nothing to do with that?"(Transcript p. 25).
Judge Smith asked the attorney of the Commissioner of Taxation and Finance during the argument: "I could imagine the possibility that something other than dance goes on in those rooms once in a while. But you're really saying they weren't dancing, or you're just saying it wasn't very high class dancing?" (Transcript p. 26)
He answered that dancing was only one component of the adult entertainment provided by the club, and, when dancers where not on stage, they also mingled with customers and performed lap dances, noting that the Tax Appeals Tribunal "reasonably concluded that just sitting and moving in a patron's lap is not a choreographed performance" (Transcript p. 27).
Counsel for the club argued that "the State of New York doesn't get to be a dance critic" and "has no business differentiating between the Bolshoi and what [the club] do[es]" (Transcript p. 30).
The petitioner had introduced as evidence in front of the Tribunal YouTube clips of pole dancing routines used as inspiration by its dancers, and stated that its dancers often used such resources available over the Internet to learn new techniques and new dance moves to be used in their pole routine.
Nite Moves had also presented as evidence the expert opinion of Dr. Judith Hanna, a professor at Maryland University who has extensively studied exotic dancing, and she "stated as her expert opinion that the video [of dancers performing at the club] represented choreography, or arrangement, of about 61 different moves with them and variation patterns with repetition. She identified the use of locomotion, gesture, pole, mirror and floor work at variable levels in response to music."
However, the Tribunal dismissed her interpretation of what constitutes choreographed performance as "sweeping," adding that if one accept her definition, "all one needs to do is to move in an aesthetically pleasing way to music, using unity, variety, repletion, contrast, transition."
All there is? One can argue that, to the contrary, that this is quite difficult, and that moving "in an aesthetically pleasing way to music" is quite difficult, especially if one wants to engage a paying audience, as anybody who ever danced on a public stage can attest.
The expert did not convince the Third Department either, which stated that "petitioner failed to meet its burden of establishing that the private dances offered at its club were choreographed performances." The Court of Appeals noted that the \Tribunal had articulated a rational basis for discriminating the expert, as she had stated that dances performed privately and publicly were the same, even though she had not observed what occurred in the private rooms (p. 4).
Indeed, one can regret that Dr. Hanna did not describe the dances performed at the Albany club, whether privately or publicly, using specific choreographic terms used in pole dance or jazz dancing. Pole dance uses a specific vocabulary, understood by all pole dancers, such as the "fireman spin," or the "inverted scorpio." Even lap dancing may be choreographed, using the chair, and the customer's lap as a prop, such as done, for example, in jazz dance.
Maybe a bona fide pole dancer and/or instructor would have been a more convincing witness, and would have been able to break down the video presented by the club using specific choreographic terms.
Is Improvised Dancing Art?
Judge Smith also asked the attorney for the Commissioner of Taxation and Finance during the debate whether in his opinion only choreographed dances were exempt, not improvised dance, and the representative said yes (transcript p. 22). However, improvisation of a dance is also choreographed, albeit done at the spur of the moment, and only dancers trained in their art are able to improvise and still capture the attention of the public. Chief Judge Lippman asked this question during the argument: "Wouldn't you say that the most creative performers are often ones who don't have every move choreographed before they start, and that creative artistic people, particularly in the dance mode, certainly there are many instances of that - - - are kind of creative? They're designing their moves as they go along, although they have a whole repertoire of different moves that they might have. Isn't that couldn't that be ... artistic or choreographic? (Transcript p. 23-24)
Judge Smith wrote in his dissent that it would be absurd to suggest that the Legislature meant to tax improvised dance, but not choreographed dance, noting, however, that this was not what the Court of Appeals' opinion had stated.
Pole Dancing May Very Well Be Dancing After All
The Court of Appeals ruled against the petitioner. However, it can be argued that whether pole dancing or lap dancing is carefully choreographed, or improvised on the spur of the moment, it is still dance. Judge Smith wrote in his dissent that "[i]t does not matter if the dance was artistic or crude, boring or erotic. Under New York Tax Law, a dance is a dance" and regretted that the majority have "implicitly defined the statutory words "choreographic... performance" to mean "highbrow dance"" (Dissent p. 2).
Judge Smith continued by stating that, while he himself found this particular form of dancing "distasteful," he nevertheless thought of it as a dance under New York Tax Law. Such dance should not be taxed based on its level, or lack thereof, of cultural and artistic value. Doing so would be, according to Judge Smith, like taxing Hustler magazine, but not the New Yorker. Indeed, dance is speech, and thus protected by the First Amendment. Even nude dancing was recognized by the Supreme Court in 1975 in Doran v. Salem Inn, Inc.
Taxing exotic dancing, while exempting other types of dance is discrimination according to Judge Smith and thus would "surely be unconstitutional."
Tax Appeals Tribunal Decision: http://www.nysdta.org/Decisions/821458.dec.htm
New York Appellate Decision: http://decisions.courts.state.ny.us/ad3/decisions/2011/509464.pdf
Appellant's brief: http://www.andrewmccullough.org/pdf/Nitemoves.br1A.pdf
Transcript of the argument in front of the Court of Appeals:
Opinion of the New York Court of Appeals Decision , and Judge Smith's dissent: