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Are the Hustler Club's lap dances a tax-deductible art form? A New York City judge sure doesn't see it that way, and has ordered the club to pay more than two years' worth of back taxes.
New York State Division of Tax Appeals Judge Donna Gardiner ruled that even if the exotic dancing itself is artistic, it's "ancillary" to the Hustler Club's real business -- to sell a "sexual fantasy," the New York Daily News reports. Unfortunately for the club's owners, such fantasy dances are "insufficiently 'cultural and artistic'" to be tax-exempt, Gardiner explained.
So how much does the Hustler Club owe Uncle Sam?
Back Taxes Owed on 'Beaver Bucks'
Prior to Judge Gardiner's decision, the Hustler Club's wasn't collecting sales tax on "Beaver Bucks" -- the name for its in-house currency. The club claimed that dancers' artistic renderings performed on the pole exempted the club under New York tax law, according to UPI.
In general, businesses that sell goods or services are subject to paying sales tax. Under New York law, tax exemptions are available on any sale or amusement charge for any company that operates exclusively for religious, charitable, public safety, or educational purposes. Those exemptions clearly don't fit the Hustler Club.
But New York also imposes a sales tax on establishments that charge an admission price of 10 cents or more -- unless the admission charge is to view "dramatic or musical art performances."
The question that fell into Judge Gardiner's lap: Do exotic lap dances fit that description?
Judge's Stance on Lap Dances
The problem for the Hustler Club: Even though the lap dances clearly contained choreography, the strip club was charging admission for the sexual fantasy, not the artistic aspect, according to the judge's opinion.
In the judge's view, the strip joint was trying to play fast and loose with its characterization of lap dances in order to claim an exemption for "live dramatic, choreographic performances." So sales tax ought to be collected on admission into "champagne rooms" and for lap dances.
In the words of Mariah Carey, the previous tax exemptions the Hustler Club claimed were "just a sweet, sweet fantasy, baby." The club has been ordered to pay $2.1 million in sales tax on $23.8 million worth of Beaver Bucks that were sold between June 2006 and November 2008, reports UPI.
Perhaps next time the Hustler Club's patrons want to view a tax-exempt artistic performance, they can check out the New York City Ballet instead. Just saying.
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