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Nite Moves, a New York strip club, argued that lap dances are not taxable. Unfortunately for them, a New York court has ruled lap dances are taxable.
Nite Moves had originally argued that the lap dances were "dramatic or musical arts performances" that would exempt the club from having to pay tax on the income, reports The Wall Street Journal.
The club started its tax protest after it was slammed with a $124,921.94 tax bill - plus interest - from lap dances following a 2005 audit, reports The Wall Street Journal.
The club plans to appeal the decision to the New York Court of Appeals. They have even brought in an expert, whom Nite Moves' attorney calls the "foremost expert in the field" of exotic dance, according to Reuters.
The expert, a cultural anthropologist, has made detailed studies, and has previously testified that the lap dances are choreographed performances that should deserve the exemption, according to The Wall Street Journal.
However, the New York Court apparently did not really buy the expert's opinion. They rejected Nite Moves' requested relief because of "inadequacy of proof," not because of the nature of Nite Moves' business, reports Reuters. They cited to the fact that the purported expert had not actually seen the private lap dances at Nite Moves and instead had relied on past experiences watching these types of dances at other clubs, and on DVDs that did not contain private dance footage.
While this "dramatic and musical arts performances" tax exemption is probably a far stretch for most businesses, businesses should keep an eye on business tax laws. A significant portion of a business' annual income will be taken away by federal and state income taxes - so knowing what you can deduct legally and what is tax exempt can be a real benefit for businesses worried about their bottom line.
And, unless Nite Moves somehow prevails on its appeal, keep in mind that lap dances are taxable, as choreographed and beautiful as you may think they are.