Latham, N.Y.-based Nite Moves sought to avoid paying state taxes on door fees and private dances, arguing that its nude acts should be exempted under the same tax code that applies to Broadway shows and other choreographed dance performances.
You can credit the effort, and three of the seven justices on the State Court of Appeals did, including Associate Justice Robert S. Smith, who wrote in his dissent (H/t: WSJ) that he would be “appalled if the State were to exact from Hustler a tax that The New Yorker did not have to pay, on the ground that what appears in Hustler is insufficiently ‘cultural and artistic.’”
A majority of four justices, however, agreed that Nite Moves failed to show “that the Legislature intended to give the adult entertainment business a tax break because the exotic stage and couch dances that are featured at the premises qualify as musical arts performances, rather than as more generalized amusement or entertainment activities that fall within the broad sweep of the tax.”
Nite Moves CFO Stephen Dick told The Journal that the club hoped federal courts would hear the case. For the moment, we can retire the story into the annals of state tax law, along with sliced bagels, sweatbands and every accountant’s favorite bit of arcana, big and small marshmallows.
The bagel story you may remember: tax officials made new a couple summers ago when they started enforcing a little know bit of tax code, that bagels sold wholesale need not be levied, but one an establishment sliced a bagel, let alone bestowed a schmear, the transaction should be taxed. (In a fine example of the tax code’s intricacies, a slice of bread at a bakery isn’t taxable, according to this Journal article from 2010.
New York State Society of Certified Public Accountants offered us a few other curious cases:
Twix, the slogan goes, “is distinctively caramel, chocolate and cookie,” which makes it taxable as candy or exempt as food, depending on in which section of a store the packages are shelved.
Shower caps are exempt, swimming caps aren’t, hiking boots get taxed, walking boots don’t, and headbands are only duty-free if they’re characterized as sweatbands. For many years, large marshmallows were taxed as candy, while small marshmallows were exempt as cooking ingredients—marshmallows are now tax free, but we’re told that accountants still delight in the story.
Meanwhile, we’d like to applaud Nite Moves for the creativity and pluck with which it made it’s case (especially its argument that pole-dancing is under consideration as a potential Olympic sport). Even if the court’s opinion that the tax exemption for choreographed and dramatic performances was created “with the evident purpose of promoting cultural and artistic performances in local communities,” a standard which a local(!) nudie bar probably doesn’t meet, Nite Moves argument has been a work of art.