Is lap dancing a form of dramatic art? That’s the question the New York State Court of Appeals will consider as it hears the appeal of Nite Moves, an Albany, N.Y.-area entertainment venue featuring female dancers, in which nonalcoholic beverages are sold.

As a result of a sales tax audit, the state found that Nite Moves had not properly paid sales tax on admissions, and assessed an additional $124,921 due for such taxes on the price of admissions.  Nite Moves contested the assessment, on the grounds that they were exempt from the tax as a place of amusement featuring dramatic or musical arts performances.  They also claimed that the admissions were exempt as a place of entertainment in which the sale of food or beverages was merely incidental to the entertainment.

An administrative law Judge ruled in favor of Nite Moves in 2009, but was reversed by the Tax Appeals Tribunal later that year. In his petition for appeal , NIte Moves’ attorney W. Andrew McCullough noted that the policy of paying sales tax only on drink sales was done on the advice of the establishment’s CPA. He quoted from an expert witness report by Dr. Judith Hanna, a cultural anthropologist, who “found that the presentations at Nite Moves unequivocally choreographic performances.”

The case has attracted widespread attention, with attorneys for Larry Flynt’s Hustler club asking for permission to present friend-of-the-court briefs.

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