A “gentlemen’s club” in New York City got hit with a $3 million tax bill over the scrip it encourages customers to use to pay and tip the club’s entertainers.
Patrons of the Penthouse Executive Club LLC didn’t pay sales tax on their optional purchase of the scrip, but it turns out that it is considered an admission charge that is subject to sales tax, even though there is also an actual admission charge was only payable by cash or credit, not the scrip. Or at least a New York administrative judge found that it was, and found the club liable for a tax of over $3 million.
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