Burlesque Law News, Part III: The “Dramatic Arts” Tax Exception & Pole Dancing

April was the biggest month so far for 95years.    We’ve also had two articles on Burlesque on the front page for the entire month.  Using superior law school LSAT logic, I can deduce that sex sells around these parts.  Therefore, I present you with the third article in our continuing coverage of burlesque law. I’m also going to attempt to make tax law interesting, so please bear with me.

In New York, the Tax Law §1105(f)(1) includes a sales tax exception for admission fees paid to venues holding dramatic or musical arts performances.  Tax Law §1101(d)(5) further clarifies the definition of such a venue as “a theatre, opera house, concert hall or other hall or place of assembly for a live dramatic, choreographic or musical performance.”   Without going off on a tangent about the legal history of exotic dancing, it is generally accepted that burlesque falls under the purview of a Dramatic and Musical Art performance.  However, a crucial distinction must be made between a theater and a cabaret.  A cabaret is taxable under Tax Law § 1105(f)(3) and is defined in § 1101(d)(12) as a place “which furnishes a public performance for profit, but not including a place where merely live dramatic or musical arts performances are offered in conjunction with the serving or selling of food, refreshment or merchandise, so long as such serving or selling of food, refreshment or merchandise is merely incidental to such performances.”  Therefore, if a burlesque show just happens to be occurring at a venue where concessions drive the profit model (i.e. most nightclubs), they’re still on the hook for taxes.

These two sections of the tax code have come under scrutiny in a recent NY Tax Appeals Tribunal Case.  An Albany-Area strip club called Nite Moves, owing $129,000 in back taxes, attempted to argue that pole dancing, like burlesque, was a dramatic art entitled to the tax exception Further, the club argued that their venue was not a cabaret where drink sales were merely incidental to said dramatic art.  The appeals court overturned a prior Administrative Law Judge’s ruling that pole dancing is art and thus entitled to the exception.  Citing that while pole dancing moves are, as the ALJ Catherine Bennet said, “no small feat,” that does not make them art.  The tribunal further explained that their ruling was based largely on the fact that the dance moves were basically copied from youtube instructional videos on pole dancing and didn’t necessarily rise to the overbroad definition of choreography relied on by Bennett.  Further, the sales of juice (fully nude strip clubs are not allowed to sell alcohol in NY) were second only to revenues from pole and lap dances, and could not be described as incidental to the performances.  The NY Law Journal further breaks down the case. One interesting tidbit is that the club’s attorney is a Mormon running on the Libertarian ticket for Governor of Utah.  Hopefully the fact that the article mentions him as a patron of the club won’t work against him in the gubernatorial race in such a wildly conservative state.