Jessica M. Karmasek Aug. 12, 2013, 6:30pm

WASHINGTON (Legal Newsline) -- A strip club is asking the U.S. Supreme Court to overturn a New York State Court of Appeals ruling, and exempt it from a state sales tax on its admission fees and so-called "couch sales."

New Loudon Corporation operates a strip club under the name Nite Moves. The club, located in the town of Colonie near Albany, features exotic dancers.

Following an audit of the club in 2005, the New York Division of Taxation determined that its general admission charges and the fees patrons pay for private dances -- referred to as "couch sales" -- are subject to sales tax.

In turn, it assessed Nite Moves $124,921.94 in taxes due, plus interest for the period from December 2002 through August 2005.

Nite Moves challenged the assessment, saying it was exempt from sales tax on admission fees to "any place of amusement" under Tax Law § 1105(f)(1), which exempts "dramatic or musical arts performances."

The club also claimed exemption from sales tax on charges of a "cabaret or similar place" under Tax Law §§ 1105(f)(3) and 1101(d)(12), which exclude "a place where merely live dramatic or musical arts performances are offered."

In its case, Nite Moves relied largely on an expert witness, a cultural anthropologist specializing in exotic dance, who testified that "the presentations at Nite Moves are unequivocally live dramatic choreographic performances."

An administrative law judge sided with Nite Moves, crediting the club's expert and finding its admission and private dance fees qualified for the exemption for "dramatic or musical arts performances."

In particular, the judge said, "The fact that the dancers remove all or part of their costume... simply does not render such dance routines as something less than choreographed performances."

The state's Tax Appeals Tribunal reversed and reinstated the tax assessment.

In its decision, it gave little or no credence to the club's expert, who admitted she did not observe any private dances, and ruled the club failed to prove its exotic dances were exempt performances.

The tribunal said the expert's "view of choreographed performance is so broad as to include almost any planned movements done while playing canned music... Further, the terminology [the witness] employs in her report and testimony at times appears designed to neatly fit into the statutory exemption language."

The state's Appellate Division, Third Department, then affirmed the tribunal's ruling.

Its rejection of the expert testimony was not arbitrary and the club's remaining evidence failed to prove it is entitled to the exemption for choreographed performances, the court ruled.

"The record reflects that the club's dancers are not required to have any formal dance training and... often rely upon videos or suggestions from other dancers to learn their craft."

Last September, Nite Moves appealed to New York's highest court, arguing that the tribunal's was arbitrary and capricious and "relied on legal error."

The club also argued that nude dancing is "protected expression," and not subject to a discriminatory tax.

In October, the state appeals court ruled against the club in a 4-3 decision.

Nite Moves filed its petition for a writ of certiorari with the U.S. Supreme Court last month.

Stephen Dick Jr., one of the club's owners, told the New York Daily News Friday that the petition for review is "a long shot," but said it is the club's "last chance."

The state has until Sept. 9 to file a response to the club's petition.

From Legal Newsline: Reach Jessica Karmasek by email at

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