Tuesday, December 3, 2013

Sales Tax Break for Performance Art, But Only If It Is High Brow

The New York sales tax is imposed on most goods and some services.  NY Tax Law section 1105(f)(1) provides that there is a sales tax on any "admissions charge" for the use of any "place of amusement" in New York, such as sporting events and amusement parks. 

But there are several statutory exceptions not subject to sales tax:
1. race tracks,
2. boxing,
3. sparring or wrestling matches,
4. live circus performances,
5. motion picture theaters,
6. sporting activities in which such patron is to be a participant, such as bowling alleys and swimming pools,
7. dramatic or musical arts performances, defined as a "theatre, opera house, concert hall or other hall or place of assembly for a live dramatic, choreographic or musical performance" in in Tax Law section 1101(d)(1).

An adult "juice bar" near Albany NY, called Nite Moves Gentlemen's Club, styles itself Albany's premiere adult venue.  The establishment is evidently a real juice bar where patrons can order juice beverages while watching exotic dancing.

In the landmark case of 677 New Loudon Corporation v. State of New York Tax Appeals Tribunal [pdf], New York State's highest court concluded that the adult juice bar did provide "dramatic or musical arts performances" that qualified for the sales tax exemption, even though the strippers did provide performances set to music. 

The taxpayer apparently lost because it could not prove that its employees performed in a sufficiently choreographed fashion, and furthermore the taxpayer's expert witness was not credible because he did not have any "personal knowledge or observation of 'private' dances" that happened at the club, which was an incredibly foolish oversight on the part of the expert witness. 

The dissent noted that the legislature probably meant "choreographic" to be synonymous with "dance" and that it was unlikely for the legislature to intend to tax improvised dances.  But the United States Supreme Court declined to review the case.

Perhaps the club should try to fit within one of the other statutory sales tax exceptions, such as "sparring or wresting matches" or "sporting activities in which such patron is to be a participant."

1 comment:

  1. Chris
    In California, the voters in 2012 increased sales tax rate.

    CEL Financial Services
    Tax Return Preparer