Strip club owner to take tax fight to Supreme Court

PHOTOGRAPHER: Justin Mason

Stephen Dick views taxing First Amendment rights as a slippery slope — one almost as slick as the poles his exotic dancers perform on at Nite Moves.

The owner of the adult club in Colonie maintains a tax on freedom of expression — specifically, the right to strip naked and dance provocatively — will inevitably lead to levies on other activities protected under the U.S. Constitution. And once that line is crossed, there’s no telling what kind of expression will be taxed next.

“Freedom is won and lost in the fringes of this country,” he said Friday. “It’s these kinds of cases where you move the bar.”

Over the course of two years, Dick has brought his argument through New York’s highest court and onto “The Colbert Report,” a national television show. Now he’s bringing it to a new level: the United States Supreme Court.

Attorneys representing Nite Moves filed a petition with the nation’s highest court in the hope the justices will take up the case decided by the New York State Court of Appeals last year. The petition submitted to the Supreme Court the day after the Fourth of July argues the taxation of exotic dancing is akin to “content-based discrimination” — an unconstitutional practice that provides government officials unlimited discretion to determine and tax on the basis of artistic merit.

“It is difficult to overstate the threat to free expression posed by the government’s misuse of power to levy taxes based on the content of speech or the identity of the speaker,” the petition states. “The [Court of Appeals decision] disregards such concerns and embraces the notion that the government should be allowed to impose higher taxes, or selectively give tax breaks, based on its estimation of the relative ‘value’ of the speech.”

In addition to Andrew Mc-Cullough, a Utah-based First Amendment attorney who represented Nite Moves at the state level, the club has enlisted Robert Corn-Revere, a nationally recognized free-speech attorney. Corn-Revere is best known for successfully helping CBS Corp. challenge a $550,000 decency fine levied by the Federal Communications Commission following Janet Jackson’s infamous “wardrobe malfunction” during the 2004 Super Bowl halftime show.

Dick said enlisting the aid of an attorney who has successfully argued cases before the Supreme Court is important. But he believes the case has significant merit he hopes the justices will recognize as they review the petition.

“We understand it’s a long shot to be heard by the court, but we also believe our case has as much merit and is deserving to be heard as any other case to be brought before them in the coming year,” he said.

State officials were granted a 30-day extension to respond to the petition earlier this month. McCullough said the Supreme Court is expected to review the petition in October and could decide whether to take up the case within a few weeks.

Nite Moves’ case initially arose after an audit by the state Department of Taxation and Finance concluded door admission charges and private dance sales at Nite Moves were subject to sales tax but no tax was being collected. The audit found the club owed about $124,921 plus interest.

Nite Moves paid the taxes, but appealed the decision before an administrative law judge in 2009. In making the appeal, the club noted a section of tax code that states a sales tax is imposed on any “admission charge” for the use of any place of amusement in the state, except charges for admission to “dramatic or musical arts performances.”

The club’s evidence of the claim came from a number of submissions to the judge, including a DVD of pole dancing routines, video of two Nite Moves dancers performing and footage from the Miss Nude Capital District contest in 1998, featuring theme performances. The club also presented testimony from Judith Lynne Hanna, a cultural anthropologist and dance expert from the University of Maryland, who argued the performances incorporated “jazz-like, improvisatory movements in routines.”

The administrative law judge sided with Nite Moves, agreeing the dances constituted a form of art. But the state appealed to the Tax Appeals Tribunal, which ultimately overturned the case based on a lack of evidence to prove the club’s assertions.

The state then successfully defended the case in the Appellate Division of the state Supreme Court and the Court of Appeals, which narrowly rejected the argument posed by Nite Moves in October 2012. In a split 4-3 decision, the prevailing appeals court justices ruled the lap dances are taxable because they don’t promote culture; dissenting justices claimed there is no distinction in state law to gauge the difference between dancing and that the case raised “signifi cant constitutional problems.”

McCullough said there are a number of cases that say taxation cannot be used to discriminate against a point of view or material. And if taxing a form of dancing is constitutional, he questioned how the state would ever determine the ones that should be taxed.

“Who gets to decide? Does the tax commissioner send out an auditor to decide?” he said. “Of course, in our case the auditor never watched the dances. He just asked a couple of questions.”