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PHILADELPHIA (Reuters) - A state judge on Wednesday shot down an attempt to tax lap dances in Philadelphia, siding with three strip clubs that faced more than $1.3 million in back taxes, interest and penalties.
Pennsylvania Common Pleas Court Judge Ellen Ceisler ruled that the city could not extend a 5 percent amusement tax to the semi-private dances, upholding a ruling by the city's Tax Review Board.
The tax already applied to admission fees to the clubs.
The city, according to court documents, attempted to extend the tax to dances for the tax years 2008 to 2010 after audits by city tax agents.
Lawyers for the clubs argued that as previous auditors had not applied the tax to dances in 2006, the tax ordinance did not apply.
“If you read the ordinance, it applied to admissions fees, not interior incidents,” said George Bochetto, a lawyer for the clubs.
The dances typically cost between $20 and $30, meaning a 5 percent tax would yield about $1 to $1.50 per dance, although the clubs did not break down other fees associated with the dances, such as the use of so-called champagne rooms.
“There were an extraordinary number of taxable incidents,” said Bochetto. The city said the clubs owed $1.3 million, including $710,000 in back taxes, and the rest in interest and penalties.
It was not the first tax case involving the services of scantily clad entertainers
In 2012, an Albany, New York, strip club appealed its $125,000 tax bill, citing an exemption for “dramatic or musical arts performances.” But New York's highest court ruled in a 4-3 decision that the exemption did not apply to exotic dancers.
Editing by Barbara Goldberg and Peter Cooney