For the second time, the Nutter administration has lost a bid to tax the money exotic dancers earn from giving "lap dances" -- a move that could have cost three of Philadelphia's biggest strip clubs as much as $1.5 million.
The administration first was rebuffed in October by the city's Tax Review Board, and on Wednesday, a Common Pleas Court judge upheld the board's decision.
The city has 30 days to appeal the latest decision. City Solicitor Shelley R. Smith said she did not know whether an appeal would be filed.
"We believe we are legally justified," she said.
Lawyer George Bochetto, who represented Club Risqué and Cheerleaders, said the judge's ruling "should be the end of it."
The administration had argued that the city's "amusement tax," paid on tickets to sporting events and concerts, should be applied to lap dances.
Clubs pay the amusement tax on entrance fees, but the city argued that lap dances were a separate amusement and should be subject to the tax as well.
The Tax Review Board called the city's reasoning, "vague and inconsistent."
If lap dances were taxable, Bochetto argued, then the city could tax separate amusements in piano bars and karaoke clubs.
The three clubs, Club Risqué, Cheerleaders, and Delilah's, were hit with back tax bills for lap dances after an audit for the years 2008-10.
A lawyer for the city told the review board that the auditors' understanding of the clubs had "evolved." Bochetto said the city was using the strip clubs as a test case to expand the scope of the amusement tax "because no one feels sorry for gentlemen's clubs."
"The fact of the matter is there are real, honest, hardworking people who run these clubs," he said. "You can't have revenue officers picking and choosing which businesses to apply this creative interpretation of a tax."
If the city had prevailed, back taxes, interest, and penalties on the three clubs would have exceeded $1.5 million.
(c)2014 The Philadelphia Inquirer
