Nevada Panel Rejects Tax Refund Request from Strip Clubs

By: Brendan Riley AP
By: Brendan Riley AP

The Nevada Tax Commission rejected arguments that a state entertainment tax unconstitutionally targets strip clubs and refused Monday to refund nearly $1.8 million in such taxes collected from six Las Vegas clubs in early 2004.

Attorneys for the strip clubs appealed the imposition of the 10 percent entertainment tax on admissions, drinks and food, arguing that strippers' dancing is a form of constitutionally protected freedom of expression that should be tax-exempt.

The clubs' appeal, rejected on a unanimous commission vote, was filed after the state Taxation Department denied the requested refund of January-April 2004 taxes on grounds the dancing fit the definition of taxable entertainment.

The businesses originally filed suit in federal court, arguing they were exempt from the tax. Taxation Director Dino DiCianno said a judge directed the clubs to first pursue "administrative remedies" with the state.

Attorney Brad Shafer, representing the clubs, argued that commissioners could "bury your head in the sand all you want," but it's clear that the tax is invalid because it discriminates among types of live entertainment.

Shafer noted the tax doesn't apply to live entertainment in a nongambling facility that seats less than 200 and exempts certain
sporting venues such as boxing, minor-league baseball and NASCAR
races. The exemptions are "content-driven" and tend to favor family entertainment, he said.

"This was to get the adult cabarets and everything else was exempted out," Shafer added, noting the state law has more than two dozen exemptions.

Attorneys Dennis Belcourt and David Pope, representing the Taxation Department, countered that the tax was an existing levy that was broadened by state lawmakers in 2003 to include the strip clubs and other forms of entertainment, and didn't amount to unconstitutional censorship.

Pope called the levy "content-neutral," and said that of the more than 50 non-casino businesses and enterprises subject to the tax, only 11 were strip clubs. However, Shafer said the strip clubs accounted for most of the non-casino entertainment tax revenue.

The clubs appealing the taxes are the Spearmint Rhino, Treasures, Sapphire, Jaguars, Olympic Garden and Crazy Horse Too.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

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