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Note: Private Lap Dances Are Not Tax Exempt in New York

This one is for you, ladies of the night.

A 2005 audit by the New York Division of Taxation found gentlemen’s club Nite Moves owed over $125,000 in sales tax on door admissions and private lap dance sales. The club argued that dances are a performance, not a taxable “service.” We’ll leave that one alone.

A New York State appellate court ruled last Thursday that private lap dances are not a dramatic or musical art performance, despite Nite Moves’ claims to the contrary. It is unclear whether any state taxation authorities partook in said private lap dances to make this determination.

In this case, the burden of proof rested on the club, who did not provide enough evidence to satisfy their claim, according to the five judge panel that made the ruling. “In short, petitioner was denied the requested relief due not to the nature of its business but, rather, because of the inadequacy of its proof,” they said.

The club’s lawyer, Andrew McCullough, plans to appeal the decision. “We brought in the foremost expert in the field,” he said. “She is the one in this country who has made a complete and detailed study of the art of exotic dance and if they are not going to believe her I don’t know who you believe.”

That expert had not actually seen Nite Moves’ dancers but other, similar exotic performances. As any connoisseur of naked gyrating women knows, not all naked gyrating is created equal.

Tax laws in New York State require sales taxes to be collected and paid on admission to or the use of any place of amusement except for dramatic or musical arts performances.

Maybe if the strippers wore historical costumes or mime makeup they’d have a case.

Hey, Nite Moves, you really should have called the Tax Domme, she knows all about this stuff.

New York court rules private lap dances not tax exempt [Reuters]

A Walmart Sticker Leads to California Lawsuit Against Overstock.com

~ UPDATE includes link and quote from Overstock.com’s press release responding to the suit.

Gary Weiss is all over the $15 million lawsuit brought by seven California counties against Overstock.com today, noting that this could be a helluva problem for our fave SLC problem-child:

The counties had offered to settle with Overstock for as little as $7.5 million, but Overstock refused. No wonder: if the company had coughed up such a substantial amount of cash, it probably would have been driven into bankruptcy.

The suit came out of some alleged false comparative advertising claims (e.g. think Crazy Eddie commercials) including this one that got investigators on the case:

It was a Cottonwood man’s complaints about the firm that persuaded prosecutors to investigate the matter, said Erin Dervin, a Shasta County deputy district attorney.

In 2007, Mark Ecenbarger bought a patio set for $449 on Overstock. The website claimed the list price other companies were charging for the set was $999.99.

But when the furniture was delivered, there was a Walmart sticker on the side of the box showing the set was really worth $247.

Naturally, Overstock is saying that this one big misunderstanding and that isn’t how they do business. The prosecutors aren’t convinced:

The suit claims Overstock often outright makes up its list prices and compare-at prices based on arbitrary markups over the firm’s cost for the product. In many cases, Overstock entirely fabricated a fictitious comparison price and then claimed it was discounting that price, even when it was the only seller of the product, prosecutors allege.

You would think that such a troublesome lawsuit would cause havoc on the company’s stock price, wouldn’t you? Nope. Gary explains:

The reason for that is simple: fraud is already incorporated into the share price. This company is under SEC investigation for systematically cooking its books. Why should consumers be treated any differently than shareholders?

UPDATE: Full statement from Overstock is available although Patrick Byrne is MIA:

“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site. We have been singled out for standard industry practices, which we look forward to demonstrating in court,” said Jonathan Johnson, President of Overstock.com.