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Larry Flynt’s Hustler Club lost another legal battle over $2.1 million in sales tax the state says it owes for in-house currency known as “Beaver Bucks.”
The New York Supreme Court Appellate Division, Third Judicial Department, ruled Dec. 7 that receipts from the sale of currency at the club are taxable as an admission charge to a place of amusement. The unanimous panel-decision further said the currency could alternatively fall under the state’s 4 percent sales tax as a charge for a public performance at a for-profit cabaret.
It was the second defeat for the club in less than six weeks. The U.S. Supreme Court denied an appeal in a related case Oct. 30.
At issue was in-house currency sold at the Hustler Club for tipping topless dancers and gaining admission to private rooms for lap dances.
Upholding the lower Tax Appeals Tribunal’s determination, the Appellate Division court rejected the club’s claims that the currency fell under the state tax law’s exclusion for admission to a “dramatic or musical arts performance.”
A 2008 audit by the state Department of Taxation and Finance found that the club owed sales taxes of $4.8 million for a period between June 2006 and November 2008. The state Division of Tax Appeals subsequently reduced the amount owed to $2.1 million.
The case is HDV Manhattan, LLC v. Tax Appeals Tribunal of the State of New York , N.Y. App. Div., 3d Dep’t, No. 523146, 12/7/17 .
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