Philadelphia Debates 'Lap Dance Tax'

July 9, 2013 — -- An amusement tax that has been dubbed a lap-dance tax, levied on some adult entertainment facilities, is causing a stir in the City of Brotherly Love.

Two adult entertainment establishments, Club Risque and Cheerleaders, have appealed tax levies of $320,538 and $486,482, respectively after being assessed by Philadelphia's tax department in the spring.

The two businesses will go before the city's Tax Review Board on July 23 to appeal the tax burden.

The attorney for Club Risque and Cheerleaders said the city is taking an existing ordinance, the 5 percent amusement tax ordinance which typically applies to admissions fees, and is trying to turn it into a tax for lap dances.

"It's the same ordinance that has been there for 40 years," said attorney George Bochetto. "Now since the city is broke, they want money for lap dances."

The city says the amusement tax "is imposed on the admission fee charged for attending any amusement in Philadelphia", according to Philadelphia's website. "Included are concerts, movies, athletic contests, night clubs and convention shows for which admission is charged."

Bochetto said the city audited the businesses' lap-dance encounters, then issued an assessment going back five years, plus interest and penalties, as first reported by the Philadelphia Daily News.

"That's rather absurd," he said.

Mark McDonald, spokesman for Philadelphia Mayor Michael Nutter, said, "There is no such lap dance tax."

"There is an amusement tax and the city is engaged in an enforcement action involving several businesses and about which I am unable to comment because we don't discuss pending litigation," he said.

McDonald said tax avoidance is a "continuous issue faced by any revenue department."

"Without speaking directly to a case about which I'm not going to comment, I can say that a business might start providing a new service or in an existing service in a new way that was not there before," he said. "When a revenue department finds out about it, an action to collect appropriate taxes would ensue."

The amusement tax in question differs from the so-called "skin tax" other areas of the country have implemented. Last August, Illinois lawmakers approved a new fund to benefit rape crisis centers. Starting Jan. 1 of this year, strip club operators pay a charge on gross receipts on a tiered basis, or a $3 surcharge for each patron.