Rulemaking Leads to Lawsuit. Retroactive tax for Taxable Nudity. Clothing Included.

In January 2017, the Texas Comptroller re-defined what constitutes a strip club, a sexually oriented business, that should be assessed the strip club tax.

The new definition of strip club  includes individuals that are fully covered in “paint, latex, wax, gel, foam, film, coatings, and other substances applied to the body in a liquid or semi-liquid state.”

In 2015, the Comptroller began applying the stip club tax to latex clothed performances. The $5 surcharge was retoractive to 2008. Resulting tax bills were in the millions for these otherwise non-strip club businesses.

The legislative issue is that the statutory definition of strip club for the $5 tax would not be triggered by latex or scantily clad performers. The Comptroller rules & the statute don’t align, welcome to litigation and legislative fix territory.

Roped into the new tax are establishments that ” sponsor sporting events with scantily clad cheerleaders, restaurants having scantily clad waitresses and businesses hosting musical guests.”

Courthouse News Service | Strip Clubs Fight Texas’ Definition of Taxable Nudity