New York taxes lap dances in strip clubs.

Club owner says taxes are his reason for leaving state
By DAN HERBECK
News Staff Reporter
7/22/2006

Richard A. Snowden wants to flee New York's taxes, including one on lap dances in his club.

New York taxes lap dances in strip clubs.

And that, says Richard A. Snowden, is one of the main reasons he is leaving Buffalo.

Snowden earlier this week said he is leaving for Las Vegas because he can't get far in local politics as the owner of a gentleman's club. But on Friday, he acknowledged that lap-dance taxes - and other state levies - are also big reasons for his unhappiness.

According to Snowden, the state wants him to pay $216,000 in sales taxes on private lap dances provided by the nearly nude performers in his Rick's Tally-Ho club in Cheektowaga.

"I'm not a crybaby, [but] these tax issues are keys to the whole reason why I'm leaving this state," Snowden said. "Nobody wants to pay taxes that they don't owe. . . . It's human nature."

He added that he is also embroiled in another tax issue with the state. He said the state is demanding $250,000 from him in personal income taxes for the years 2002 and 2003.

Even in a state known for its taxes, Snowden said, the handling of his case is "outrageous" and "over-reaching."

He said the lap-dance tax was the last straw for him after years of frustration with a state government he views as business-unfriendly. Earlier this week, Snowden announced he is putting his business and his Nottingham Terrace mansion up for sale and moving to Las Vegas.

Snowden said he is especially upset because in July 2004, a state tax official sent him a legal opinion stating that lap dance proceeds would not be subject to the sales tax.

Michael Bucci, a spokesman for the state Department of Taxation and Finance, said he could not comment on any actions the state is taking in Snowden's case.

"No tax warrants, which would be public, have been filed in his case. If [Snowden] does have a tax liability, it has not moved to the active collection stage," Bucci said. "Until a case becomes public, the taxpayer can say what he wants about it, but we can't talk about it."

Without commenting directly on Snowden's case, Bucci said the state considers some lap dances to be subject to sales taxes, depending on where they are performed in a club.

"The department's criteria is that if the dance occurs in a public part of a club, it would not be taxable," Bucci said. "But a private one-on-one dance in a separate room would be taxable because the club would be charging an admission fee to that particular room."

Snowden said he is aware of that distinction. He said he does pay state sales taxes on private dances that are performed in his club's "VIP Room."

"The standard lap dance is done in the public area of Tally-Ho Buffalo. We charge $30 a song. The girl keeps $20 and the club takes a $10 commission," Snowden said.

"Our VIP Room is a semi-private room with a love seat and tables. In the VIP Room, the girls charge $65 for 15 minutes of private dancing and $125 for 30 minutes. We receive a commission on that, too."

Snowden said he is "very careful" to make sure the club pays taxes on all lap-dance proceeds from the VIP Room. He said the club has not paid taxes on standard lap dances since it received a letter from the state, outlining the New York's policy, two years ago.

"We pay every penny of tax on every drop of liquor that we sell. We pay every tax that we're supposed to pay," Snowden said.

What exactly is a lap dance?

"Rather than a gentleman sitting at the bar or at a table, watching a girl on stage, he sits on an arm chair, and she dances a foot or two away from them," explained Snowden, a 27-year veteran of the business. "The girls are wearing bottoms and pasties. They're not nude."

Despite the use of the term "lap dance," dancers are not supposed to sit on the laps of patrons while performing, Snowden said.

"We ask the girls not to do that. We watch it pretty closely," he said. "Our girls are angels, but it's human nature for some to try to push the envelope once in awhile."

On a busy night at his club, about 15 dancers may be working, Snowden estimated. He said the typical dancer performs anywhere from two to 10 lap dances a night, and perhaps one VIP Room dance.

Speaking about a second, more mundane tax dispute, Snowden claimed the state has wrongly concluded that his main residence was Buffalo in the years 2002 and 2003. During those years, he said, he made a total of $2.8 million in income from his Las Vegas strip club.

"My main residence then was Las Vegas, not Buffalo," Snowden said. "The state disagrees, and they're coming after me for another $250,000 in state income taxes. I've sent then all kinds of documentation - credit card records, my Nevada driver's license and other stuff - but my fear is that they're going to rule against me."

The 55-year-old Snowden has made a splash in Buffalo since moving here from Las Vegas in 2004 and buying the stately Miller Mansion near Delaware Park. He has become involved in numerous charities and has several times floated the idea of running for public office.

He recently put his mansion up for sale for $2.95 million and also put his strip clubs in Cheektowaga, Rochester and Florida on the market. Snowden said he pays $35,000 in annual property taxes for the mansion but is not upset about that expense.

During an interview in his home, Snowden left the door open for the possibility that he and his wife, Danielle, could stay in Buffalo after all. Snowden said he has been emotionally moved by the number of phone calls and letters he has received since Wednesday, when a story in The News detailed his plans to leave town.

"Could I be convinced to stay? If New York State can be convinced to reason with me on these two tax issues, and if I can get reasonable prices for my properties, we might stay," Snowden said. "We love this area. We never meant to make a quick buck in Buffalo and leave town."