This memorandum is uncorrected and subject to revision before publication in the New York Reports.
The judgment of the Appellate Division should be affirmed, with costs.
Petitioner, the operator of an adult "juice bar" in Latham, New York, contends that the admission charges and private dance performance fees it collects from patrons are exempt from state sales and use taxes. We agree with the Appellate Division that petitioner failed to meet its burden of proof that a tax exemption applies to those charges.
To begin, New York State collects taxes from a wide variety of entertainment and amusement venues. In particular, the Tax Law imposes a sales tax on "[a]ny admission charge" in excess of ten cents for the use of "any place of amusement in the state" (Tax Law § 1105 [f] ). The Legislature expansively defined places of amusement that are subject to this tax to include "any place where any facilities for entertainment, amusement, or sports are provided" (Tax Law § 1101 [d] ). The tax, therefore, applies to a vast array of entertainment including attendances at sporting events, such as baseball, basketball or football games, collegiate athletic events, stock car races, carnivals and fairs, amusement parks, rodeos, zoos, horse shows, arcades, variety shows, magic performances, ice shows, aquatic events, and animal acts (see 20 NYCRR 527.10). Plainly, no specific type of recreation is singled out for taxation.
However, with the evident purpose of promoting cultural and artistic performances in local communities, the Legislature created an exemption that excluded from taxation admission charges for a discrete form of entertainment - "dramatic or musical arts performances" (Tax Law § 1105 [f] ). In this case, petitioner claims, and the dissent agrees, that the Legislature intended to give the adult entertainment business a tax break because the exotic stage and couch dances that are featured at the premises qualify as musical arts performances, rather than as more generalized amusement or entertainment activities that fall within the broad sweep of the tax. We disagree.
It is well established that a taxpayer bears the burden of proving any exemption from taxation (see Matter of Grace v New York State Tax Commn., 37 NY2d 193,195). "Furthermore, in construing a tax exemption statute, the well-settled rule is that '[i]f ambiguity or uncertainty occurs, all doubt must be resolved against the exemption'" (Matter of Charter Dev. Co., L.L.C. v City of Buffalo, 6 NY3d 578, 582 ). This is so because "an exemption is not a matter of right, but is allowed only as a matter of legislative grace" (id.). Thus, a determination by the Tax Appeals Tribunal that a taxpayer does not qualify for a tax exemption should not be disturbed "unless shown to be erroneous, arbitrary or capricious" (id. at 195-196).
In order for petitioner to be entitled to the exclusion for "dramatic or musical arts performances", it was required to prove that the fees constituted admission charges for performances that were dance routines qualifying as choreographed performances. Petitioner failed to meet this burden as it related to the fees collected for the performances in so-called "private rooms"; none of the evidence presented depicted such performances and petitioner's expert's opinion was not based on any personal knowledge or observation of "private" dances that happened at petitioner's club. Thus, the Appellate Division properly concluded that the activities conducted in the private rooms failed to qualify for the exemption.
Further, it was not arbitrary, capricious or an error of law for the Tax Appeals Tribunal to find that petitioner failed to meet the same burden as it pertained to the admission charges for the stage performances. The Tribunal discredited the expert's opinion that the routines qualified as choreographed performances, a determination well within its province (see generally Matter of DiMaria v Ross, 52 NY2d 771 ). The Tribunal articulated a rational basis for discrediting her; it found her testimony was compromised by her opinion that the private performances were the same as the main stage performances despite the fact that she neither observed nor had personal knowledge of what occurred in the private areas.
Clearly, it is not irrational for the Tax Tribunal to decline to extend a tax exemption to every act that declares itself a "dance performance." If ice shows presenting pairs ice dancing performances, with intricately choreographed dance moves precisely arranged to musical compositions, were not viewed by the Legislature as "dance" entitled a tax exemption, surely it was not irrational for the Tax Tribunal to conclude that a club presenting performances by women gyrating on a pole to music, however artistic or athletic their practiced moves are, was also not a qualifying performance entitled to exempt status. To do so would allow the exemption to swallow the general tax since many other forms of entertainment not specifically listed in the regulation will claim their performances contain tax-exempt rehearsed, planned or choreographed activity.
Because we conclude that the charges and fees were taxable under Tax Law § 1105 (f) (1), we need not consider whether petitioner met its burden that the admission charges were not subject to tax pursuant to section 1105 (f) (3) of the Tax Law.
Petitioner's remaining constitutional argument is unavailing.
The ruling of the Tax Appeals Tribunal, which the majority upholds, makes a distinction between highbrow dance and lowbrow dance that is not to be found in the governing statute and raises significant constitutional problems. I therefore dissent.
The dispositive question is whether the charges the State seeks to tax are paid for admission to a "choreographic . . . performance" (Tax Law § 1101 [d] ). I find it clear that the Legislature used "choreographic" in its statutory definition of "[d]ramatic or musical arts admission charge" merely as a synonym for "dance." Strictly speaking, it is true, not all dance is choreographed -- some may be improvised -- but it is absurd to suggest (and I do not read the majority opinion to suggest) that the Legislature meant to tax improvised dance while leaving ...