Philadelphia exempts "legitimate contemporary American theater" performances from the amusement tax. So, lawyers for the three clubs argued Tuesday before the five-member tax panel that erotic dancing is in fact a theatrical performance.
To help their cause, they commissioned an expert report from a Queens College professor with two Yale School of Drama degrees.
Katherine Profeta visited all three clubs and concluded the performances she witnessed fell squarely into the "multi-focal, immersive theater experience" as well as the country's long-standing "burlesque tradition."
She said she found dancers creating characters, displaying "technical virtuosity," and "grace and balance." She was even impressed with their skill while wearing enormous platform shoes, which she compared to ballet dancers mastering toe shoes.
Deputy City Solicitor Marissa O'Connell, arguing on the city's behalf, said she had a background in classical ballet and seemed particularly pained by the comparison.
"But toe shoes make you bleed," she said.
O'Connell said the businesses had never described themselves before as theaters, exempt from the tax.
"They hold themselves out as nightclubs," she said. "If they want an exemption, you have to apply. I'm not really sure why we're here."
George A. Bochetto, an attorney for Club Risque and Cheerleaders, said the exemption for "legitimate theater" was "vague and open to abuse."
"Who's to judge?" he asked. "Is there such a thing as illegitimate theater?"
The question of artistic legitimacy is just one issue at play in the hearing on the appeal, which will continue Thursday, when another expert witness plans to testify on the choreography of lap dancing.
The clubs pay the amusement tax on the entrance fee charged to customers. Bochetto argued that activity inside the club isn't subject to the tax.
He said the city was not going after other businesses that charge separately for entrance and for services provided inside - like a piano bar that charges $2 to request a song.
"If you are not treating them similarly, you are treating them unconstitutionally," he said.
Stephen Howard, the attorney for Delilah's, said the city had never before asked the club to collect the amusement tax on lap dances.
"They gave us no advanced warning," he said. "In our wildest dreams, we would have never interpreted the tax in this way."
The clubs were hit for back taxes after an audit for the years 2008-10. O'Connell said that the auditors' "understanding of the clubs have evolved over time."
She said Cheerleaders was taxed in 2007 for money collected from dances in private rooms, where customers pay $600 an hour "for the time and, I guess, the attention of a beautiful woman, which is fine."
"That is an additional activity that's subject to the tax," she said. "Just because the city hasn't assessed it before, if it's taxable, it's taxable."
Contact Troy Graham at 215-854-2730 or email@example.com, or follow on Twitter @troyjgraham.