Tax News

CCH (cch.taxgroup.com) reports:

  In a 4-1 decision, the Utah Supreme Court held that the statute that imposes the state's Sexually Explicit Business and Escort Service Tax is a content-neutral law that imposes only incidental burdens on some expression, but is unreasonably vague with respect to the imposition of the tax on escort service providers.

  The case was filed by a group of erotic dancing clubs and escort service agencies to obtain a permanent injunction against the enforcement of the tax, and a declaratory judgment that the tax violates their First Amendment rights under the U.S. Constitution. The tax is a 10% gross receipts tax imposed on businesses whose employees or independent contractors perform services while nude or partially nude for 30 days or more per year, or provide companionship to another individual in exchange for compensation. Proceeds from the tax are used to provide treatment for convicted sex offenders. A district court granted summary judgment in favor of the Utah State Tax Commission. The plaintiffs appealed to the state supreme court.