The Texas Supreme Court on Friday declined to review whether a $5-per-patron fee at live nude entertainment clubs is an occupation tax in disguise, letting stand a lower appeals court ruling that found alcohol-serving Texas strip clubs must pay up when it comes to the "pole tax."
Last May, the Texas Third Court of Appeals ruled that the fee was not an unconstitutional occupation tax and must be paid by Texas strip clubs that serve alcohol.
Lawyers for the strip clubs have said the fee was a surreptitious tax because lawmakers failed to designate 25 percent of the money to be collected for public education. The appeals court said it's an excise tax that can be spent any way the Texas Legislature chooses.
From the time it was passed in 2007, strip clubs have fought the Sexually-Oriented Business Fee. Money from the fee is going to programs for sexual assault victims and to health care.
It is not clear whether the clubs will continue their legal fight. A call seeking comment from a lawyer for the Texas Entertainment Association, which represents many of the roughly 200 strip clubs in the state, was not immediately returned.
Shortly after the law was enacted in 2008, some clubs paid the fee, then stopped as legal challenges began. By mid-year, the fee had generated about $14 million in collections.