The Hustler Club in Manhattan sells “sexual fantasy,” not artistic performance, and the scrip purchased by patrons to buy lap dances and tip strippers is subject to state sales and use taxes, an administrative law judge has concluded.

Administrative Law Judge Donna Gardiner upheld an outstanding tax bill of $2.1 million that state Department of Taxation and Finance auditors say the four owners of the Hustler Club owe for the period between June 1, 2006, and Nov. 30, 2008.

Based on testimony of performers and videotape provided by the club, Gardiner held in Matter of HDV Manhattan, 824229 and 824231-824234, that the routines and lap dances do not qualify as a “live dramatic, choreographic or musical performance” that is subject to a sales tax exemption under §1101[d][5] of state Tax Law.

“This adult entertainment establishment provides a service to its patrons that essentially boils down to performers who remove their clothing and create an aura of sexual fantasy,” Gardiner wrote in a decision dated Jan. 30.

While the dancers’ routines incorporate “some elements of dance and certainly choreography,” Gardiner concluded that the Hustler Club’s entertainment is “not dance.”

Gardiner said her ruling was in line with Matter of 677 New Loudon Corp. v. State of New York Tax Appeals Trib., 19 NY3d 1058 (2012), in which a 4-3 Court of Appeals held that the pole dancing at a suburban Albany men’s club did not qualify as an artistic performance for sales tax exemption purposes (NYLJ, Oct. 24, 2012).

State auditors said the four owners of the Hustler Club, which is located at 641 West 51st St., owed the taxes on the sales of $23.8 million in scrip during the 29-month period in question.

Hollis Hyans and R. Gregory Roberts of Morrison & Foerster and Bradley Shafer of Shafer & Associates represented the Hustler Club. Osborne Jack argued for the state Division of Taxation.