Metro-East News

When it comes to Illinois ‘sin tax,’ are strip clubs cheating?

Hollywood Showclub is one of seven strip clubs that operate in Washington Park.
Hollywood Showclub is one of seven strip clubs that operate in Washington Park.

A state law sometimes irreverently called a “sin tax” requires all strip clubs that sell alcohol to collect $3 from each patron or pay a flat fee based on income that goes into a fund to support rape crisis centers.

But a survey by the BND of active strip clubs in Illinois affected by the Live Adult Entertainment Facility Surcharge Act found at least 58 clubs open for business — which is 19 more than paid into the fund in 2016.

When the law was enacted effective in 2014, supporters estimated that more than $1 million per year would be collected, but last year, about half — $532,000 — was collected, the state reported.

While clubs regularly open and close down, making a precise, year-to-year comparison difficult, the BND’s total reflects an increase of 49 percent over the number of clubs that actually paid last year and 29 percent over 2015.

Based on the per-club average collected in 2015-16, or $11,745 per club, non-payment potentially cost rape crisis centers tens of thousands of dollars in 2016 and 2015.

The bill creating the law was sponsored by state Sen. Toi Hutchinson, D-Olympia Fields, but was pushed by another Democrat — former Lt. Gov. Sheila Simon. Neither could be reached for comment.

According to the Illinois Department of Revenue, 39 strip clubs in Illinois filed last year and 45 filed in 2015, when $501,000 was collected. In 2014, some $406,000 was paid. The provided data did not include the number of filers in 2014.

The department, according to a spokesman, does not keep a list of all fully nude or topless clubs operating in the state, and instead relies on inspectors for the Illinois Liquor Commission for this number. The surcharge law requires clubs that feature live full or partial nudity and serve alcohol to pay a surcharge of $3 per patron visit. But they also have the option to pay a flat fee based on annual revenue. The state does not make public how much each club paid.

Polly Poskin, executive director of the Illinois Coalition Against Sexual Assault, said that her staff estimated two years ago that 120 strip clubs were operating in Illinois — nearly three times the number that have so far paid the surcharge.

While the rape crisis centers in Illinois greatly appreciate the funding generated by the nominal fee on strip clubs, (the amount collected) is less than half of what was anticipated. Based on the number of clubs, $1 million to $1.2 million is a conservative estimate of what should be collected.

Polly Poskin, executive director of the Ilinois Coalition Against Sexual Assault

“While the rape crisis centers in Illinois greatly appreciate the funding generated by the nominal fee on strip clubs, (the amount collected) is less than half of what was anticipated. Based on the number of clubs, $1 million to $1.2 million is a conservative estimate of what should be collected,” Poskin said in a written statement.

“We believe if the Department of Revenue prioritized annual audits of the clubs, collections would be in line with what is required by law. IDR could easily do better by sexual assault victims.”

The metro-east has 15 strip clubs. Washington Park has seven clubs in operation and may hold the unofficial title of having the most strip clubs within one municipality in the state. Because a city ordinance prevents strip clubs from operating in Chicago if they sell alcohol, few exist within the city limits.

The law requires that each “qualifying business” annually file a Live Adult Entertainment Facility Surcharge Return, although these are not public records.

According to the IDR, when the surcharge law was first enacted, the department spent significant time going over a list of live-adult-entertainment businesses. This review eliminated a number of businesses that did not meet the requirements of the law. The result was that the number of clubs that turned up in the department’s review was similar to the number that have actually paid the tax.

However, the surcharge law is open to interpretation. The act defines a business that must pay the tax as, “... a striptease club or other business that serves or permits the consumption of alcohol on its premises and ... provides activities by employees, agents, or contractors of the business that involves nude or partially denuded individuals that, when considered as a whole, appeal primarily to an interest in nudity or sex.” The law applies to both female and male dancers or entertainers.

The newspaper’s review covered strip clubs in Elmhurst, Elgin, Urbana, Dixon, Decatur, Rockford, Ottawa, Peoria, Creve Coeur, Harvey, Bridgeview, Melrose Park, Stone Park, Chicago Heights, Bedford Park, Markham, Ford Heights, Washington Park, Brooklyn, Centreville, Sauget, Compton, Gulfport, Samonauk, Sparland, McClure, DeSoto, Carol Stream and Galesburg.

George Pawlaczyk: 618-239-2625, @gapawlaczyk

How much do they pay?

Washington Park, with a population of 4,200, currently has seven strip clubs that bring in revenue to the village through annual live entertainment licenses. These clubs accounted for $60,000 in revenue for the village in 2016:

  • Hustler Club, 5420 Bunkum Road — $25,000
  • Club Hollywood, 5841 Bunkum Road, $15,000
  • C-Mowes, 2107 Kingshighway — $5,000
  • Blondie’s, 6113 Forest Blvd. — $5,000
  • Miss Kitty’s, 5200 Bunkum Road — $5,000
  • Dollie’s Playhouse, 6210 Forest Blvd. — $5,000
  • Wise Guys, 2226 Kingshighway — non payment due to pending lawsuit

Source: Village finance department records

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