Can Utah constitutionally tax nude dancing businesses? Bushco v. Utah State Tax Commission Explained

In Bushco v. Utah State Tax Commission, the Utah Supreme Court addressed whether the state’s Sexually Explicit Business and Escort Service Tax violated the First Amendment rights of escort services and erotic dancing clubs.

Background and Facts

In 2004, Utah enacted a 10% gross receipts tax on businesses whose employees perform nude services for thirty or more days per year or provide compensated companionship. The tax revenue funds sex offender treatment programs and internet crimes investigations. Plaintiffs, including escort services and erotic dancing clubs, challenged the tax as violating their First Amendment rights. The district court granted summary judgment for the Tax Commission.

Key Legal Issues

The court examined whether the tax was a content-neutral regulation of conduct or a content-based restriction on protected expression. The analysis required determining the appropriate level of constitutional scrutiny and whether specific statutory provisions were unconstitutionally vague.

Court’s Analysis and Holding

The court held the tax constitutional under intermediate scrutiny as applied to nude dancing businesses. Following United States v. O’Brien, the court found the tax content-neutral because it regulates nudity (unprotected conduct) rather than the expressive message. The tax satisfied the four-prong O’Brien test: it was within legislative power, furthered the substantial interest of providing sex offender treatment, was unrelated to suppressing expression, and imposed only de minimis burdens on protected speech.

However, the court struck down the escort service provisions as unconstitutionally vague. The statutory definition of “escort” as anyone providing “companionship” for compensation failed to give ordinary persons adequate notice of prohibited conduct and could encompass legitimate activities like eldercare or tour guides.

Practice Implications

This decision demonstrates the importance of precise statutory language in regulations affecting expressive conduct. While governments may impose content-neutral taxes on conduct associated with protected expression, they must ensure definitional terms provide clear guidance. The ruling also reinforces that conduct-based regulations receive less stringent scrutiny than direct restrictions on speech content.