ALBANY, N.Y. (AP) - Nude lap dances aren't likely to be confused with "Swan Lake." But a New York strip club says they are an art form, too, and should be exempt from state taxes.

So far, the state tax department and an appeals court disagree and want the Nite Moves club in Albany to pay $124,000 in back taxes.

New York's highest court was set to hear arguments in the dispute Wednesday in what is surely one of the racier tax cases ever to reach the Court of Appeals.

Nite Moves claims lap dances are exempt under state tax law as "live dramatic or musical arts performances." The exemption also applies to theater or ballet. The club is relying on testimony from a cultural anthropologist who has studied exotic dance and visited Nite Moves.

"It's definitely a form of art. It's live entertainment," a dancer said Wednesday afternoon at the club, where there was only one customer. She declined to give her name, saying she has another, unrelated job. "Some girls are up there practicing for hours when nobody's in here."

Nite Moves does not have a liquor license. W. Andrew McCullough, an attorney for Nite Moves, said the effect of the eventual court ruling probably won't be widespread because most establishments featuring exotic dancers sell alcohol, and other tax rules apply to those establishments.

An administrative law judge previously agreed with Nite Moves, saying: "The fact that the dancers remove all or part of their costume ... simply does not render such dance routines as something less than choreographed performances."

But the state Tax Appeals Tribunal said the club didn't present sufficient proof that it qualifies for the exemption, and a mid-level court upheld that ruling last year.

"In our view, there can be no serious question that - at a bare minimum - petitioner failed to meet its burden of establishing that the private dances offered at its club were choreographed performances," the Appellate Division court ruled. The court also noted that the club dancers are not required to have any formal dance training.

At Nite Moves, a windowless building with a small stage and a pole, the dancer said they work as independent contractors and share fees and tips with the house. A lap dance was listed at $20 for a private minute. Just because it's nude or erotic doesn't mean it's not art, the dancer said, noting art galleries commonly have works that are both.

Another dancer, in stiletto sandals and skimpy bikini fringed with fabric, shook her hips and twirled around the pole to slow rock music. She upbuttoned her top, but rebuttoned it and left the stage shortly after TV news crews arrived.

Cary Ziter, a spokesman for the state Department of Taxation and Finance, said the agency is not aware of any other cases in state court similar to the Nite Moves case. He said the tax department doesn't know how many so-called gentlemen's clubs operate in New York.

Angelina Spencer, executive director of the Association of Club Executives, told CNN recently there are about 4,000 adult nightclubs in the U.S.

The top court typically takes about a month to issue a decision.