Police said they believe the holes are linked to lewd acts, declining to comment further.
Leroy Newell Sr., 58, of Martinsburg, was cited for "operating a place for or permitting or engaging in prostitution, lewdness or assignation" and ordered to appear in Martinsburg Municipal Court on March 29.
Conviction on the charge carries a maximum of 30 days in jail and a $250 fine.
Under West Virginia law, discovery of the peep holes was not cause to shut down the Queen Street bookstore, located across the street from the Martinsburg City Police Department.
Pennsylvania officials, however, ordered Smiley to shut down his Chambersburg store on Feb. 24 pending a hearing in the Franklin County Court of Common Pleas.
"The business is to remain closed, but he will be given the opportunity during that time to bring the building into compliance with the statute," Franklin County District Attorney John F. Nelson said Tuesday.
That includes removing viewing booths that police said had holes knocked in the walls and evidence of bodily fluids.
"Once they feel they are in compliance, myself and the state police will conduct an inspection," Nelson said. If the business is found to be in compliance, Nelson said he and the bookstore's attorney will go back to Walker and seek a consent decree allowing it to reopen.
If in the future the business is found to be in violation, Nelson said the owner and operators can be cited for contempt of court.
Smiley could not be reached for comment.
Conviction on the Pennsylvania charges carry a maximum penalty of 90 days in jail and a $300 fine.