NYC Yoga Classes Are Taxable
Attention New York City yoga studio attendees: Your dues may increase.
The WNYC News Blog is reporting that due to a tax bulletin issued by the New York State Department of Taxation and Finance, yoga studios located in the city must collect and remit a 4.5 percent sales tax on yoga classes.
NY Tax Law Section 1212-A(a)(2) imposes tax on the receipt of sales in New York City for services provided by weight control salons, health salons, gymnasiums, turkish and sauna bath and similar establishments.
Before the bulletin was issued, yoga studios apparently believed that they were not considered a “similar establishment” under the tax law. And the State probably didn’t care to address the interpretation until yoga became so popular.
The State interprets “similar establishment” to mean a health and fitness club. It seems reasonable given the specific types of taxable services listed in the statute. Since people participate in yoga exercises in order to improve their health, I believe yoga is taxable under the law.
If, however, the health and fitness club also provides access to participant sporting activities and facilities, then it may instead be considered an athletic club. In New York, sales tax is imposed on dues and membership fees paid to any athletic club in the state, not just in New York City.
As for the “new” NYC yoga tax, the Department of Taxation and Finance plans to issue regulations shortly.