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Update: Some NYC Yoga Classes Taxable

July 30th, 2012 1 comment

Two weeks ago I wrote about whether yoga classes held in New York City are subject to sales tax.

Perhaps the NYS Department of Taxation & Finance took notice, because one week later the Department issued a tax bulletin clarifying its interpretation of the sales tax law as applied to yoga classes in NYC:

Facilities in New York City that offer only instruction in various yoga disciplines are not considered to be weight control salons, health salons, or gymnasiums. As a result, charges by these facilities for yoga classes are not subject to the New York City local sales tax. …

Charges for yoga instruction by a facility that otherwise qualifies as a weight control salon, health salon, or gymnasium (e.g., a facility that also offers its customers access to exercise equipment or to Pilates or aerobics classes) are subject to the New York City local sales tax.

Previously, NYC yoga studios were under the impression that all yoga classes were considered weight control salons, health salons, or gymnasiums, and thus subject to the local sales tax.

Interesting that the State is now opening the door for yoga studios to structure their businesses such that classes aren’t subject to the sales tax. My guess is that when initially approached about the issue, the Department took the safe route with a blanket position. But after assigning the task to counsel, they realized the legal interpretation was too broad.

Back to mind-body therapy…

(Hat tip: Kay Bell)

Categories: New York, Sales Tax Tags:

NYC Yoga Classes Are Taxable

July 17th, 2012 No comments

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.

Categories: New York, Sales Tax Tags:
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