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Sales Tax State Activity Update - March 2006

Let's Get Physical - Missouri Looks at Health Club Services

Background

The Taxpayer owns a number of fitness centers in Missouri. The facilities provide for cardiovascular and weight training services. They also may provide personal training, aerobics, yoga, spinning, and similar group classes. Tanning and temporary day care services are also available for use by members.

Question 1
Are fees paid for services such as personal training, aerobics, yoga, spinning, and similar group classes provided in a health club subject to tax?

Response
Fees charged for personal training, aerobics, yoga, spinning, and similar group classes are subject to sales tax.

Section 144.020.1(2), RSMo, provides that fees paid in or to a place of amusement are subject to sales tax. In Wilson's Total Fitness Center, Inc. v. Director of Revenue, 38 S.W.3d 424 (Mo. banc 2001), the Missouri Supreme Court ruled that fitness centers were places of amusement and fees paid to a fitness center are subject to sales tax under Section 144.020.1(2).

Based on the information provided, the Taxpayer's facilities for personal training, aerobics, yoga, spinning, and similar group classes are places of amusement. Therefore, fees paid for these services are subject to sales tax.

Question 2
Are fees paid for tanning and temporary day care services subject to sales tax?

Response
Fees paid for tanning and temporary day care services are not subject to sales tax.

Day care services and tanning services are not one of the enumerated services subject to tax under Section 144.020, RSMo.

Question 3
Are fees charged to exempt organizations subject to sales tax?

Response
The Taxpayer may make nontaxable sales to exempt organizations if the Taxpayer takes an exemption letter in good faith and the transaction is exempt from sales tax.

Question 4
Are fees paid by individuals that join the gym pursuant to a letter from a physician subject to sales tax?

Response
Sales to persons with a physician's letter that recommends exercise are subject to sales tax. Missouri does not provide an exemption for sales made to individuals that have obtained a physicians recommendation for fitness memberships. Therefore, such sales are subject to sales tax.

View the full ruling on the Missouri Department of Revenue website.

(Missouri Department of Revenue, Letter Ruling No. LR2732, 01/20/06)

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