Yoga Stretches Definition of Physical Fitness Service

On November 19, 2008, the Washington Department of Revenue conducted a meeting regarding the sales tax determination of yoga classes. It has been a gray area for tax payers to determine if yoga classes are taxable or not.

A provision in the state law says that “physical fitness services” are subject to a sales tax. The State Department of Revenue has issued guidance stating that yoga classes that are primarily instructional do not have to charge a sales tax, however, if they are use for exercise purpose then it becomes taxable. This is where the confusion starts. The determination of how yoga classes are used is left up to the service provider.

Due to the conflicting guidance by the Washington Department of Revenue, sales tax will not be assessed for yoga classes for periods prior to December 1, 2008. However, if sales tax has been already collected, refunds will not be allowed by the state.

Finally a tax advisory on classes such as Yoga, Tai Chi and Qi Gong was issued on December 1, 2008. It stated that such classes when conducted in a health or athletic club, fitness center, health spa, or similar facility (“fitness facility”) is taxable. The presumption is that the primary focus of any such class is physical fitness, and that the class therefore does constitute a “physical fitness service.” Other places such as Community centers, parks, school gymnasiums, universities, colleges, hospitals, medical facilities, and private residences are not considered “fitness facilities” and therefore not taxable.

The tax advisory can be viewed on the Washington Department of Revenue Website.