In the state of Washington, why does an aikido business not have to pay sales tax, but a karate school does? The answer lies within a new law effective January 1, 2016 from the Washington State Department of Revenue declaring martial arts training facilities taxable.
Martial arts training facilities must collect and remit retail sales tax on their charges to customers as it is now defined as retail sales. This income will also be subject to retailing business and occupation tax.
According to an article, "The purpose of the new law is not raise extra revenue. The goal is to simplify the tax code. If you own a business that involves recreation and exercise, then you pay sales tax; if not, then you don’t."
The Special Notice has further emphasized the definition of an athletic or fitness facility to include martial arts facilities.
"Martial arts facilities are premises where training, instruction or competitions involving boxing, kickboxing, wrestling, and martial arts or mixed martial arts take place. Martial arts and mixed martial arts include, but are not limited to: karate, judo, Taekwondo, Capoeira, Savate, Muay Thai, Sanshou, Hapkido, Sumo, Aikido, Jujutsu, Brazilian Jiu-Jitsu, Sambo, and Kung Fu."
Legislation is being proposed and considered that will change tax laws across the country - and online. Most SMBs have limited tax expertise in-house. Compliance is key to avoid expensive audits and penalties. We have designed an innovative interface and user experience that reduces the time, effort, and risk of managing sales tax compliance.