LR 8159
Fitness Center Fees Exempt from Sales Tax
August 26, 2021
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated March 2, 2021.
The facts as presented in your letter ruling request are summarized as follows:
Applicant operates a health and fitness center located in Missouri. Applicant's customers purchase a membership that can either be paid annually or month-to-month. This membership allows Applicant's customers to use the equipment and sign up for a variety of classes.
Members are given access to a variety of 30-minute instructional classes or use the equipment for a 'circuit workout.' The 30-minute instructional classes are led by Applicant's instructors and cover a variety of health and fitness topics. Examples of a few of these classes are to improve balance, boxing, walking, core, and body basics. In contrast, during a circuit workout, a member goes through a series of exercises in a set order. An instructor follows the members and provides direction during these circuit workouts.
ISSUE:
Are Applicant's membership fees subject to Missouri state and local sales tax?
RESPONSE:
No. Applicant's membership fees are not subject to Missouri state and local sales tax.
Section 144.020.1, RSMo, levies and imposes a sales tax "upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state." Subsection (2) of Section 144.020.1, RSMo, subjects to sales tax as a taxable service rendered at retail the amounts "paid for admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games and athletic events, except amounts paid for any instructional class[.]" "Instructional class" is defined by section 144.010.1(5), RSMo, as including "any class, lesson, or instruction intended or used for teaching[.]"
As presented, Applicant's business provides two services - 30-minute guided sessions and circuit workouts. Applicant's members are always engaged with an instructor during these services and there is no opportunity for a member to use the equipment without an instructor present. The services are instructional classes. Therefore, Applicant's membership fees are not subject to Missouri state and local use tax.
Applicant should note that this letter applies "only to the particular fact situation stated in the request." 12 CSR 10-1.020(7)(A). If members are allowed to use equipment without instruction, Applicant may be required to remit sales tax on amounts paid for membership fees.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel Stephen S. Krogmeier. General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
Sincerely,
Ken Zellers