LR 8280
Taxability of Fitness Club Membership Fees
January 04, 2024
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 November 9, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant operates three health and fitness centers in Missouri. Applicant's customers purchase a membership that can either be used a) per class, b) month-to-month, or c) annual. These allow Applicant's customers to sign up for a variety of health and fitness classes. Customers are given access to a variety of 45-minute and 60-minute instructional classes. The instructional classes are always led by an instructor and cover a variety of health and fitness topics. Examples of a few of these classes are to improve balance, core, and mental health.
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(2), RSMo, subjects to sales tax as a service rendered at retail 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[.]"
Applicant's membership fees are paid so that their members can take classes at Applicant's studios, and all of these classes are led by an instructor. Because all classes are led by an instructor and Applicant's members cannot use the space or equipment individually, these are considered as fees paid for an 'instructional class,' and therefore not subject to tax.
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 If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.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 J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford