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NYS Rules on Yoga, Exercise, Sports
What is sport? What is exercise? Is yoga one or the other or neither? Is it taught in a gymnasium, health club or athletic club? In parsing the various legal definitions—which vary between New York City and the rest of the state—the New York State Department of Taxation and Finance clearly had to work up a sweat.
Basically, said the department in statement NYT-G-12(1), weight control salons, health salons and gymnasiums are subject to local sales tax within New York City. However, such facilities are typically exempt from state sales tax—more on that below.
Noted in the statement was New York City "Company X," which runs multiple health class facilities. However, it is not taxable as an athletic club, because customers do not control any social or athletic activities, do not participate in the management of the facility or in the selection of other participants, or possess any proprietary interest in Company X.
However, most of Company X's facilities offer Pilates classes, and Pilates is considered exercise under the "gymnasium" definition. And that means that yoga classes—although not classified as exercise—are taxable at these facilities because they're taught in a gymnasium.
The department did note, however, that one of Company X's facilities offers just yoga and not Pilates or other activities. Yoga itself is not an exercise, ruled the department, because it includes meditation, spiritual chanting, breathing techniques and relaxation skills. Therefore, at that particular facility, yoga instruction is not taxable, because it's not being taught in a gymnasium. Further details on the definitions and facility taxation are available in the statement.
Meanwhile, as noted above, state guidelines outside of New York City are a little different. The state makes a distinction between health clubs, which tend to revolve around health and weight loss, and athletic clubs, which focus on sports. The difference is outlined in a recently issued tax bulletin, TB-ST-329. It says that dues or membership fees paid to health and fitness clubs are not subject to New York State sales tax and are not subject to local sales taxes if the club is located outside New York City.
However, that tax bulletin cites another statement, TSB-M-83 (19)S (issued in 1983 but still applicable), which says that dues paid to any social or athletic club in New York State are subject to sales tax if the dues of an active annual member, exclusive of the initiation fee, are in excess of $10 per year. This statement also clarifies what constitutes a "club" for tax purposes.