When thinking about yoga, sales tax probably isn't the first thing springing to mind. However, in Missouri, it's front and center in the minds of yoga studio owners and for some legislators as well. The issue appears to have been building for a while.
Fitness Clubs, Exercise, & Sales Tax
In July 2008, Letter Ruling 4912 issued by Missouri's Director of Revenue, stated that a Missouri Supreme Court case recognized fitness clubs as places of recreation and that fees paid to them are subject to sales tax. According to an article on Club Industry, a website for fitness business professionals, in October 2009, the Department of Revenue sent letters to 140 yoga and Pilates studios ordering them to pay the sales tax on their services.
The Spirit of Yoga St. Louis website shows a coalition of yoga businesses and supporters currently organizing a petition and supporting recently filed legislation that would exempt yoga and similar practices from the sales tax. According to the website, most yoga studios will collect the sales tax, but under protest.
One of the main issues involved here is a controversial one, because it touches on religion and spirituality. Is yoga more than exercise aimed at physical fitness? Is there a spiritual component?
Spirituality & Exemptions
Senate Bill 726, the proposed legislation, tackles the spiritual issue head on. It seeks to exempt from sales tax, “All amounts paid or charged for admission, participation, or other fees or charges paid for instruction, lessons, or classes in physical exercise or personal training including, but not limited to, Yoga, Tai Chi, Qiyong, or such other training which provide spiritual benefits to its practitioners provided such instruction, lessons, or classes are not provided by a health club, fitness center, or spa.”
A recent study by the Pew Forum on Religion & Public Life provides some interesting insight. It found that the religious practices and beliefs of Americans are varied and do not fit neatly into conventional categories. Further, it found that 23% of adults agree that yoga is a blend of exercise and spiritual practice.
Washington State & What Lies Ahead
Something equally as informative is how a similar situation played out in another state. Washington's Department of Revenue issued an Excise Tax Advisory last February. Yoga and similar practices are exempt from sales tax when the “physical fitness services” are secondary and the “primary focus” is on “breath regulation, meditation, and/or discussion of the historical and philosophical origins of Yoga.”
With so many states struggling to find ways to increase revenue collection, don't be surprised if other states make similar attempts to tax yoga. But there's certainly no need to panic yet. Missouri will provide some answers eventually. Maybe the best thing to do is to take a step back. And breathe.
For more information please visit:
Missouri Dept. of Revenue Letter Ruling 4912, July 17, 2008.
Missouri Imposes Tax on Yoga Studios, November 18, 2009.
Pew Forum on Religion & Public Life: Many Americans Mix Multiple Faiths, December 2009.
Excise Tax Advisory: Taxability of Yoga, Tai Chi, and Qi Gong, February 2, 2009.
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