D.C.’s yoga community has been arguing that studios should not be subject to the new sales tax extension that goes into effect Oct. 1. There’s also some general confusion about the scope of the tax. David Umansky, public affairs officer in the Office of the Chief Financial Officer, took a stab at answering some of our questions via email:
Q. How wide a range of businesses fall under the definition of “health club”?
A. For the purposes of the new tax on the services of a health club, “health club” is defined to include fitness club, fitness center or gym the purpose of which is physical exercise, includes the use of, access to, or membership to, an athletic club, fitness center, gym, recreational sports facilities featuring exercise and other active physical fitness conditioning or recreational sports activities including swimming, skating or racquet sports, or other facility for the purpose of physical exercise. Given how broadly the legislation is drafted, a wide range of fitness and physical exercise businesses fall under the new health club services tax.
Q. Why do yoga studios meet this definition?
A. The language of the imposition statute includes in the definition of health clubs “other facility[ies] for the purpose of physical exercise.” This language is broad enough to cover yoga studios.
Q. Does the tax extend to dance studios and martial arts studios?
A. “Health club services” do not include instructional lessons such as those for martial arts or ballroom dance. “Instructional lessons” can be distinguished from the health club services subject to tax in that instruction about the activity is the primary focus in the former and exercise is the primary focus in the latter.
Q. If fitness or yoga classes are taught at a facility where the primary purpose isn’t fitness — a store, restaurant, park, place of worship — are those exempt from the tax? (The tax is directed to the facility, not the content of what’s taught, yes?)
A. The tax on health club services is tied to the location of the services. To the extent that the activities occur outside of a health club as defined by the statute, they will not be subject to tax.
Q. What options, if any, do the public have to weigh in on how this tax is levied?
A. The Office of Tax and Revenue has issued a draft regulation addressing all the new sales taxes. The public can continue to weigh in by submitting all comments to email@example.com until the final regulations are issued.
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