Missouri DOR Clarifies Sales Tax Ruling on Yoga
Missouri – Though sales tax is applicable to fees paid to yoga studios, a recent court case has brought up additional concerns and questions. A Missouri yoga studio operator requested a letter ruling from the Director of Revenue in early March this year after learning of the court’s decision in Tatson, LLC dba Powerhouse Gym of Joplin v. Director of Revenue. Director Nia Ray’s response was posted on the Missouri Department of Revenue website (http://dor.mo.gov/rulings/show.php?num=7548) on May 5th. In it, she outlines that yes; facilities are required to collect and remit sales tax on the fees paid for yoga classes and activities. Per section 144.020.1 of the tax law, some areas where sales tax can be applied are amusement, entertainment, and recreational services. The practice of yoga has been a taxable service in Missouri since 2009 same as other places of recreation such as athletic and fitness clubs. The tension is at the heart of the matter for yoga instructors; yoga as meditation versus yoga as exercise.
Director Ray goes on to say that the recent court ruling was issued because Powerhouse was not rendering any taxable service at retail. Powerhouse had contracted another company, Custom Built, who rented office space from Powerhouse and offered personal training sessions to gym members. When the Department of Revenue issued an assessment against Powerhouse for $12,207, Powerhouse challenged the assessment to the Administrative Hearing Commission. Then the Missouri Supreme Court also ruled in favor of Powerhouse, as Powerhouse was renting office space to custom Built, not selling a tangible personal property or rendering taxable service at retail. Powerhouse did not have any action between Custom Built and its members, therefore the supreme Court said the rental fee did not fit the description of a taxable service.
About Davis & Davis LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis & Davis LLC – Sales Tax Experts specializes in sales/use tax audit consulting and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis & Davis we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.
For sales/use tax compliance questions or audit related concerns, we are here to help!
Contact us at:
Or call today for a consultation: