Iowa—Sales and Use Tax: Yoga Franchisee’s Not Subject to Sales and Use Tax
IA – For Iowa sales and use tax purposes, a yoga franchisee’s (taxpayer’s) classes were not subject to sales and use tax as the instruction charges qualified for the statutory exemption. In this matter, the taxpayer offered yoga classes to customers and petitioned for a declaratory order clarifying whether its services of yoga classes to customers were subject to sales tax. Upon review, it was noted that the taxpayer provided facilities for both taxable recreation and nontaxable instruction in a recreational activity.
However, the charges for instructions were not taxable because:
- the instruction charges were separately contracted for;
- instruction occurred under supervision and in a class setting; and
- the instruction imparted learners with requisite knowledge and instructors were specially trained.
Accordingly, the taxpayer’s services satisfied the criteria for exemption given under the administrative rules.
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