State sales tax hurting gyms' financial fitness

JEFFERSON CITY, Mo. -- Some Missouri lawmakers want exercise to be taxing -- not taxed.

The state charges sales tax on admission and fees for places of entertainment and recreation, which has been determined to include fitness centers and other athletic and exercise facilities. Some business owners say they are uncertain whether they owe tax and warn that a large bill for back taxes could ruin them.

State lawmakers are advancing legislation aimed at reining in the sales tax, which they think has been applied in ways never intended.

Rep. Eric Burlison proposes levying the tax for someone to watch an activity but not when people pay to participate. For example, he said there would not be sales tax charged for a dance lesson but the tax would apply on a ticket to watch dancers perform.

"We want to encourage people to be healthy and have active lifestyles. And I don't think that we should be taxing that, and I don't think the original intent of the tax was to tax that," he said.

Legislation sponsored by Burlison, R-Springfield, has been endorsed by a House committee, and a different measure was approved last month by a Senate committee.

The Senate version would state the sales tax would apply to places of dance, theater, performing arts, commercial sports, spectator sports, gambling, amusement parks, circuses, festivals, air shows, museums, movie theaters and other commercial attractions.

Missouri law establishes a sales tax on "admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games and athletic events." Several court cases have focused on the law. The high court ruled in 2001 that athletic, exercise and fitness clubs count as places of recreation and that fees paid to them are subject to sales tax. In 2008, the court concluded sales tax must be paid for fees a fitness facility said it received for personal training services.

The Revenue Department said the agency has done some outreach, such as sending letters to yoga studios in 2009. It acknowledged there has been confusion.

Several business owners say the tax needs to be clarified.

A Kansas City-area gymnastic facility said it faced a sizable bill following an audit. Another gym owner in the Kansas City area said her accountant could not get a clear answer about the sales tax and that many gym owners have no clue they should be paying it.

Noah Alldredge, owner of Springfield-based Big Time Results, said he was told it owed back taxes. Alldredge said the company does personal training and corporate wellness, and questioned why working out would be considered entertainment.

"I don't know if you guys would want to pump out 10 push-ups for me, 10 squats and tell me how amused you are from that," Alldredge told lawmakers.

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Fitness sales tax is HB1179 and SB584

Online:

Legislature: http://www.moga.mo.gov