Were personal-training dues taxable fitness-club admissions when members could use the facility only during supervised lessons, and how could prior tax be refunded?

Plain-English summary

A registered health studio sold six-month, one-year, and two-year "memberships" for private or semi-private personal training. Each appointment consisted of 30 minutes of trainer-directed cardiovascular exercise and 30 minutes of supervised strength training. Members could use the equipment only as prescribed during scheduled sessions and had no other facility access or benefits.

Florida held that the charges were professional instruction fees, not taxable admissions. The admissions statute generally taxes fitness-club dues, but Rule 12A-1.005 excludes instruction charges when the customer may use the facility only during the lesson. The studio's arrangement matched that exception despite calling the payments membership dues.

The studio had previously collected and remitted tax and wanted to use any refund for club improvements or extra membership time. Florida required the customers to be made whole first. Before the studio could receive a refund from the state, it had to either:

• Repay the tax to each customer in money; or
• Obtain an individual agreement giving that customer specific, absolute legal rights or benefits in exchange for the refund amount.

Each agreement had to state the amount and how the customer chose to use it, such as a cash refund, identified improvements, or additional membership time. The studio also had to keep records supporting the customer refund or credit.

What this means for you

Access—not the word "dues"—controlled the result

Members could not work out independently. Their only facility use occurred during scheduled professional instruction, which kept the fee outside taxable admissions.

A nominal instruction label will not protect ordinary club access

The rule warns against relabeling a true membership fee. If customers can enter and use fitness facilities outside lessons, the result can change.

Collected tax belongs to the state until customers are protected

A dealer cannot keep or recover tax collected from customers without first refunding them or giving them agreed consideration equal to their rights.

Noncash refunds need individual, enforceable agreements

A general decision to spend the money on the club is insufficient. Each customer must agree to specific benefits and the dealer must document the amount and election.

Common questions

Q: Were the personal-training dues taxable?
A: No, because they purchased supervised instruction only and no independent club use.

Q: Could members use the equipment between appointments?
A: No. Their access was limited to the scheduled training sessions.

Q: Could the studio simply spend the refund on improvements?
A: No. It needed each customer's agreement exchanging the refund amount for specific legal rights or benefits.

Q: Could extra membership time replace cash?
A: Yes if the customer agreed and the amount and added term were documented as an absolute benefit.

Citations and references

• Fla. Stat. §§ 212.02(1) and 212.04(1) (admissions and fitness-club dues)
• Fla. Stat. §§ 212.08(7)(v)1., 213.756(1), and 213.22
• Fla. Admin. Code r. 12A-1.005(4)(d)2. (professional instruction exception)
• Fla. Admin. Code r. 12A-1.014(3), (6) (customer refunds and records)
• Orlando Orange Grove Co. v. Hale, 161 So. 284 (Fla. 1935)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08A-026

Original ruling text

SUMMARY

QUESTIONS: 1. Whether payments to Taxpayer for professional instruction are admissions
subject to sales tax?

2. Whether Taxpayer may use refunded tax for club improvements or an extended membership
   term in lieu of refunding tax directly to Taxpayer’s customer?
   ANSWERS: 1. Charges for professional instructions are not admissions subject to the tax when
   the members use of the club’s facilities are solely during the period of instruction.
3. Taxpayer is not entitled to receive a refund until it first refunds the tax collected to its
   customers or obtains agreements with its customers for such amounts to be kept by the Taxpayer
   in exchange for some specific rights or benefits.

September 25, 2008

XXX
XXX
XXX
XXX
Subject: Technical Assistance Advisement 08A-026
Sales and Use Tax
Instruction fees
FEI#: XXX
XXX (Taxpayer)
Section 212.04(1), F.S.; Section 212.02(1), F.S.
Section 212.08(7)(v)1., F.S.; Section 213.756, F.S.
Rule 12A-1.005(4)(d)2., F.A.C.; Rule 12A-1.014(3) and (6), F.A.C.
Dear XXX:
This letter is a response to your petition dated May 8, 2008, for the Department’s issuance of a
Technical Assistance Advisement (“TAA”) concerning the above referenced party and matter.
Your petition has been carefully examined, and the Department finds it to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of s. 213.22, F.S.
ISSUE #1
Whether “Dues” charged for professional instruction by Taxpayer are subject to sales tax.
FACTS

Page 2

Taxpayer operates a studio offering private and semi-private instruction classes. You indicated
during our telephone conference that Taxpayer is registered with the State of Florida as a health
studio. A copy of the membership agreement, bylaws, and rules and regulations were provided.
The membership agreement provides that customers are required to pay monthly membership
dues. The current membership dues rates for group instruction are $118 per month for 6 months,
$108 per month for one year, $98 per month for two years. Other income is from nutritional
classes conducted by a registered dietician.
Taxpayer’s facilities include free weights and Nautilus equipment. Taxpayer only offers
personal training memberships. Taxpayer’s membership agreement provides in part the
following:
General Services. [Taxpayer] provides Professional Services to members.
Members are entitled to a one-hour scheduled appointment. The appointment
shall be divided into one 30-minute segment of cardiovascular training as directed
by the certified personal trainer and one 30-minute segment of strength training
under the direction and supervision of the certified personal trainer. Member’s
access to the facility is limited to the scheduled appointments. Strength training is
specifically limited to scheduled appointments with a certified personal trainer.
Taxpayer’s rules and regulations provide additional requirements. Members are required to
perform only the prescribed programs set forth by the instructor during sessions, which last one
hour. All personal training operates on scheduled appointments. Taxpayer typically trains no
more than four members per session. The first thirty minutes include cardiovascular exercise on
Taxpayer’s machines and the final thirty minutes include strength and resistance training, always
with the personal trainer. All sessions start promptly every thirty minutes on the hour and half
hour. Members are permitted to use the equipment and exercise areas exactly as prescribed and
only during the personal training sessions. No use of Taxpayer’s facilities is otherwise permitted
except during the personal training sessions.
APPLICABLE STATUTES AND RULES
Section 212.04(1)(a) and (b), F.S., provide in part:
(1)(a) It is hereby declared to be the legislative intent that every person is
exercising a taxable privilege who sells or receives anything of value by way of
admissions.
(b) For the exercise of such privilege, a tax is levied at the rate of 6 percent of sales
price, or the actual value received from such admissions, which 6 percent shall be added
to and collected with all such admissions from the purchaser thereof, and such tax shall
be paid for the exercise of the privilege as defined in the preceding paragraph….
Section 212.02(1), F.S., provides in part:

Page 3
(1) The term "admissions" means and includes the net sum of money after
deduction of any federal taxes for admitting a person or vehicle or persons to any
place of amusement, sport, or recreation or for the privilege of entering or staying
in any place of amusement, sport, or recreation, including, but not limited to, …
all dues and fees paid to … membership clubs providing recreational or physical
fitness facilities, including, but not limited to, … exercise, and fitness facilities
….

Rule 12A-1.005(4)(d)2., F.A.C., provides:
(d) Fees paid to private clubs or membership clubs that do not entitle the payor to
the use of the club's recreational or physical fitness facilities are not subject to tax.
Examples of such fees are: …

2. Charges for professional instructions in any sport conducted at the club, so long
   as such charges are exclusively for the instructions and include the use of the
   facility only during the period of time the instructions are taking place. It is not
   the intention of this rule to allow a club to exempt what is in effect a dues or
   membership fee by labeling such charges as instruction fees.
   ANALYSIS
   Section 212.04(1)(a) and (b), F.S., requires that the sales tax must be collected on all receipts
   from sales of admissions. Section 212.02(1), F.S., defines the term “admissions.” It includes
   dues paid to membership clubs that provide physical fitness facilities. Rule 12A-1.005(4)(d)2.,
   F.A.C., provides that the dues paid for professional instruction conducted at a club are not
   subject to the tax when they are exclusively for the instructions and include the use of the facility
   only during the period of time the instructions are taking place. Otherwise, the charges are for a
   taxable admission.
   In this instance, the dues in question only entitle the member to personal training sessions.
   Members are not entitled to any other use of the facilities apart from the sessions. Also, the
   members receive no other benefits. As such, Rule 12A-1.005(4)(d), F.A.C., applies to the dues
   paid by the members to Taxpayer.
   RESPONSE
   The dues paid by members to Taxpayer are not admissions and are not subject to sales tax.
   ISSUE #2
   Whether Taxpayer may use refunded tax for improvements or for an extended membership term.
   FACTS

Page 4

You indicated that Taxpayer will apply for a refund of tax previously collected and remitted on
dues. Members will have the option to receive the refund amount in money or as a credit to be
applied for membership time or for improvements to the club.
APPLICABLE STATUTES AND RULES
Section 213.756(1), F.S., provides:
(1) Funds collected from a purchaser under the representation that they are taxes
provided for under the state revenue laws are state funds from the moment of
collection and are not subject to refund absent proof that such funds have been
refunded previously to the purchaser.
Rule 12A-1.014(3), and (6), F.A.C., provides:
(3) Whenever a dealer credits a customer with tax on returned merchandise or for
tax erroneously collected, the dealer must refund such tax to the customer before
the dealer's claim to the State for credit or refund will be approved.

(6) Any dealer who takes a credit, or applies for a refund, for tax paid to the state
is required to keep and preserve all information and documentation necessary to
substantiate the dealer's entitlement to a refund or credit of tax paid until tax
imposed under Chapter 212, F.S., may no longer be determined and assessed
under s. 95.091, F.S.
ANALYSIS
Section 213.756(1), F.S., and Rule 12A-1.014(3), F.A.C., prohibit the Department from paying a
refund unless Taxpayer provides proof that the tax collected has been refunded to its customers.
Also, Rule 12A-1.014(6), F.A.C., provides that a record of such refund or credit of tax must be
made. The refund must be paid in money or other consideration agreed upon by the member.
For example, a credit creating contract or other legal rights absolute (not conditional) in favor of
the member against Taxpayer may qualify. See Orlando Orange Grove v. Hale, 161 So. 284
(Fla. 1935); TAA 02A-010.
Before it can receive a refund, the Taxpayer must refund to its customers the amount of tax
collected. This can be paid in money or the customer can contract their rights to the refund
provided for by section 213.756, F.S., to Taxpayer. Such an agreement must be received from
each member. The agreement should indicate the amount and the manner in which the member
chooses the funds to be used, whether it is for a cash refund, improvements, or additional
membership terms.
RESPONSE

Page 5
Taxpayer is not entitled to receive a refund until it first refunds the tax collected to its customers
or obtains agreements with its customers for such amounts to be kept by the Taxpayer in
exchange for some specific rights or benefits.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which
is binding on the Department only under the facts and circumstances described in the request for
this advice, as specified in Section 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or administrative
rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based,
may subject similar future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of Section 213.22, F.S. Confidential information must be deleted before public disclosure. In an
effort to protect confidentiality, we request you provide the undersigned with an edited copy of
your request for Technical Assistance Advisement, the backup material and this response,
deleting names, addresses and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department within 10 days of the date of this
letter.
Sincerely,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734
CW/
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