Is a fitness facility that includes a swimming pool a NYC-taxable gymnasium, and how are its food/drink and locker charges taxed?
Plain-English summary
Important: The Department has stated that the conclusions in this 2014 Advisory Opinion are no longer accurate as of November 3, 2020. The summary below describes what the opinion concluded; do not rely on its gym/pool holding for current transactions -- confirm the current rule for fitness facilities that include participatory-sports facilities.
The Petitioner ran a NYC fitness facility with exercise equipment, a locker room with laundry service, a substantial salt-water swimming pool, and a variety of classes (Pilates, yoga, aerobic step, Latin dancing, cardio sculpt, aqua), plus physical therapy, acupuncture, nutrition counseling, and personal training. It also sold bottled water, "muscle" drinks, prepared smoothies, and snack bars, with a seating area, and rented lockers. Members didn't control the facility. It asked whether it was a taxable athletic club (State) or a gymnasium (NYC), and how its food/drink and locker charges were taxed.
The Office of Counsel concluded (in 2014):
- Not a social or athletic club. Members don't control activities, management, or selection and hold no proprietary interest; the cap is just space. So not a club under 1101(d)(13) -- no 1105(f)(2) dues tax.
- Not a NYC-taxable gymnasium -- because of the pool. Although it otherwise had the amenities of a gymnasium, a facility that also provides participatory-sports facilities (such as a swimming pool or racquetball courts) is not treated as a weight-control salon/health salon/gymnasium for NYC tax (TSB-A-08(10)S, 08(12)S; TB-ST-329). Because it had a pool, it was not subject to NYC tax under Admin. Code 11-2002(a). (This is the conclusion the Department later said is no longer accurate as of Nov. 3, 2020.)
- Classes/services not taxable. Aerobics/Pilates/exercise classes, personal training, and acupuncture aren't enumerated taxable services (1105(c)); individualized nutrition advice generally isn't taxable (though selling related TPP could be).
- But food, drink, and lockers ARE taxable:
- Bottled water is taxable (1105(a)), on or off premises.
- Prepared smoothies are taxable -- on-premises under 1105(d); and off-premises too, because made-to-order in disposable cups isn't sold "in the same form/condition/packaging" as a grocery store.
- "Muscle" drinks are taxable for on-premises consumption; off-premises may be exempt only if they genuinely qualify as dietary/health supplements (label + ingredients).
- Snack bars like granola/cereal bars are exempt food (not candy) when sold in grocery-style form; other bars may be taxable.
- Locker rentals are taxable storage under 1105(c)(4) (State and local).
What this means for you
Fitness facilities with real sports facilities (note the 2020 change)
Under this 2014 opinion, having a genuine participatory-sports facility (a pool, courts) took a club out of the NYC gym/health-salon tax. But the Department later stated this conclusion is no longer accurate as of November 3, 2020 -- so for current periods, don't assume a pool exempts your membership fees from NYC tax; verify the current treatment.
Food and drink at gyms is its own analysis -- and often taxable
Regardless of the gym question, your juice bar / snack counter has standard food-and-drink rules: bottled water and made-to-order smoothies are taxable, on-premises consumption is taxable, and only true grocery-style packaged snacks/supplements may be exempt. Lockers are always taxable storage.
When an opinion is superseded, treat it as history
This page preserves the original text for reference, but a dated "no longer accurate" banner means the holding has changed. Use it to understand the reasoning, not as current authority.
Common questions
Q: Does having a swimming pool keep my NYC fitness club out of the gym tax?
A: That's what this 2014 opinion held -- but the Department later said its conclusions are no longer accurate as of November 3, 2020. Check the current rule before relying on it.
Q: Are my smoothies and bottled water taxable?
A: Yes. Bottled water is taxable; made-to-order smoothies are taxable on or off premises; on-premises food and drink is taxable. Grocery-style packaged snack bars and qualifying supplements may be exempt.
Q: What about locker rentals?
A: Locker rentals are taxable storage under section 1105(c)(4), subject to State and local tax.
Citations and references
- Tax Law section 1105(f)(2) (dues of a social or athletic club)
- Tax Law section 1101(d)(13) (definition of social or athletic club)
- New York City Administrative Code section 11-2002 (NYC tax on health salons/gymnasiums)
- Tax Law section 1105(d) (food and drink)
- Tax Law section 1105(c)(4) (storage; locker rentals)
Source
- Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2014.htm
- Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a14_12s.pdf
Original ruling text
New York State Department of Taxation and Finance
TSB-A-14(12)S
Sales Tax
July 2, 2014
Office of Counsel
Advisory Opinion Unit
As of November 3, 2020, the conclusions in this Advisory Opinion are no longer accurate
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
PETITION NO. S120517A
The Department of Taxation and Finance received a Petition for Advisory Opinion
from REDACTION REDACTION REDACTION REDACTION. Petitioner asks whether its
facility constitutes a “weight control salon, health salon, or gymnasium” for the purposes of
§ 11-2002(a) of the Administrative Code of the City of New York (Administrative Code), or
if it is an athletic club for the purposes of § 1105(f)(2) of the Tax Law.
We conclude that Petitioner’s facility is not a “weight control salon, health salon, or
gymnasium” for the purposes of Administrative Code, and it is not an athletic club for the
purposes of § 1105(f)(2) of the Tax Law.
Facts
Petitioner’s facility includes a fitness area equipped with a variety of fitness
equipment, including treadmills, stepping machines, rowing machines, and weight-lifting
equipment. The facility has a locker room and it provides laundry service to its customers.
Petitioner’s facility also includes a substantial salt water swimming pool with an adjacent
deck area.
Petitioner’s members do not control any social or athletic activities, selection of
members or club management, or possess any proprietary interest in Petitioner. The number
of members is restricted solely due to the physical size of the facility. Memberships are
available to the general public on a first-come, first-served basis.
Petitioner charges both initiation and membership fees for the use of its facility.
Petitioner also charges fees to its patrons entitling them to use its facility for activities
intended to improve physical well-being and overall fitness. Petitioner offers a variety of
classes, such as Pilates, yoga, aerobic step, Latin dancing, cardio sculpt, aqua classes and
personal training services. The Pilates classes may include the use of Pilates equipment.
Petitioner provides a number of services, including physical therapy, acupuncture and
nutrition counseling. Petitioner also provides personal training services, or members may
engage a personal trainer directly for personal training services.
Petitioner sells snack bars, bottled water and “muscle” drinks. Petitioner also sells
prepared dairy free smoothie drinks during the summer months that are made from fruit and
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served in disposable cups. There is an area for customers to sit and consume these items.
Petitioner also charges members for monthly and annual locker rentals.1
Analysis
Petitioner asks the following questions:
Q.
- Is Petitioner an “athletic club” for State and local sales tax purposes?
A.
Petitioner is not an “athletic club” as defined by Tax Law § 1101(d)(13). Tax Law §
1105(f)(2) imposes sales tax on the dues paid to any “social or athletic club in this state if the
dues of an active annual member, exclusive of the initiation fee, are in excess of ten dollars
per year, and on the initiation fee alone, regardless of the amount of dues, if such initiation fee
is in excess of ten dollars.” Tax Law § 1101(d)(6) defines dues as any “membership fee
including any assessment, irrespective of the purpose for which made, and any charges for
social or sports privileges or facilities, except charges for sports privileges or facilities offered
to members’ guests which would otherwise be exempt if paid directly by such guests.” Sales
and Use Tax Regulation § 527.11(b)(5) defines a club or organization as “any entity which is
composed of persons associated for a common objective or common activities . . . .
Significant factors, any one of which may indicate that an entity is a club or organization are:
an organizational structure under which the membership controls social or athletic activities,
tournaments, dances, elections, committees, participation in the selection of members and
management of the club or organization, or possession by the members of a proprietary
interest in the organization.”
Petitioner’s customers do not control any of the facility’s social or athletic activities.
They do not participate in the management of the facility or in the selection of other
participants, and do not possess any proprietary interest in Petitioner or its facility. The
number of participants is restricted solely because of the physical size of the facility.
Therefore, Petitioner’s facility is not a social or athletic club as defined in Tax Law §
1101(d)(13). See 20 NYCRR §§ 527.11(b)(5) & (7). Accordingly, a charge by Petitioner to
use this facility would not be subject to tax as dues paid to a social or athletic club under §
1105(f)(2) of the Tax Law.
Q.
2. If not an athletic club, is Petitioner’s facility a “weight control salon, health salon,
or gymnasium” for the purposes of the New York City Sales Tax under § 11-2002(a) of the
Administrative Code of the City of New York?
1
The Petition also listed a number of services, including child care services, spa and related services provided by
persons who are not medical professionals, sales of gym bags, towel services, and sales by vending machines.
Petitioner asked that these items be removed from consideration as part of the facts of its Advisory Opinion.
Likewise, Petitioner operates other facilities within New York City that are not part of the Petition. The only
charges discussed in the Petition are those made by Petitioner for use of this one facility.
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A.
Petitioner is not a “weight control salon, health salon, gymnasium, turkish and sauna
bath or similar establishment” for the purposes of the New York City local sales tax.
Petitioner offers a variety of exercise equipment as well as a series of classes, including
Pilates, yoga, aerobic step, Latin dancing, cardio sculpt, aqua classes, and personal training
and rehabilitation services. Section 11-2002(a) of the Administrative Code imposes a local
sales tax on the receipts from “every sale of services by weight control salons, health salons,
gymnasiums, Turkish and sauna bath and similar establishments and every charge for the use
of such facilities.” Petitioner’s charges are subject to the New York City local sales tax if its
facility falls within the meaning of one of these terms. A gymnasium is commonly
understood to be an indoor facility where sporting and/or exercise activities take place.
Petitioner's facility offers access to a variety of exercise equipment and provides access to
Pilates, yoga, aerobic step, Latin dancing, and cardio sculpt classes, all with an emphasis on
these as exercise activities. However, weight control salons, gymnasiums, or similar
establishments are establishments “which provide activities directed at the improvement of
bodily appearance and not those which offer participatory sports and athletic facilities.” See
Matter of Prospect Park Health and Racquet Associates, Tax Appeals Tribunal (July 22,
1997); TB-ST-329, Health and Fitness Clubs.
In Petitioner’s case, it states that it offers the general amenities of a gymnasium, plus
the use of a swimming pool. If a facility that would otherwise be considered a gymnasium
also provides access to participant sporting activities and facilities to its members, such as a
swimming pool or racquetball courts, the facility is not considered to be a weight control
salon, health salon, gymnasium, or other establishment for New York City sales tax purposes.
See TSB-A-08(10)S; TSB-A-08(12)S; TB-ST-329, Health and Fitness Clubs. Because
Petitioner’s facility includes a swimming pool, it will not be considered a facility subject to
tax under New York City Administrative Code § 11-2002(a).
Q.
3. Is Petitioner required to collect New York City local sales tax for aerobic, Pilates or
other exercise classes; acupuncture and Nutrition Counseling or personal training services?
A.
As discussed above, Petitioner’s facility is not a weight control salon, gymnasium, or
similar facility, pursuant to Tax Law § 1212-A(a)(2) and the New York City Administrative
Code § 11-2002(a). Classes in aerobics, Pilates or other exercise classes, personal training or
acupuncture services are not services that are subject to sales tax. See Tax Law § 1105(c).
Generally, providing individualized nutritional advice or recommendations is not subject to
the sales tax. However, Petitioner provided insufficient facts to allow us to make a
determination about whether there is any aspect of its nutrition counseling service (such as the
sale of tangible personal property, e.g. calorie counting books or food scales) that may be
taxable.
Q.
4. Must Petitioner collect State and local sales tax on its charges for bottled water,
dairy free smoothies, muscle drinks, snack bars or locker charges?
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A.
Water sold in bottles or by any means other than through a pipe or main is subject to
tax. See Tax Law §1105(a). This is so whether or not the bottled water is sold for onpremises consumption.
Petitioner’s sales of prepared smoothies are subject to tax. Section 1105(d)(i)(1) of
the Tax Law provides that sales of food or drink are taxable in all instances where the sale is
for consumption on the premises where sold. Accordingly, all sales for consumption on
Petitioner's premises are subject to sales tax. Petitioner’s sales of smoothies for off-premises
consumption are also subject to tax. Section 1105(d)(i)(3) provides that sales of food or drink
are taxable in those instances where the sale is for consumption off the premises of the vendor
unless: (1) the food or drink is sold in an unheated state, and (2) the food or drink is of a type
commonly sold for consumption off the premises and in the same form and condition,
quantities and packaging, in establishments which are food stores (such as a grocery store).
Petitioner’s smoothies, which are prepared at the time of purchase and served in disposable
cups, are not sold in the same form and condition, quantity or packaging as in grocery stores
or other establishments which are food stores. See Tax Law § 1132(c); 20 NYCRR § 533.2;
TSB-A-02(25). Thus, Petitioner’s sales of smoothies for off-premises consumption also are
subject to tax.
Petitioner’s sales of muscle drinks for on-premises consumption are subject to tax
pursuant to Tax Law § 1105(d)(i)(l). However, muscle drinks sold for off-premises
consumption may not be subject to tax. Section 1115(a)(1) of the Tax Law provides an
exemption from the sales and use tax on the sale of food, food products, beverages, dietary
foods and health supplements, sold for human consumption. Health supplements are products
that are intended to substitute for or supplement natural food in an ordinary diet. See 20
NYCRR § 528.2(c); TB-ST-160, Dietary Foods and Health Supplements. However, it is not
enough that the manufacturer labels an item to be a dietary supplement; its ingredients must
qualify as such. In addition, the labels of dietary foods should bear a statement of the dietary
properties upon which the product's use is based. See TSB-A-10(49)S; TB-ST-160, Dietary
Foods and Health Supplements. Petitioner did not provide sufficient facts to allow us to make
a determination about whether the sale of this product is taxable. In any event, muscle drinks
sold for consumption in Petitioner’s eating area are subject to tax.
Petitioner’s sale of snack bars would not be subject to tax if the bars are similar to
granola or cereal bars. See TB-ST-283, Food and Food Products Sold by Food Stores and
Similar Establishments. Section 1115(a)(1) of the Tax Law provides an exemption from the
sales and use tax on the sale of food, food products, beverages, dietary foods and health
supplements, sold for human consumption. This exemption does not include candy or
confections. Snack bars, such as granola or cereal bars, are not considered to be candy and
confectionery, and are therefore exempt when sold in the same form, condition, quantity and
packaging as food stores (such as a grocery store). See TB-ST-103, Candy and
Confectionery. Snack bars which are not similar to granola or cereal bars may be subject to
tax.
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Fees paid by members to rent lockers where they can store personal items are subject
to State and local sales taxes pursuant to § 1105(c)(4) of the Tax Law. See TSB-A-08(11)S.
DATED: July 2, 2014
NOTE:
/S/
DEBORAH R. LIEBMAN
Deputy Counsel
An Advisory Opinion is issued at the request of a person or entity. It is limited to
the facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in
this document does not cover every situation and is not intended to replace the law
or change its meaning.