Are a fitness-training gym's membership and per-visit fees subject to New York State sales tax or New York City local tax?

Plain-English summary

A functional-fitness gym (a licensed affiliate of a national training brand) operates in New York City with ~25 coaches and specialized equipment (Olympic bars, rings, pull-up bars). Members complete an intro course, then pay a monthly/semi-annual membership or a per-visit fee to train. Members have no control over the business and no proprietary interest in it; the gym sells no spa services or merchandise. It asked whether the fees are subject to State or NYC sales tax.

The Office of Counsel concluded no State tax, but yes NYC tax:

• Not section 1105(f)(1) (admission charges). The fee isn't to enter the place; it's to use the equipment and join training sessions -- so it isn't a taxable admission charge (TSB-M-87(15)S).
• Not section 1105(f)(2) (social/athletic club dues). A "club" turns on whether members control the organization and hold a proprietary interest -- here they don't, so it isn't a club. And exercise/calisthenics for fitness/weight reduction is not a participatory "athletic activity" (20 NYCRR 527.11(b)(7)). So no club-dues tax.
• Yes NYC local tax (Admin Code section 11-2002(a)). NYC taxes services of weight control salons, health salons, or gymnasiums. A facility whose material purpose is improving fitness, appearance, and well-being through exercise is a health salon/gymnasium (Prospect Park). This gym is exercise-and-equipment only -- group fitness, not competitive/participatory sport (unlike a club with pools/tennis/squash) -- so it's a gymnasium/health salon subject to NYC tax, even if some members enter competitions.

What this means for you

Gyms, studios, fitness-training businesses

Membership and class fees for using your equipment and coached workouts are generally not New York State sales tax -- they're not admission charges, and you're usually not a "club" unless members control the organization. But in New York City, a fitness/exercise facility is a taxable health salon or gymnasium -- collect NYC local tax on those fees.

The State "athletic club" tax is narrow

It needs a real club (member control/proprietary interest) and a participatory sport. Plain exercise for fitness/weight loss is neither, so it escapes 1105(f)(2) -- but lands in the NYC health-salon tax.

Location drives the result

The same gym is NYC-taxable but would not owe State/county sales tax on these fees outside the NYC local-tax regime. Know which local tax applies where you operate.

Common questions

Q: Do I charge State sales tax on memberships?
A: Generally no -- they're not admission charges and (absent member control/ownership) you're not a taxable club.

Q: Then why do I owe NYC tax?
A: NYC separately taxes weight control salons, health salons, and gymnasiums. A fitness/exercise facility falls in that category.

Q: Some members compete -- does that make us an athletic club?
A: No. The material purpose is fitness and well-being through exercise, not participatory sport, so you're a gymnasium/health salon, not a State-taxable athletic club.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(f)(1) (admission charges to places of amusement)
• Tax Law section 1105(f)(2) (dues and initiation fees of social or athletic clubs)
• 20 NYCRR 527.11 (social and athletic clubs; athletic activity)
• New York City Administrative Code section 11-2002(a) (NYC tax on weight control/health salons and gymnasiums)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_35s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(35)S
Sales Tax
March 23, 2015

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE

ADVISORY OPINION

PETITION NO. S140407A

The Department of Taxation and Finance received a Petition for Advisory Opinion
from
REDACTED,
whose
principal
place
of
business
is
located
at
REDACTEDREDACTEDREDACTEDREDACTEDREDACTED (Petitioner). Petitioner
asks whether membership fees for unlimited access to its facilities and charges for one-time
participation in its facilities within New York City are subject to New York State and/or New
York City local sales tax.
We conclude that Petitioner is not subject to New York State and local sales tax under
either Tax Law § 1105(f)(1) or § 1105(f)(2), but Petitioner is subject to local sales tax
imposed in New York City under New York City Administrative Code § 11-2002(a) because
Petitioner’s facilities qualify as weight control salons, health salons, or gymnasiums.
Facts
Petitioner is a licensed affiliate of a national company that provides accredited fitness
training to individuals across the country. As a part of its affiliation, Petitioner is required to
pay annual fees to its national company. Petitioner also provides its members with certified
trainers, or coaches, who coach its members in a variety of fitness exercises.
Petitioner currently employs approximately 25 coaches. Its facilities consist of
specialized exercise equipment, which includes, but is not limited to, Olympic lifting bars,
gymnastic still rings or paralletes, pull-up bars, and other specialized exercise equipment
designed for Petitioner’s specific training and exercise programs. Petitioner’s coaches
coordinate approximately 450 training sessions a week at Petitioner’s facilities. The number
of members who partake in such training sessions is limited based upon the space available in
each facility. Examples of Petitioner’s training exercises include having members carry heavy
objects over certain distances, run obstacle sprints, do pull-ups and partake in other like
activities.
In order to train or exercise at Petitioner’s facilities, individuals must complete a
training course pertaining to Petitioner’s specialized exercise techniques. This training
consists of six small-group sessions with a coach that take place at Petitioner’s facilities. Once
the initial training is completed, individuals may pay a monthly or semi-annual fee to become
a full-time member of Petitioner’s facilities, or an individual may choose to pay a fee each
time he or she participates in Petitioner’s exercise activities. Members of Petitioner’s
facilities, however, do not control any activities of the Petitioner, do not partake in the control

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Sales Tax
March 23, 2015

or management of the Petitioner, and do not hold any proprietary interest in the Petitioner.
Apart from granting members the ability to partake in training and exercise sessions,
individual membership fees do not pay for any additional services such as spa treatments.
Petitioner also does not sell any tangible personal property, such as workout clothing, at its
facilities.
Once an individual is a member of Petitioner’s facilities, the individual may partake in
a variety of specialized exercises, which range in levels of skill and proficiency in order to
tailor to an individual’s specific needs. After an individual completes a training session or
challenge or at one of Petitioner’s facilities, his or her score and/or time is recorded and
compared against other individuals who completed the same activity. Some members of
Petitioner’s facilities also partake in competition-level classes, where participants compete
against teams from around the world in different regional competitions.
Analysis
Tax Law § 1105 imposes New York State and local sales tax on numerous enumerated
sales, services and other items. See Tax Law § 1105. Specifically, Tax Law § 1105(f)(1)
imposes a tax on the admission charges into or for the use of places of amusement and
entertainment that are in excess of ten cents. However, admission charges to race tracks,
boxing, sparring, wrestling matches, dramatic, choreographic or musical arts performances
and admission to, or use of, facilities for sporting activities in which the patron is a participant
are exempt from the sales tax.
Petitioner is not subject to sales tax under § 1105(f)(1) because Petitioner does not
charge its members an admission fee to enter any of its facilities. Rather, Petitioner charges a
membership fee in order for its members to use its exercise equipment and to engage in its
exercise activities. Because the fee is not specifically for entrance to one of Petitioner’s
facilities, it is not covered by Tax Law § 1105(f)(i). See TSB-M-87(15)S; See also, TSB-A2003(9)S. As a result, Petitioner is not subject to sales tax under § 1105(f)(1).
Secondly, Tax Law § 1105(f)(2) imposes tax on the dues and initiation fees paid to
social or athletic clubs when such dues are in excess of ten dollars. The tax is imposed
irrespective of the purpose for which the dues and fees are made and may be imposed on
charges for social or sports privileges or facilities. 20 NYCRR § 527.11(b)(2). An athletic
club is defined as any club or organization that has a material purpose to practice, participate
or promote sports or athletics. 20 NYCRR § 527.11(b)(7)(i). Further, an athletic activity does
not consist of exercise or calisthenics activities used solely for weight reduction purposes. 20
NYCRR § 527.11(b)(7)(ii). A club or organization is defined as any entity which is composed
of persons associated for a common objective or common activities. 20 NYCRR §
527.11(b)(5). Significant factors used to determine whether an entity is a club or an
organization for sales tax purposes include whether the organization’s members control its
organizational structure and whether members have a proprietary interest in the organization.
Id.
In this case, Petitioner’s members have no say in the Petitioner’s organizational
structure, and they have no proprietary interest in Petitioner. Thus, Petitioner’s facilities are

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not social and athletic clubs and the fees charged by Petitioner are not subject to sales tax
under Tax Law § 1105(f)(2).
Petitioner, however, is subject to New York City local sales tax under Administrative
Code § 11-2002(a), which imposes a sales tax upon the receipt of every sale of services
offered by weight control salons, health salons or gymnasiums. In defining what constitutes
weight control salons, health salons, or gymnasiums, the Tax Appeals Tribunal has held that a
facility with the material purpose of providing exercise activity, calisthenics, and exercise
equipment for health and weight reduction purposes is subject to sales tax as a health salon or
gymnasium. See Matter of Prospect Park Health and Racquet Associates, TSB-D-97(30)S.
Thus, a facility will be defined as a weight control salon or a gymnasium if its material
purpose is directed at improving one’s physical appearance or well-being. Id. Conversely, a
facility will not be subject to local New York City sales tax if its material purpose is to
provide its members with the opportunity to engage in participatory sporting activities. Id.
The services offered at Petitioner’s facilities consist of a wide variety of exercise
activities and exercise equipment. The variety of exercise equipment at Petitioner’s facilities
include, but is not limited to, gymnastic still rings, pull-up bars, Olympic lifting bars, and
other weight lifting equipment. Further, members of Petitioner’s facilities take part in a
variety of exercise activities, such as running obstacle sprints or lifting and carrying weights
over certain distances. The use of such equipment and participation in such activities
emphasizes the improvement of one’s fitness, appearance, and overall well-being, but does
not consist of participatory sporting or athletic activities. See 20 NYCRR § 527.11(b)(7)(ii)
(stating that an athletic activity does not consist of solely exercising or calisthenics solely for
weight reduction purposes).
On Petitioner’s website, Petitioner states that it offers its members the ability to
participate in a “fitness regime” that aims at forging “a broad, general, and inclusive fitness.”
Further, Petitioner’s offerings have been categorized as being “communal,” in the respect that
its members motivate and help each other in different types of workout techniques. In other
words, its participants do not compete or participate in a sporting activity, but rather, they
help each other improve their physical fitness. Petitioner’s facilities foster the idea of group
exercise and fitness – not competitive sport.
Unlike the facilities in Prospect Park, which included an Olympic-sized pool and
places to play tennis, racquet ball, and squash, Petitioner’s facilities consist solely of exercise
equipment. See Matter of Prospect Park Health and Racquet Associates, supra. Petitioner’s
members use its facilities in order to exercise and improve upon their health and bodily
appearance. They do not use Petitioner’s facilities in order to participate and compete in
sporting activities. See TSB-A-14(18)S. Even though certain participants at Petitioner’s
facilities may engage in competitive, athletic based competitions, the material purpose of
Petitioner’s facilities is to have its members engage in a fitness based regime. See Matter of
Prospect Park Health and Racquet Associates, supra.
Therefore, we conclude that
Petitioner’s facilities are weight control salons, health salons, or gymnasiums for purposes of
New York City Administrative Code § 11- 2002(a).

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Sales Tax
March 23, 2015

In conclusion, the fees charged by Petitioner for use of its facilities in New York City
are subject to New York City local sales tax under Administrative Code § 11-2002(a), but are
not subject to New York State or local sales tax under either Tax Law § 1105(f)(1) or §
1105(f)(2).

DATED: March 23, 2015

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.