A number of health facilities and trainers have been asking questions about a sales tax starting to show up at more places.
There’s a provision in state law specifically covering this. A Knoxville state lawmaker wants it changed, saying it’s unfair.
The physical fitness facility sales tax has been on the books since 1984 according to Tennessee’s Department of Revenue. It can be applied to dues, fees or memberships at health clubs. An important notice from the state went out to fitness centers in June.
For a little more than six years, Michelle Kenik and her husband have owned Health First Fitness in Bearden.
“Every day you’re helping people live a healthier lifestyle,” said Kenik.
Her gym got a notice from the state this summer explaining they’ll have to start charging a sales tax.
“Quite honestly I was appalled because adding a tax on basically exercise, that just seems like a really backward approach,” added Kenik.
Tennessee State Rep. Martin Daniel says there’s been no attempt by the state to collect taxes from gyms where instruction is involved ince the 1980s.
“In June of this year, the Department of Revenue apparently sent out a letter to all health club facilities telling them that they were going to start assessing the tax,” said Daniel.
Fitness centers that are subject to the tax include ballet barre, yoga, boot camps, indoor cycling, kickboxing, cross training, HIIT, and aerobic classes.
“This is a step in the wrong direction toward a healthier Tennessee,” said Kenik.
Daniel agrees with that sentiment and hopes to tackle this issue in the 2019 legislative session.
“I have drafted a bill that would completely eliminate the tax on health facilities, whether there’s instruction involved or otherwise. So all health facilities will be treated the same. The tax would be entirely removed,” he said.
Kenik hopes something is done soon.
“It affects the client in a way that it might be the difference between them being able to afford it or not,” she said.
There are some exemptions when it comes to the current sales tax law: facilities larger than 15,000 square feet, non-profit facilities and places that teach martial arts, gymnastics, fencing, skiing and dancing.
Daniel says the tax generates about $16 million per year for the state and so doing without that money, he says, wouldn’t be a big shortfall for the state’s budget.
The state Department of Revenue explains facilities should charge the seven percent state sales tax rate plus applicable local option sales tax rate which ranges from 2.25 to 2.75-percent.