New York City Sales Tax Im-posed on Yoga Studies
- Sales Tax News
- Apr 2, 2012 | Will Frei
New York City yoga studios preparing their taxes this year feel stretched beyond their normal limits. Last April the New York Department of Taxation published a bulletin that categorized yoga studios as "health and fitness clubs," making yoga studios within New York City limits subject to the city's 4.5% sales tax.
The bulletin puts many studios in a difficult position, since they have operated for years without paying the city sales tax. According to Alison West, the executive director of the lobbying group, Yoga for New York, having to pay additional taxes may prove fatal to some yoga studios. "Yoga studios have been severely taxed—no pun intended—by the economic crisis," West stated. "If students drop out because of the cost increases [due to the sales tax expense], then studios will suffer."
However, Edward Walsh, a spokesman from the Department of Taxation sees this as a matter of finding balance. Walsh notes that similar businesses, such as Pilates studios, already pay the city sales tax. According to Walsh, yoga studios should feel fortunate to have not paid the sales tax for so long: "It is our position that sales tax always applied to businesses offering yoga under this business model."
Although yoga studios have not paid the city sales tax to date, some studios have been audited and billed for three years worth of back taxes. Walsh promises that the Department will make reasonable assessments when auditing studios, recognizing "...that there is some confusion among operators of yoga businesses." It will be a while before yoga studio owners can breathe easily in this new city position on sales tax and yoga studios.