House Passes Bill to Exempt Fitness Clubs From Sales Tax

By Linda Ong |

Published 04/10 2014 07:20PM

Updated 04/10 2014 07:26PM

SPRINGFIELD, Mo. -- Fitness is a lifestyle for owner of Balance Fitness Studio Blanca Freelander.

"I wanted to create a place that would be not just fitness, but also people's second home," said Freelander.
About 250 clients come to work out at the studio. Since February, clients have had to pay 7.6-percent more for their memberships.

Missouri law charges sales tax on fees paid to places of "amusement, entertainment, recreation, games and athletic events." The State Supreme Court has interpreted that to apply to exercise and fitness clubs.

As a result, the Missouri Department of Revenue has been auditing small businesses throughout the state.

According to a statement by Michelle Gleba, Director of Communications at the Missouri Department of Revenue, "the department uses a number of criteria to determine whether a business is an audit candidate," like type, size, and number of employees, and "may only collect three years of taxes from the date of assessment."

Missouri's House of Representatives has approved two bills, HB 1179 and 1765, to exempt gym memberships from entertainment taxes. According to a statement, State Rep. Eric Burlison who is sponsoring the bills, said the tax is an "egregious overreach by the revenue department" and works against those struggling with obesity.

Freelander said she has not been audited by the Department of Revenue for the back tax, but has had to incur the sales tax on her customers since February.

Nicole Quade has worked out at Balance Fitness Studio for more than a year. She said she is willing to pay the tax, but that it doesn't help those who are trying to stay healthy.

"Everywhere you look, you hear people say that they want everybody to be in better shape, and that America is becoming obese," said Quade. "I think if you really want them to be in shape, you need to go out of your way to make sure that they can afford it as well."

Freelander said the tax is unfair to those who choose to maintain their health through fitness centers.

"I would not want to tax them.  I completely disagree with it," she said. "It's just making it more of fitness being a privilege issue that if you have the money you can do it, otherwise you can't. It's not the right message to send out there.

The two House bills now move on to the Senate for consideration.

The Senate has approved similar legislation sponsored by Senator Bob Dixon.

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