Is yoga fitness? Should it be taxed as so? Will practitioners have to pay for it? These are questions on New York studio owners’ minds lately. For years yoga has slid by without paying NY sales tax. That changed last April when the New York Department of Taxation and Finance ruled to include yoga studios in the category of businesses based around fitness rather than movement spaces (dance studios aren’t taxed). Since then, yoga studios have been getting audited across NY and the tax man is coming to collect, which could slam some and bankrupt others.
The story, which we first reported at the end of March, has received media attention and climbed its way to the Wall Street Journal and Businessweek thanks in part to the efforts of the advocacy organization and (circumstantial) lobbying group, Yoga for New York. Government officials believe yoga studios should have to pay sales tax just like any other fitness or health club.
“We do see this as a fairness issue,” said Edward Walsh, a spokesman for the Department of Taxation and Finance, noting that Pilates studios have to pay sales tax. “Businesses that provide similar services should be subject to the same taxes in the city.”
The department believes the tax is legal under a 1971 state law which allows cities of more than a million people to collect sales tax on weight-control salons, health salons, gymnasiums, and Turkish and sauna baths.
The department’s view is that yoga studios should count themselves lucky for getting away without paying sales tax for as long as they have.
“It is our position that sales tax always applied to businesses offering yoga under this business model,” Mr. Walsh said.
But many yoga studios disagree, or are at least fighting for a little break on having to pay back taxes, which could be around the $100,000 mark for New York Yoga, for example. They claim they didn’t know about the tax until auditors came demanding the moolah and argue yoga isn’t about weight loss and massage.
Meetings have been held by Yoga for New York (the org that formed in 2009 to fight government regulation on yoga licensing and won) where studio owners have united to brainstorm ideas on how to stop the tax, to help those who were audited and to prepare the potentially inevitable for others.
Some studios have started paying sales tax as a preemptive measure, which unfortunately for the students, would mean raising class prices.
“To do this without talking to us, and then to audit studios, we feel is deeply inappropriate,” says Alison West, executive director of Yoga for New York, the lobby group that’s spearheading a charge to reverse the legislation. “The tax itself would be passed on, unfortunately, to students, making their classes more expensive—but the back taxes, which could add up to hundreds of thousands of dollars, could actually bankrupt a studio because it’s money that would have to come out of its very unlined pockets,” she adds.
An email plea from Kula Yoga’s Schuyler Grant sent out to the studio’s mailing list called the sales tax “extortion” and provoked everyone to get involved.
“Our broke ass state is trying to squeeze money out of an industry that they see growing in these rough economic times. Namely … Yoga. If their various extortion schemes are successful, a lot of small yoga studios are going to go out of business. And your yoga classes are going to go up. Maybe a lot.”
The movement to push back on the gov’s taxation is growing. A petition entitled “My yoga studio is not a gym!” was created to be handed in to the City Planning Office. They’re looking for 750 signatures and at time of publishing they’ve just 153 to go.
Stop the city from requiring that yoga studios obtain the same costly PCE permit that giant franchised fitness centers are required to have. Yoga studios are not massage parlors nor are they fitnes[sic] studios!
The city has moved to categorize yoga studios as fitness centers and not movement spaces, which requires costly new permits and licensing fees which are grossly inappropriate for businesses of this scale.
An additional petition asking once again to fully put a stop to the sales tax push and the audits and to relieve any studios facing back taxes will be delivered to the NYC Department of Finance.
Stop the proposed tax on the sale of yoga classes
There is a huge push against yoga studios as a source of taxation and funding at both the city and state level. An increasing number of studios are facing legal investigation for violating these new and poorly understood government regulations.This has meant burdensome lawyers fees, penalties, back-tax bills and other administrative costs which are threatening the vitality of many studios in our city. We are calling upon our local officials to not impose this service tax and to stop all audits demanding years of back taxes.
They’re at 578 signatures shooting for 750 as well.
And yet there is another issue! NY’s Department of Labor is trying to classify yoga teachers as employees vs. independent contractors, which causes a few problems.
“Consider this,” says West. “If a teacher teaches at five different studios, that means that whatever the insurance company is, it would be making off with five times that amount of money for just one teacher. There’s something wrong with this picture.”
This week (and all month in some cases) many studios are joining forces to host benefit classes, donating the money to a collective fund that Yoga for New York will use to advocate and lobby. Check out the full list of classes here.
Yes, it’s a fine mess, wrapped in money and tied up with many strings attached. We’ll keep you posted with any updates or developments.
And we’ll leave you with the same questions we presented a few weeks ago.
Perhaps the biggest question here, and in other cases before or after, is how does government define yoga? And if forced, or even given the liberty, to declare ourselves, how would we define it?
- Sales Tax Issues Plague NY Yoga Studios – What Is Yoga to the Government?
- Welfare Yoga: Policy Follows Practice in Trend of Yoga for All
- The State Debate: Is Yoga Taxable? Updates on Wash. DC, Missouri and Licensing in Texas
- Make-a-Buck-Asana: It’s a Yoga Branding World and Somebody’s Gotta Trademark It
- Make Up or Break Up: Yoga Alliance, What Have You Done for Us Lately?
- Yoga Gets Hotter (Like 110 Degrees), Or the Sweat Obsession and the Detox Myth