Sales and Use Taxx TAA 14A-008 - Personal Training

QUESTION: WHETHER CERTAIN CHARGES FOR PERSONAL INSTRUCTION ARE SUBJECT TO SALES TAX.  ANSWER: NO. MEMBERS MAY USE THE PREMISES ONLY DURING THE INSTRUCTION PERIOD AND ONLY FOR TRAINING PURPOSES.

March 20, 2014

Subject: Technical Assistance Advisement – TAA 14A-008 Sales and Use Tax - Personal training Section(s) 212.04, 212.02, 212.05, 212.07(8), Florida Statutes (“F.S.”) Rule(s) 12A-1.005, Florida Administrative Code (“F.A.C.”) XXX (“Taxpayer”) FEIN: XXX BPN: XXX XXX (“Company”)  Dear XXX:  This letter is a response to your petition dated XXX, for the Department’s issuance of a Technical Assistance Advisement (“TAA”) to Petitioner, concerning charges for personal training. Your petition has been carefully examined, and the Department finds it to be in compliance with the requisite criteria set forth in Rule Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S.

Issue

Whether Taxpayer’s charges for personal training are subject to sales tax?

Facts

Taxpayer operates a XXX. Members do not sign an agreement. Monthly members pay for unlimited classes within a given month. Taxpayer sells merchandise at retail, including items with Company’s name. Taxpayer’s retail merchandise sales are less than the cost of goods sold.  Taxpayer’s agreement with Company requires Taxpayer to pay a fee to use Company’s name. The agreement permits Taxpayer to operate independently, except regarding use of Company’s name.  The studio is only open and capable of being used by members during scheduled class periods. Some members pay for monthly memberships, or others pay for a limited number of classes. Taxpayer has no other memberships or persons using the studio. Taxpayer removes equipment to storage and closes the facility when classes are not being conducted.  All classes are at the instruction and supervision of a certified trainer/coach. Certification is controlled and required by Company. The classes and instruction are administered in a group setting, with between three and fifteen people in each class. New members are required to attend certain classes initially. The classes are limited to a specific schedule, and members are only permitted access to the facilities during those set class times. The facilities are closed at all other times, and membership does not provide the right or ability to access Taxpayer’s facilities at any time other than when classes are held.  When classes are conducted, a specific daily regime is performed. The classes may relate to sports such as football, gymnastics, powerlifting, and rowing. The instruction may also relate to self-defense, endurance training, and mobility exercises. Modifications can be made by the coach as the coach. Otherwise, members are not allowed to deviate from the manner of use of Taxpayer’s studio.

Taxpayer Position

The request asserts that the charges are not taxable because they are for personal instruction. You cite Rule 12A-1.005(4)(d)2., F.A.C., as authority.

Law and Discussion

Section 212.04(1), F.S., requires sales tax to be collected on the sales price or amounts received from the sale of admissions. Section 212.02(1), F.S., defines the term “Admissions.” It includes all dues and fees collected by private or membership clubs providing recreational facilities. Rule 12A-1.005(4)(d), F.A.C., provides that certain charges are not considered taxable dues and fees. Rule 12A-1.005(4)(d)2., F.A.C., provides that charges for professional instructions in any sport conducted at a club are not dues and fees, so long as such charges are exclusively for the instructions and include the use of the facility only during the period of time the instructions are taking place. The Rule provides that it is not the intention of the Rule to allow a club to exempt what are in effect a dues or membership fee by labeling such charges as instruction fees. As with most instruction, once the member learns the sport for which instruction is provided, then it is presumed that the instruction will be completed.  Taxpayer does not allow access to members so that they may come and go as they please, to use the studio facilities at their leisure, or to follow their own program. Taxpayer does not offer other activities in the studio. The studio is only used during the personal training classes. As such, the members are only receiving the personal instruction addressed by Rule 12A1.005(4)(d)2., F.A.C.  Taxpayer is required to collect and remit sales tax on retail merchandise sales. See s. 212.05, F.S. Taxpayer is required to remit tax on the cost price of merchandise given away. See s. 212.07(8), F.S.

Conclusion

Taxpayer’s charges for personal training are not subject to sales tax. So long as the charge is paid by the member for instructional courses only, then the tax imposed by s. 212.04, F.S., does not apply.  This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice, as specified in section 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based, may subject similar future transactions to a different treatment than expressed in this response.  You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of section 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 10 days of the date of this letter.  

Respectfully,  

Charles Wallace Senior Attorney Technical Assistance & Dispute Resolution 850-717-7541  

Record ID: 162153