Fitness Center Charges Not Subject to Tax in Tennessee

Friday, August 19th, 2011

 
 
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Tennessee
General

The Tennessee Department of Revenue has issued a letter ruling discussing the exemption for fees charged by certain physical fitness facilities. Tenn. Code Ann. Sec. 67-6-330(a)(17)(A) specifically exempts fees paid to "any corporation or enterprise that offers, on a regular, full-time basis, services or facilities for the development or preservation of physical fitness through exercise or athletics." Fees exempt from tax include membership fees, activation fees collected for photo identification cards, charges for guest passes, equipment charges, and fees charged for renting out physical fitness facilities. In order to qualify for this exemption, the corporation or enterprise must (1) have at least one full-time employee certified in administering health assessments, or at least one full-time employee licensed by the state that represents a medical and/or paramedical discipline; (2) be open at least 70 hours per week; (3) permit participation by each member each day in operation; (4) have at least 15,000 square feet in use for physical fitness purposes; and (5) offer three or more of the following programs and/or activities: (a) health assessments that include blood chemistry and urinalysis; (b) racquetball; (c) exercise equipment; (d) track or swimming; or (e) aerobics. In addition, before any corporation or enterprise can be exempted under this provision, the Department of Revenue must approve the exemption based upon information supplied by the entity claiming the exemption. Finally, note that the exemption does not apply to establishments listed under Industry 7992 or Industry 7997 of the Standard Industrial Classification Index of 1987. [Note that as of August 7, 2013, the exemption discussed above is codified at Tenn. Code Ann. Sec. 67-6-330(a)(16)(A) rather than (a)(17)(A).]

Tenn. Ltr. Rul. No. 11-19 (Dept. of Revenue, June 9, 2011)


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