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By stan_sipple

St Louis area fitness club loses sales tax refund fight in the Missouri Supreme Court. Michael Jaudes Fitness Edge, Inc., Appellant, v. Director of Revenue, Respondent.: SC88605

Fitness Edge is a place of recreation, and the fees it receives for its training services may be taxed pursuant to section 144.020.1(2), which levies "a tax equivalent to four percent of the . . . fees paid to, or in any place of amusement, entertainment or recreation. . . ." The fact that Fitness Edges does not charge membership fees and is not a club does not make a legal difference in determining whether Fitness Edge is subject to tax under section 144.020.1(2).

(2) Fitness Edge's contention that exercise performed under the immediate and direct supervision of a fitness trainer is not recreation within the meaning of section 144.020.1(2) depends on a distinction between health-based exercise and other exercise, a distinction not made in the statute. This Court rejected those distinctions in Wilson's Total Fitness v. Director of Revenue, 38 S.W.3d 424, 426 (Mo. banc 2001) and will not resurrect them here.

(3) The distinction in the tax code between fees paid to a place of recreation such as Fitness Edge for personal training services and fees paid directly to personal trainers on an independent basis is a reasonable one. Training services provided by an independent contractor are different in kind from a business that offers training services along with the provision of exercise equipment, lockers, and other amenities at a permanent, established fitness facility. Distinguishing between these different business models is within the considerable freedom that the legislature enjoys in making classifications in order to produce reasonable systems of taxation.

Full post as published by Showmeblawgs on April 09, 2008 (boomark / email).