This Special Notice has been modified and superseded by SN 2003(7.1)
Sales and Use Taxes on Health and Athletic Club Services
Purpose: This Special Notice describes recently enacted legislation that imposes sales and use taxes on health and athletic club services. It also provides transitional rules for applying tax to sales of services occurring before and after the effective date of the legislation.
Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(FF), as enacted by 2003 Conn. Pub Acts 2, §27.
Health and athletic club services provided at an additional charge are subject to sales and use taxes whether provided to members or guests. Examples include additional charges by a health and athletic club for personal training sessions, aerobic exercise classes, tennis or swimming lessons, and any other activities not included in basic membership or service fees.
Health and athletic clubs may make nontaxable charges, such as for racquetball or tennis court rentals or massages by licensed massage therapists, in addition to their charges for taxable services. The health and athletic club must separately state nontaxable charges from charges for taxable health and athletic club services. If these charges are not separately stated, the entire charge is subject to tax.
Definition: As used in this Special Notice, health and athletic clubs mean businesses that feature exercise and other active physical fitness conditioning facilities directed at improving an individual’s muscle condition, body tone, or cardiovascular fitness, whether or not on a membership basis. Businesses that are subject to sales and use taxes include, but are not limited to those that are engaged in operating aerobic dance and exercise classes, exercise salons, fitness salons, gymnasiums, physical fitness centers, and health fitness spas.
Health and athletic clubs do not include businesses limited to providing sports, amusement, and recreation services, whether they are private membership clubs or open to use by the public upon payment of a fee.
Examples of these businesses include:
Health and Athletic Services Excluded From Sales Tax: The legislation excludes from sales and use taxes health and athletic club services provided:
Dues Tax Implications: While some health and athletic clubs may be exempt from the dues tax, charges made by the clubs may nevertheless be subject to sales and use taxes as follows:
Transitional Rules: Payments made for health and athletic club services are subject to sales and use taxes as follows:
Effect of This Document: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates an informal interpretation of Connecticut tax law by the Department of Revenue Services (DRS) and may be referred to for general guidance by taxpayers or tax practitioners.
Effect on Other Documents: None affected.
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