When was Florida sales tax due on a health-studio membership paid in monthly installments?

Plain-English summary

Florida said the full sales tax was due when the health-studio membership agreement was signed, even though the member paid in monthly installments. The agreement sold future physical-fitness services and required the member to pay the full contract amount.

The contract lasted one to three years, imposed a finance charge, allowed acceleration after default, and offered only limited cancellation rights beyond the statutory three-day period. Because it was a retail installment contract rather than a month-to-month membership, section 212.06(1)(a) made the full tax due at the moment of the transaction.

What this means for you

For the contract described, collecting and remitting tax only when each installment arrived was not permitted. The timing followed the binding payment obligation created at signing.

Common questions

Q: Was tax deferred until the studio received each monthly payment? No.

Q: Why was the agreement treated as an installment sale? Members agreed in advance to pay the full price for future services, and the contract included finance, default, and prepayment terms.

Q: Was this a month-to-month membership? No. The ruling described a one-to-three-year obligation that generally continued even if the member stopped using the facilities.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04(1), 212.04(3), and 212.06(1)(a) — admissions tax and timing
• Fla. Stat. §§ 501.012–501.019, including § 501.017(1) — health-studio contracts
• Fla. Stat. § 520.31(12)–(13) — retail installment contracts and transactions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-012

Original ruling text

SUMMARY

QUESTION: When is tax due on health studio membership
agreements, when the membership is paid in monthly
installments?

ANSWER - Based on Facts Below: The Agreement requires
Taxpayer's members to agree, in advance, to pay for future
health studio services. The members' payments, therefore,
are made pursuant to a retail installment contract. Tax is
due at the time the membership is entered into, regardless
whether the entire membership is paid up front or paid in
monthly installments.

Mar 13, 2000

Re: Technical Assistance Advisement 00A-012
Sales and Use Tax - Tax Due at Time of Sale or Transaction
Sections 212.02, 212.04, 212.06, F.S.
Petitioner: XXX (Taxpayer)

Dear :

This is a response to your request dated January 19, 2000, for
the issuance of a Technical Assistance Advisement (TAA)
concerning the above referenced matter. Your petition has been
carefully examined, and the Department finds it to be in
compliance with the criteria set forth in Chapter 12-11, F.A.C.
This response to your request constitutes a TAA, and is issued
to you under the authority of s. 213.22, Florida Statutes.

FACTS

From your letter:

... [Taxpayer] owns and operates four (4)(FN 1) women-only
health studios in... Florida....

Taxpayer enters into membership agreements with persons desiring
to use the facilities, for the sale of future health studio
services, which requires payment of a single fee that is divided
into an enrollment fee, monthly membership fees, and sales tax.
The agreement indicates that the total amount may be paid off
early.

REQUESTED ADVISEMENT

Your request for advice involves the timing of tax on the
monthly payments. You are seeking confirmation that sales tax
on the aforementioned contracts should not be collected from the
members, or remitted to the State, until the monthly payments
have been received from the members.

LAW AND ANALYSIS

Section 212.02(1), F.S., defines the term "admissions" to mean
and include all dues and fees paid to private clubs and
membership clubs providing recreational or physical fitness
facilities.

Pursuant to s. 212.04(1), F.S., it is the legislative intent
that every person is exercising a taxable privilege who sells or
receives anything of value by way of admissions. For the
exercise of such privilege, a tax is levied at the rate of 6
percent of the sales price, or actual value received, for such
admissions. Section 212.04(3), F.S., further provides:

(3) Such taxes shall be paid and remitted at the same time
and in the same manner as provided for remitting taxes on
sales of tangible personal property.

Section 212.06(1)(a), F.S., provides in pertinent part:

(1)(a) The aforesaid tax at the rate of 6 percent of the
retail sales price as of the moment of sale... shall be
collectible from all dealers as herein defined on the sale
at retail... of tangible personal property or services
taxable under this chapter. The full amount of the tax on
a credit sale, installment sale, or sale made on any kind

of deferred payment plan shall be due at the moment of the
transaction in the same manner as on a cash sale.

Sections 501.012 through 501.019, F.S., provide for the general
regulation of health studios. Section 501.017(1), F.S.,
prescribes the contractual provisions required in health studio
contracts "... for the sale of future health studio services
which is paid for in advance or which the buyer agrees to pay
for in future installment payments...."

Section 520.31(12), F.S., defines a "retail installment
contract" to mean an instrument "... reflecting one or more
retail installment transactions entered into in this state
pursuant to which goods and services may be paid for in
installments." Subsection (13) defines the term "retail
installment transaction" as "... the sale of or the furnishing
of goods or services by a retail seller to a retail buyer
pursuant to a retail installment contract or a revolving
account."

DETERMINATION

You have included a copy of a sample contract, entitled
"Membership Agreement."

You contend that the taxpayer does not provide services until
the payment is made. You indicate that you "have found nothing
which would indicate that sales tax on the... contract for
monthly membership payments which have not yet been paid, and
for services which have not yet been provided, should be paid at
the time the contract is entered into, or otherwise in advance."
(your emphasis)

However, sections 501.012 through 501.019, F.S., specifically
regulate health studio contracts that are for the sale of future
services, which may be paid up front or over time. Such
contracts also are included within the purview of section
520.31(12), F.S., which defines a retail installment contract as
contracts for which services may be paid for over time.

The attached sample Membership Agreement contains all of the

provision required under section 501.017, F.S. The agreement
also provides, under the Payment Information section, the
following pertinent information, which shows a finance charge is
being imposed and that the total contract price must be paid:

Default: You are in default if we do not receive a payment
from you within 10 days. If you default we can demand full
payment of the entire amount you owe. If you default you
agree to pay all costs of collection, including collection
agency and attorney fees.

Prepayment: If you pay off early all of the amount you owe,
you may be entitled to a refund of part of the finance
charge.

Additionally, the membership agreement does not offer the buyer
a right to cancel the membership if the buyer no longer desires
to continue to use the facilities (beyond the statutorily
imposed three-day waiting period). Thus, the membership being
purchased is for a period of one to three years, and is not a
month-to-month membership. Even if a member ceases to use the
taxpayer's facilities after a couple of months of membership,
that member is still obligated to pay the full amount set forth
in the contract (except under very limited circumstances).

Applying the provisions of s. 501.012 through 501.017, F.S., and
ss. 520.31(12) and (13), F.S., cited above, to the Membership
Agreement, the Agreement requires Taxpayer's members to agree,
in advance, to pay for future health studio services. The
members' payments, therefore, are made pursuant to a retail
installment contract. It is noted that the provisions on the
reverse side of the Membership Agreement are those mandated by
s. 501.017, Florida Statutes. Therefore, in accordance with the
provisions of s. 212.06(1)(a), F.S., tax would be due when the
Membership Agreement is entered into.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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 s. 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 15 days of the date of this letter.

Sincerely,

Sara D. Faulkenberry
Tax Law Specialist

Ctrl #40021

FOOTNOTE 1: The Department's records show that the taxpayer
operates five locations.