Do membership fees and monthly dues at a chain of Bally Total Fitness/Bally Sports Clubs locations in New York City -- which aren't all identical -- owe New York's social/athletic club dues tax or New York City's separate gym/health-salon tax?

Plain-English summary

Three Bally Total Fitness subsidiaries operating New York City clubs under the Bally Total Fitness and Bally Sports Clubs names asked whether their membership fees, monthly dues, and activity charges are taxable. Unlike a single facility, the petitioners acknowledged their various club locations "are not identical" -- collectively offering some or all of an indoor pool, aquatic classes, racquetball, running track, cycling/spinning, rowing, boxing, kick boxing, yoga, martial arts, and dance, plus traditional gym equipment, personal training, and spa services. The most popular membership plan grants access to any of roughly 350 Bally-affiliated clubs nationwide. As in similar rulings, members hold no ownership interest and have no control over club management or activities, and membership is capped only by each facility's physical size.

The Department applied its now-familiar two-part analysis: the state/local social-athletic-club dues tax doesn't apply because members lack real governance rights or ownership, regardless of which specific club they attend. But the separate New York City tax on gyms, health salons, and weight-control-type establishments is analyzed location by location, since it depends on what a specific facility actually offers -- not on the parent company's overall business or brand. To the extent a given club offers a genuine variety of sporting activities and facilities, it falls outside that narrower NYC tax, following Town Sports International. Because the petitioners' clubs are not all identical, the Department was explicit that this exempt result holds only "to the extent" each club provides that sporting-activity variety -- and flagged that if any specific club in the chain lacked sporting activities and instead functioned as a plain gym or weight-control salon, membership charges tied to just that club would be subject to New York City's 4% local tax.

What this means for you

Multi-location gym and fitness-club chains

Don't assume one favorable "we're not a gym" determination covers your entire chain -- New York City's local gym/health-salon tax is evaluated location by location based on each specific facility's actual activity mix. A brand offering true multi-sport facilities at some locations and plain workout-equipment-only facilities at others should expect different tax treatment across those locations.

Accountants and tax professionals

This ruling is notable for making explicit what other same-year sports-club rulings (TSB-A-00(19)S, TSB-A-00(22)S, TSB-A-00(26)S) leave implicit: the NYC gym-tax exemption is inherently facility-specific, not brand- or company-wide. If you're advising a multi-location client, audit each location's actual activity offerings separately rather than relying on a single company-wide determination.

Common questions

Q: If my fitness chain gets a favorable ruling for its flagship location, does that cover all my locations?
A: Not necessarily for New York City's local gym/health-salon tax -- that determination depends on what each specific location actually offers. The state club-dues tax analysis (member governance) is more likely to apply chain-wide if governance is structured the same way everywhere.

Q: What happens if one club in a chain is just gym equipment with no participant sports?
A: Membership charges limited to that specific club would be subject to New York City's 4% tax on gyms/health salons, even if sister locations in the same chain are exempt.

Q: Can another fitness chain rely on this ruling?
A: No. It binds the Department only for these petitioners and the facts described. Other chains should evaluate their own governance structure and each location's actual activity mix.

Citations and references

Statutes and regulations:

• Tax Law § 1105(f)(1) (admission-charge exemption for participant sports facilities)
• Tax Law § 1105(f)(2) (tax on social or athletic club dues and initiation fees)
• Tax Law § 1107(a) (additional New York City sales tax)
• Tax Law § 1212-A(a)(2) (NYC local tax authorization on gyms, health salons, and similar facilities)
• NYC Administrative Code § 11-2002(h) (NYC tax on weight control salons, gymnasiums, and similar establishments)
• 20 NYCRR § 527.11(b)(5), (7) (definitions of "club or organization" and "athletic club")

Prior rulings referenced:

• Town Sports International and Subsidiaries, Adv Op Comm T&F, July 1, 1998, TSB-A-98(42)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(17)S
Sales Tax
April 4, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S990825A

On August 25, 1999, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Manhattan Sports Clubs, Inc., Holiday Health and Fitness Centers of New
York, Inc., and Jack LaLanne Fitness Centers, Inc., C/O Bally Total Fitness Corporation 8700 Bryn
Mawr Ave., Chicago, Il 60631.
The issue raised by Petitioners is whether the membership fees, monthly dues or activities
charged by them for the use of their facilities are subject to sales tax.
Petitioners submit the following facts as the basis for this Advisory Opinion.
Petitioners are all wholly owned subsidiaries of Bally Total Fitness Corporation. Petitioners
operate a number of clubs in the New York City area under the names of Bally Total Fitness and
Bally Sports Clubs.
These clubs provide a variety of participatory sporting activities. All of Petitioners’ club
facilities are not identical, but the clubs provide some or all of the following participatory activities:
in-door swimming pool, aquatic exercise classes, racquetball courts, running track, spinning room
(cycling), rowing, boxing, kick boxing, yoga, martial arts, and dance facilities. In addition,
Petitioners offer traditional training facilities such as weight lifting equipment, aerobics, stepping
machines, saunas and steam rooms along with personal training, nutritional counseling and spa
services.
Petitioners charge a membership fee and monthly dues for use of their facilities. Petitioners
sell multiple types of memberships. The most popular type of membership plan allows members
access to any of Petitioners’ approximately 350 clubs or affiliated clubs. Members must pay an extra
fee for certain specialized classes and activities, such as kick boxing and martial arts. Petitioners’
members do not control any social or athletic activities, selection of members or club management,
or possess any proprietary interest in the Petitioners. The number of members is restricted solely
because of the physical size of the facility.
Applicable Law & Regulations
Section 1105(f) of the Tax Law imposes sales tax, in part, on:

-2­
TSB-A-00(17)S
Sales Tax
April 4, 2000

(1) Any amusement charge . . . except charges to a patron for admission
to, or use of, facilities for sporting activities in which such patron is to be a
participant, such as bowling alleys and swimming pools.
(2)(i) The dues paid to any social or athletic club in this state if the dues . . .
are in excess of ten dollars per year, and on the initiation fee alone, regardless of the
amount of dues, if such initiation fee is in excess of ten dollars. . . .
Section 1107 (a) of the Tax Law provides:
General. On the first day of the first month following the month in which a
municipal assistance corporation is created under article ten of the public authorities
law for a city of one million or more, in addition to the taxes imposed by sections
eleven hundred five and eleven hundred ten, there is hereby imposed on such date,
within the territorial limits of such city, and there shall be paid, additional taxes, at
the rate of four percent, which except as provided in subdivisions (b) and (d) of this
section, shall be identical to the taxes imposed by sections eleven hundred five and
eleven hundred ten. Such sections and the other sections of this article, including the
definition and exemption provisions, shall apply for purposes of the taxes imposed
by this section in the same manner and with the same force and effect as if the
language of those sections had been incorporated in full into this section and had
expressly referred to the taxes imposed by this section.
Section1212-A(a)(2) of the Tax Law authorizes the City of New York to impose a local tax
on "beauty, barbering, hair restoring, manicuring, pedicuring, electrolysis, massage services and
similar services, and every sale of services by weight control salons, health salons, gymnasiums,
turkish and sauna bath and similar establishments and every charge for the use of such facilities;"
such tax to be administered and collected by the Commissioner of Taxation and Finance.
Section 11-2002(h) of the Administrative Code of the City of New York imposes sales tax,
in part, on:
Receipts from . . . every sale of services by weight control salons,
gymnasiums, turkish and sauna bath and similar establishments and every charge for
the use of such facilities. . . .
Section 527.11(b) of the Sales and Use Tax Regulations provides, in part, the following
definitions of terms that are contained in section 1105(f)(2) of the Tax Law:
(5) Club or organization. (i) The phrase club or organization means any
entity which is composed of persons associated for a common objective or common

-3­
TSB-A-00(17)S
Sales Tax
April 4, 2000

activities. Whether the organization is a membership corporation or association or
business corporation or other legal type of organization is not relevant. Significant
factors, any one of which may indicate that an entity is a club or organization, are:
an organizational structure under which the membership controls social or athletic
activities, tournaments, dances, elections, committees, participation in the selection
of members and management of the club or organization, or possession by the
members of a proprietary interest in the organization. The organizational structure
may be formal or informal.
(ii) A club or organization does not exist merely because a business entity:
(a) charges for the use of facilities on an annual or seasonal basis, even if an
annual or season pass is the only method of sale and provided such passes are sold
on a first-come, first-served basis;
(b) restricts the size of the membership solely because of the physical size of
the facility. Any other type of restriction may be viewed as an attempt at exclusivity;
(c) uses the word club or member as a marketing device;
(d) offers tournaments, leagues and social activities which are controlled
solely by the management.
*

*

*

(7) Athletic club. (i) An athletic club is any club or organization which has
as a material purpose or activity the practice, participation in or promotion of any
sports or athletics.
*

*

*

(ii) Athletic activities does not include exercising or calisthenics solely for
health or weight reduction purposes, as contrasted to sports. An establishment that
merely provides steam baths, saunas, rowing machines, shaking machines and other
exercise equipment shall not be considered an athletic club. However, there is a four­
percent local sales tax in the city of New York on every sale of services by weight
control salons, health salons, gymnasiums, Turkish baths, sauna baths and similar
establishments, and on every charge for the use of such facilities.

-4­
TSB-A-00(17)S
Sales Tax
April 4, 2000
Opinion
Petitioners’ charges to their patrons entitle them to use facilities for sporting activities in
which the patron is to be a participant. Petitioners’ charges, therefore, are not subject to the tax on
admission charges under Section 1105(f)(1) of the Tax Law. Petitioners’ charges would be subject
to sales tax under Section 1105(f)(2) of the Tax Law if Petitioner operated an athletic club as defined
in paragraphs (5) and (7) of Section 527.11 of the Sales and Use Tax Regulations.
Petitioners’ members do not control any social or athletic activities, selection of members
or club management, or possess any proprietary interest in Petitioners. Petitioners’ membership is
limited solely by the physical size of the facilities. Therefore, Petitioners are not operating an
athletic club as defined in paragraphs (5) and (7) of Section 527.11 of the Sales and Use Tax
Regulations. Accordingly, Petitioners’ charges to their members are not subject to tax as dues paid
to an athletic club under Section 1105(f)(2) of the Tax Law.
To the extent that Petitioners provide a variety of sporting activities and facilities to their
members, Petitioners’ facilities are not weight control salons, gymnasiums or other establishments
described in Section 11-2002(h) of the Administrative Code of the City of New York. In such case,
Petitioners’ charges, therefore, are not for services provided by, or use of facilities in, weight control
salons, gymnasiums or other establishments described in such Section 11-2002(h) and are thus not
subject to that tax. See Town Sports International and Subsidiaries, Adv Op Comm T & F, July 1,
1998, TSB-A-98(42)S. In such case, accordingly, membership charges for the use of Petitioners’
facilities would not be subject to any of the taxes imposed under Section 1105(f) and 1107 of the Tax
Law or such Section 11-2002(h). It should be noted that if one of Petitioners’ clubs did not provide
sporting activities and facilities to members and constituted a weight control salon, health salon,
gymnasium, turkish and sauna bath or other similar establishment within the meaning of Section 11­
2002(h) of the Administrative Code of the City of New York, membership charges limited to such
club would be subject to the four percent tax imposed in New York City.

DATED: April 4, 2000

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.