Does a New York City sporting and fitness facility (rock climbing, boxing, aerobics, and traditional gym equipment) owe state or city sales tax on its initiation fees, monthly membership dues, and extra charges for personal training and boxing lessons?

Plain-English summary

An attorney asked, on behalf of a New York City client, whether the client's initiation fees and monthly membership dues — plus extra charges for personal training and one-on-one boxing instruction — are subject to New York State and City sales tax. The client's facility offers a wide mix of activities: a 30-foot rock climbing wall, a professional boxing studio, an aerobics/dance studio, steam rooms and saunas, plus traditional gym equipment, yoga, kickboxing, dance classes, and more. Membership is first-come, first-served limited only by facility size; members have no say in club management, elections, or activities, and hold no ownership stake in the business. The client had been collecting both state and city sales tax on its fees.

The Department worked through two separate taxes:

State "athletic club" dues tax (§ 1105(f)(2)): Membership fees for facilities where the patron is a participant in sporting activities are normally excluded from the general admission-charge tax, but a separate tax applies specifically to dues paid to a "social or athletic club." The regulatory test for whether an organization is a "club" turns on member control — do members control social/athletic activities, elections, or committees, or hold a proprietary interest? Restricting membership only by facility size (on a first-come, first-served basis) does not, by itself, make an entity a club. Because this facility's members had no such control, it isn't an "athletic club" for tax purposes, so its initiation fees and dues are not taxable under § 1105(f)(2).

New York City local tax on gyms/health salons (Admin. Code § 11-2002(h)): This separate city tax reaches charges by weight-control salons, health salons, gymnasiums, and similar establishments, plus certain personal services (beauty, barbering, massage, etc.). Because the client's facility offers a broad range of genuine sporting activities (climbing, boxing, dance) rather than functioning as a plain gym or health salon, it falls outside this category entirely — so neither its membership fees nor its personal-training/boxing-instruction charges are subject to the city tax, and personal training/boxing instruction also aren't among the state's separately enumerated taxable services under § 1105(c).

Since none of these charges are taxable after all, the Department reminded the client that any sales tax it had been collecting must still be remitted to the Department (a vendor can't simply keep erroneously collected "tax" money), while a member who paid that erroneous tax can seek a refund directly from the Department within three years.

What this means for you

Multi-activity gyms, climbing facilities, and boutique fitness studios

The state "athletic club dues" tax doesn't automatically apply just because you charge membership fees for sports facilities — the deciding factor is whether members actually control the club's management, elections, or activities. A facility that simply caps membership by physical capacity (first-come, first-served) is not, by itself, enough to make it a taxable club.

Facilities offering personal training, boxing, or specialty instruction

If your facility offers genuine sporting variety rather than functioning as a plain gym/health salon, New York City's separate local gym/health-salon tax may not reach you at all — even for add-on services like personal training that would otherwise look similar to spa or salon services.

Vendors who discover they've been over-collecting sales tax

If you've been charging tax on fees the Department now determines aren't taxable, you must still remit any tax you already collected to the Department (you can't just keep it) — the fix runs through your customers filing refund claims, not through you unilaterally stopping remittance retroactively.

Common questions

Q: Are gym membership fees always subject to New York's athletic-club dues tax?
A: No. The tax depends on whether members control the club's social/athletic activities, elections, or management, or hold a proprietary interest — not simply on whether dues are charged.

Q: Does restricting membership because of limited space make a facility a taxable "club"?
A: No — restricting membership solely due to the physical size of the facility, on a first-come, first-served basis, does not by itself create a club or organization for tax purposes.

Q: Is personal training or one-on-one instruction taxable in New York City?
A: Not automatically. It's only taxable under the city's gym/health-salon tax if the facility itself is a weight-control salon, health salon, gymnasium, or similar establishment — a multi-activity sporting facility like this one falls outside that category.

Q: If I collected tax I didn't actually owe, can I just stop sending it to the state?
A: No. Any money collected purportedly as sales tax must still be remitted to the Department; the customer who paid it in error is the one who can seek a refund.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c) (enumerated taxable services), § 1105(f)(1) (admission charges; participant-sports exclusion), § 1105(f)(2) (social/athletic club dues)
• Tax Law § 1107(a) (additional city taxes framework)
• Tax Law § 1137(a) (remittance of erroneously collected amounts)
• Tax Law § 1139(a) (refund/credit procedure)
• Tax Law § 1212-A(a)(2) (NYC local tax authorization for gyms/salons)
• NYC Administrative Code § 11-2002(h) (local tax on gyms, health salons, and similar establishments)
• 20 NYCRR § 527.11(b) (definitions of club/organization and athletic club)

Prior rulings and cases referenced:

• New York Health and Racquet Club, TSB-A-99(26)S
• Matter of Prospect Park Health and Racquet Associates and Peter J. Sferrazza and George Hart, as Partners, TSB-D-97(30)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2003.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a03_38s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(38)S
Sales Tax
October 9, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S030319A

On March 19, 2003, the Department of Taxation and Finance received a Petition for
Advisory Opinion from William A. Barrett, 22 Jericho Turnpike - Suite 1100, Mineola, New York
11501.
The issue raised by Petitioner, William A. Barrett, regarding Petitioner’s client is whether
membership fees charged for the use of its facilities are subject to New York State and local sales
taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner’s client (Client) provides a variety of participant sporting and fitness activities at
its facility in New York City. The facility has a thirty foot high rock climbing wall, a professional
boxing studio complete with a boxing ring and an aerobic/dance studio. It also has steam rooms,
saunas and locker rooms. In addition, the client offers traditional fitness and training facilities such
as weight lifting equipment, stepping machines, running and cycling equipment, personal training,
free nutritional and fitness classes, yoga, step, cardio Thai kickboxing, boot camp aerobics, salsa
dance lessons, hip hop aerobics, bodies on the ball, urban rebounding, ultimate stretching, pilates
mat and one on one rock climbing lessons.
Client charges an initiation fee and a membership fee for use of its facility and collects the
New York State and New York City sales taxes on these fees. These fees allow its members access
to all club and sporting facilities offered. Client’s members must pay extra for personal training
services and one on one boxing instruction. Client’s members do not control any social or athletic
activities. Client’s members do not participate in the selection of members or management of the
club. The members also do not possess any proprietary interest in the client. Membership is limited
by the size of the facility on a first-come, first-served basis.
Applicable law and regulations
Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services.
Section 1105(f) of the Tax Law imposes sales tax, in part, on:

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(1) Any admission 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, in part:
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 . . .
which except as provided in subdivision (b) 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.
Section 1137(a) of the Tax Law provides, in part:
Every person required to file a return under the preceding section whose total
taxable receipts, amusement charges and rents are subject to the tax imposed
pursuant to subdivisions (a), (c), (d), (e) and (f) of section eleven hundred five of this
article shall, at the time of filing such return, pay to the tax commission the total of
the following:
*

*

*

(iii) All moneys collected by such person, purportedly as tax imposed by this
article or pursuant to article twenty-nine, with respect to any receipt, amusement
charge or rent not subject to tax, and all moneys collected with respect to any receipt,
amusement charge or rent subject to tax, purportedly in accordance with a schedule
prescribed by the tax commission but actually in excess of the amount stated in such
schedule as the amount to be collected.
Section 1139(a) of the Tax Law provides, in part:

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In the manner provided in this section the tax commission shall refund or
credit any tax, penalty or interest erroneously, illegally or unconstitutionally
collected or paid if application therefor shall be filed with the tax commission (i) in
the case of tax paid by the applicant to a person required to collect tax, within three
years after the date when the tax was payable by such person to the tax commission
as provided in section eleven hundred thirty-seven, or (ii) in the case of a tax, penalty
or interest paid by the applicant to the tax commission, within three years after the
date when such amount was payable under this article . . . Such application shall be
in such form as the tax commission shall prescribe. No refund or credit shall be
made to any person of tax which he collected from a customer until he shall first
establish to the satisfaction of the tax commission, under such regulations as it may
prescribe, that he has repaid such tax to the customer. . . . (Emphasis added)
Section 1212-A(a)(2) of the Tax Law authorizes the City of New York to impose a local
sales tax at the same uniform rate 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 . . . but excluding services rendered by a physician, osteopath,
dentist, nurse, physiotherapist, chiropractor, podiatrist, optometrist, ophthalmic dispenser or a person
performing similar services licensed under title VIII of the education law . . .;" 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 . . . 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. . . .
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
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

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members of a proprietary interest in the organization. The organizational structure
may be formal or informal. (Emphasis supplied)
(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 . . .
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.
Opinion
Client’s charges to its patrons entitle them to use facilities for sporting activities in which
the patron is to be a participant. Client’s initiation fee and monthly membership dues for use of the
facility, therefore, are not subject to the tax on admission charges under section 1105(f)(1) of the
Tax Law. Client’s initiation fee and monthly membership dues would be subject to sales tax under

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section 1105(f)(2) of the Tax Law if Client operated an athletic club as defined in paragraphs (5) and
(7) of section 527.11 of the Sales and Use Tax Regulations.
Client’s members do not control any social or athletic activities, do not participate in the
selection of members or club management, or possess any proprietary interest in Client. Therefore,
Client is not operating an athletic club as defined in paragraphs (5) and (7) of section 527.11 of the
Sales and Use Tax Regulations. Accordingly, Client’s charges to its members for initiation fees and
monthly membership dues are not subject to tax as dues paid to an athletic club under section
1105(f)(2) of the Tax Law.
Since Client provides a variety of sporting activities and facilities to its members, Client’s
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. Client’s charges to its
members for initiation fees and monthly membership dues, 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 the local New York City tax. See New York
Health and Racquet Club, Adv Op Comm T & F, May 19, 1999 TSB-A-99(26)S; Matter of Prospect
Park Health and Racquet Associates and Peter J. Sferrazza and George Hart, as Partners, Dec Tax
App Trib, July 22, 1997, TSB-D-97(30)S.
Client also offers its members personal training services and one on one boxing instruction.
Personal training services and one on one boxing instruction are not included in the services of
beauty, barbering, hair restoring, manicuring, pedicuring, electrolysis, and massage services that are
enumerated as taxable services in section 11-2002(h) of the New York City Administrative Code
and are not similar to such services. Accordingly, personal training services and one on one boxing
instruction would only be subject to the New York City sales tax as a charge for services sold by a
weight control salon, health salon, gymnasium, turkish and sauna bath or similar establishments, or
as a charge for the use of such facilities. Since Client’s facility is not a weight control salon,
gymnasium or similar establishment, and personal training services and one on one boxing
instruction are not among the enumerated services in section 11-2002(h) of the New York City
Administrative Code, the fees for personal training services and one on one boxing instruction are
not subject to the New York City tax. Section 1105(c) of the Tax Law imposes New York State
sales tax on the receipts from certain enumerated services. Since personal training services and one
on one boxing instruction are not included within the services taxed under section 1105(c) of the Tax
Law, the receipts from personal training services and one on one boxing instruction are not subject
to the New York State sales tax.
Accordingly, the initiation fee, monthly membership dues and additional fees for personal
training services and one on one boxing instruction are not subject to any of the taxes imposed under
sections 1105(c), 1105(f) and 1107 of the Tax Law or section 11-2002(h) of the New York City
Administrative Code. However, section 1137 of the Tax Law requires that a registered vendor pay
to the Department of Taxation and Finance all moneys collected by such person, purportedly as tax
imposed by Article 28 of the Tax Law, with respect to any receipts, amusement charges, etc. not

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subject to tax. Accordingly, any moneys collected by Client, purportedly as sales tax, are required
to be remitted to the Department of Taxation and Finance at the time of filing the sales and use tax
returns of Client. However, a customer who has paid sales tax which was collected by Client in
error may file a claim for refund within three years after the date when the tax was payable by Client
to the Department of Taxation and Finance if he or she can substantiate the payment of the tax. See
section 1139(a) of the Tax Law.

DATED: October 9, 2003

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

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