Athletic or fitness facilities

In general, charges for the use of an “athletic or fitness facility” (AFF) are subject to retail sales tax and Retailing business and occupation (B&O) tax. An AFF is defined as:

“An indoor or outdoor facility or portion of a facility that is primarily used for: exercise classes; strength and conditioning programs; personal training services; tennis; racquetball; handball; squash; or pickle ball; or other activities requiring the use of exercise or strength training equipment, such as treadmills, elliptical machines, stair climbers, stationary cycles, rowing machines, Pilates equipment, balls, climbing ropes, jump ropes and weightlifting equipment.”

An entire facility is an AFF if it is primarily (more than 50%) used for AFF activities.

If an entire facility is not considered an AFF, then you must determine whether any portion of the facility is an AFF. Typically, this test must be performed whenever there is a significant change in activities that could cause a portion of a facility to become an AFF.

What types of facilities are included in the definition?

Facilities that meet the definition of an AFF come in many shapes and sizes. Some common terms for these facilities include, but are not limited to:

Fitness centers.
Workout clubs.
Cross-fit centers.
Facilities that offer Les Mills programs such as:
- Body Pump.
- Body Step.
- Body Flow.
- Attack.
Pilates facilities.
Tennis centers.
Pickleball facilities.

Are there fitness facilities not included in the definition of retail sales?

Certain organizations that provide access to an AFF are not considered to be making retail sales. Instead, charges for these facilities are subject to B&O tax under the Service and Other Activities classification. They are:

Educational institutions that provide access to an AFF to their staff and students.
- Note: Charges to alumni or other members of the public are considered a retail sale.
Facilities that exclusively provide:
- Yoga, tai chi or chi gong classes.
- Martial arts classes, training, or events.

Other organizations that provide access to an AFF that are not considered to be making a retail sale but are exempt from B&O tax include:

Rent or association fees charged by a landlord or residential association that provides access to an AFF – unless the rent or charges vary depending on whether the tenant or owner has access to the facility.
AFFs provided by an employer to its employees or family members but only when the employer does not charge for their use.

Are any uses of an AFF not considered retail sales?

Yes, in some circumstances, the charge for using an AFF, or portion of an AFF, is not considered a retail sale. Examples include separately stated charges for:

The use of an AFF primarily for a purpose other than engaging or receiving instruction in a physical fitness activity. For example, if a couple wants to get married at an AFF, the charge for the use of the facility would not be a retail sale.
The use of a discrete portion of an AFF, other than a pool, that does not by itself meet the definition of an AFF. For example, a beauty spa that is inside of an AFF is considered a discrete portion not meeting the definition of an AFF.
Services such as advertising, massage, or nutritional consulting that do not require the customer to engage in physical fitness activities to receive the service.
- Note: This does not include personal training services or instruction in a physical fitness activity.
Physical therapy provided by a physical therapist when performed pursuant to a referral from an authorized health care practitioner.

What about lessons offered at an AFF?

All instructional lessons provided at an AFF, including swimming lessons, are considered retail sales. There are no exceptions to this provision in the law.