If you’re a dance teacher, fitness center owner, or gymnastics teacher in Missouri, you may have heard of this “entertainment tax” that your establishment is supposed to pay.
Or maybe not.
Long, semi-short story: In Missouri, “places of entertainment, amusement, and recreation” – which traditionally meant places where the public was entertained by concerts or spectator sports – are subject to sales tax . But in 2008, a state Supreme Court ruling in a case called Michael Jaudes Fitness Edge, Inc. v. Director of Revenue everything turned everything upside down.
Jaudes, a personal trainer for Creve Coeur, argued he should receive a refund of sales tax paid on fees collected from customers, claiming the fees covered personal training, not gym use. for entertainment or entertainment purposes. Jaudes lost the case, with judges ruling that because he had opened an establishment he used to train his clients, he would have to pay entertainment tax like other establishments.
The problem with such decisions is that no matter how precise they can be on paper, they set a precedent. The Revenue Department is now citing the case asking people in similar situations to pay sales tax on entertainment. It’s not just personal trainers, but dance and gymnastics teachers who find themselves taken care of. In many cases, they don’t even realize they are obligated to pay until they receive a notification demanding back taxes, says Heidi Geisbuhler, chief of staff to State Senator Bob Dixon (R -Springfield). “TThe dance studio in many cases … “she said,” didn’t realize they owed anything. ”
This is why the legislator acts. Senator Dixon introduced a bill in January that would clarify what is defined as a place of entertainment, exempting dance studios, gymnastics studios and fitness centers. Additionally, Sen. Will Kraus (R-Excelsior Springs) has introduced a bill over the past two years requiring the Department of Revenue to at least notify these business owners if there is a change in the interpretation of laws on sales or use taxes. Both bills are still pending.
But because many groups did not know they had to pay the tax, there was a backlash in the attempt to reduce it. A petition on change.org even originally targeted Dixon, apparently under the assumption that he was initiating the tax, not trying to reduce it. (His since been corrected.)
Geisbuhler says Dixon’s goal is to get things back to what they were before the court ruling. She thinks the law was never meant to cover gyms, let alone fitness classes or dance classes. “With SB 706, Senator Dixon is trying to dispel the confusion surrounding the definition of entertainment venues and allow fitness centers, gymnastics studios and dance studios to operate with a sales tax exemption. like they did before, âshe said. said.
And hey, if the net result is that it attracts more people to the gym, or the dance studio, who are we to discuss that?