NYC To Tax Yoga Studios?

New York yoga studios breathed a collective sigh of relief in 2010 when the “Yoga Bill” was passed, which exempts yoga (including teacher training programs) and martial arts studios from state educational certification requirements. But they’re gearing up for another battle, as the state has recently audited them under the premise that they should be subject to same kind of tax (4.5%) as fitness studios.

Yoga studios are being threatened to identify as fitness studios and, as such, pay licensing fees for the spaces they utilize (up to $30,000), from which dance or movement spaces are exempt. Lastly, the state is seeking to reclassify yoga instructors who teach 4-6 hours of classes a week, currently independent contractors, as employees, a shift that would signify a slew of clerical and financial obligations (taxes and insurance) for yoga studio employers.

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Studios argue that the proposed tax would translate into increased cost for students, around $1 per $20 class, and prevent them in the short-term from raising prices to cover increasing costs. The licensing fees and proposed shift to treat instructors as employees rather than independent contractors would be particularly prohibitive for smaller studios, which lack the celebrity, turnover, and following of cult-yoga studios on the NYC yoga scene.

Is yoga taxable? This is open to interpretation; in New York state, yoga classes haven’t specifically been listed among taxable classes and services. Thus the state’s move to classify yoga as fitness is an attempt to close the legal loophole which has allowed yoga studios to be exempt from taxes so far.

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NYC yoga studios have claimed that they have more in common with dance and movement studios than fitness studios and, as such, should be exempt from the taxes and licensing fees that come with the territory. Of course, the battle for states to regulate in various ways has been underway for years. Virginia successfully exempted teacher training programs from state regulation, and the debate has been underway for several years in Texas.

Unclear is the status of marital arts in this recent move by New York state for taxation and reclassification. Do martial arts studios currently pay tax and classify instructors as employees? Traditional yoga has more in common with martial arts than either dance or fitness, although many modern yoga studios routinely pull students in the door with promises of being stronger and more fit. Certainly, the hot yoga trend has more in common with fitness fad than traditional yoga or martial arts.

Do you think yoga is more similar to dance or fitness? What do you think about the taxing of yoga studios and regulation of the yoga industry?

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