Amusement Tax Gets Benched

By: John Woods

On July 1, 2019, Tennessee’s Amusement Tax on small gyms was repealed, tearing down a sizeable obstacle to Tennesseans’ ability to get physically fit. The widely-discussed Amusement Tax applied sales tax to small, boutique firms but not their “big-box” competitors. The tax began in 1986 when a carve-out was tailor-made for a big-box gym competing against a non-taxed YMCA in Chattanooga, Tennessee. That carve-out exempted the big-box gym and others like it from the sales tax but left sales tax in place for small gyms. Over the next 30 years, no one in Nashville seemed to notice that many new boutique fitness studios weren’t collecting the tax.

Then, in June 2018, the Tennessee Department of Revenue issued Notice #18-09 and signaled its renewed intent to seek sales tax from those fitness studios that did not meet the 1986 statute’s provisions: 

  • One full-time employee certified in administering health assessments or state-licensed paramedic; 

  • Open 70 hours per week; 

  • At least 15,000 square feet in use

  • Offer three or more of either (a) health assessments including blood chemistry and urinalysis, (b) racquetball, (c) exercise equipment, (d) track or swimming; and (e) aerobics.  

CrossFit, OrangeTheory, barre, spin and yoga studios immediately began a grassroots campaign to end the unfair head-start given to big-box gyms. Starting July 1, your community fitness studio should have started giving your wallet a break, even if it takes a pound of your sweat instead.