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Taxing Our Patience by Maureen O’Hagan - CrossFit Journal

Taxing Our Patience

By Maureen O’Hagan

In Affiliation, Rest Day/Theory

September 04, 2013

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Washington state CrossFit affiliates not considered “instructional,” burdened with confusing tax. Maureen O’Hagan reports.

CrossFit Bellevue owner Leilani M. Cerrillo looked around one day and realized something: her clients were paying sales tax and her neighbors’ clients weren’t.

The gymnastics studio next door? Not subject to Washington state sales tax.

The cheerleading school? Not taxed.

But Cerrillo’s box? Taxed.

“I don’t see why my people are being charged sales tax and those people are not,” she said. “I think there’s a lot of gray area.”

Under Washington’s jury-rigged system, if the “primary purpose” of the fitness activity is instruction, it’s not subject to the sales tax. If it’s primarily about fitness, then it is.

No one ever accused the taxman of being logical. In fact, if you bore into state sales-tax rules that apply to physical-fitness activities, things quickly get confusing. Washington’s system is so unclear that while some box owners just buck up and pay, others aren’t forking over a dime; some are getting away with it and others are being penalized.

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3 Comments on “Taxing Our Patience”

1

Geoffrey Jumper wrote …

Washington State is not the only state faced with our shift to service sector jobs and less manufacturing. I currently own one crossfit box, one mom and pop gym and two dry cleaners. To make payroll and keep the home fires burning, luckly I'm a pilot and fly 80 to 90 hours a month to keep cash flow up. The last few years have been very hard. My wife and I work seven days a week and have not had vacation in seven years. My wife is from Europe and when her mother passed away last winter, she could not go home for the funeral because our businesses owned us! Closure? We figured out the current financial state of our county and are making pretty good money. But, the cost is our lives. We have two children and one grand daughter and worldwide travel privileges. Sounds great! Big problem, we are working ourselves to death. CrossFit is about life, enjoying the CF community and drinking a few beers after a Saturday killer wod. After very careful thought, my wife and I are selling all our businesses. The end game for us is an economy that puts so much burden on small businesses. We had to say enough is enough. Luckily we have wonderful friends and I still get to train and coach at a great box across town. My CF addiction is satisfied but not my dreams. Businesses small and large do not know what tax burdens coming for 2014 much less 5 years a head. Just read the Forbes article on Delta Air Lines published last month. I'm working on a new business model which will allow my next business to navigate the tax threats ahead and run although a smaller but lean business; nimble, always trained and ready to capitalize on opportunities. I learn from articles like this one and I hope to see more on the very creative and hard working small box businesses. I travel coast to coast and hit every box I can. A CF box explorer of sorts. We are all in the same bucket, all fighting to run a great business. As a community we will survive and thrive. At the heart of CF, we are the sport of fitness and Washington DOR sees that in big fashion every years at the games. How some boxes escape the taxes? Many times it's who you know. Sad! I hope the future brings financial rewards for those of us who invest in our health and not rely on the government for health care. WOD ON!

2

wrote …

In Missouri, gym memberships and hourly training are considered "Places of Amusement", and are subject to tax. They are taxed under the same statute as going to an NFL football game, believe it or not. The Supreme Court of Missouri's opinion goes on to state that if you are exercising primarily for health, then it's not taxes...but if you are exercising primarily for recreation, then it's taxed. Who, in their right mind, suffers through CrossFit workouts without health being the primary concern? CrossFitters may be labeled a semi-sadistic group, but no one is doing these daily grueling WODs for fun and recreation!

A state representative even tried to overrule this recently by proposing a bill to eliminate taxes on health clubs, and the bill died as quickly as it was introduced. The state should be finding ways to encourage people to take their health and fitness seriously. Instead, they find the health of Missourians "amusing".

3

wrote …

Governments don't give a shit about people's health, only their money. They may talk the Facebook warm and fuzzy about how they are trying to get people to be more physically active, in the end, they just want your money any way they can get it to spend it as they choose.

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