State's yoga studios won't have to charge sales tax

Yoga instructors will soon join the ranks of lawyers, doctors and engineers in the eyes of the state Department of Revenue. They won't have to charge customers a sales tax.

You can thank Suzy Green-Cindrich, owner of Three Trees Yoga in Federal Way, as well as several other yoga instructors in the region who got the state last week to reverse course on the tax.

Cindrich said she was audited by the state earlier this year and was told her business needed to start charging a sales tax and, in fact, owed three years' back taxes. This was news to Cindrich, who says she'd been told by the Department of Revenue earlier that she didn't need to charge a sales tax.

"It would have been about $20,000," she said. "It would have hurt us a lot. Yoga is not a big-dollar business."

So Cindrich protested, as did other yoga studios. They argued that under state law, they were not required to charge a sales tax.

The confusion was over a provision in the law that says physical-fitness services are subject to a sales tax. However, state Department of Revenue rules said that yoga studios don't have to charge a tax if they're primarily instructional, but they do if it's for exercise, said Mike Gowrylow, a spokesman for the agency.

"We kind of left it up to the provider to determine what they're doing. Some of them said 'we're instructional' and some of them said 'we're just exercise,' " he said.

A state auditor earlier this year visited some studios that were not charging a sales tax and decided that they should have been.

The backlash by the yoga studios made the agency reverse course. "We decided the yoga people had made a very good case that yoga, and similar kinds of things, are not really what most people think of as physical fitness," Gowrylow said.

The state told the yoga studios to keep collecting the tax, if they had been told to do so, but that the department would issue a notice soon telling them to discontinue that starting Dec. 1, Gowrylow said. In addition, none of the studios would be asked to pay back taxes.

The department, however, plans to define what the state considers to be a yoga studio. The agency does not want gyms to simply label an exercise routine as yoga to avoid charging a sales tax, Gowrylow said.

Cindrich said the agency was very responsive to her concerns and she had no complaints.

Anne Phyfe Palmer, owner of 8 Limbs Yoga centers in Seattle, was relieved by the ruling.

Palmer had not been audited by the state but was worried she would be soon. Yoga, she said "is definitely not an aerobic exercise."

"The primary goal of yoga is to study the mind," she said. "We're busy people. We're moving all the time and so through yoga we learn to slow down and over time become more interested and adept at studying the mind."

Andrew Garber: 360-236-8266 or agarber@seattletimes.com