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Confusion as 'spiritual' fitness boutiques probed for unpaid sales taxes

Participants ride exercise bikes during a group outdoor fitness promotion in central Sydney on July 5, 2011. The event was given a Tour de France flavour with an instructor pretending to involve the cyclists in a stage of the race as they exercised.   AFP PHOTO / Greg WOOD (Photo credit should read GREG WOOD/AFP/Getty Images) GREG WOOD/AFP/Getty Images)

Three of New York's trendiest fitness clubs may be putting a spiritual spin on their services as a way of avoiding sales taxes, but state Attorney General Eric Schneiderman isn't having it, Crains reports.

Schneiderman last week issued subpoenas for unpaid sales taxes to popular spinning clubs SoulCycle and Flywheel Sports, and to Bar Method, which bills itself as a combination ballet and Pilates-style workout. The subpoenas are investigative and the companies have not been accused of any wrongdoing.

Fitness companies in New York City, uniquely within the state, are subject to sales taxes unless their services are limited to yoga and meditation, which allows them to qualify for a religious exemption. Bar Method, SoulCycle and Flywheel Sports do not offer yoga, but their branding and testimonials often tout a spiritual element to the workouts.

The tax distinction between yoga studios and other fitness clubs was only made by the state last July, and a consultant for the health and fitness industry told Crains that the problem had arisen before.

"There's been a real confusion for years as to what the criteria are for payment," said Richard Caro, president of Management Vision. "This is not something that's a new topic."

 
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