Tax Updates Gym Operators Need to Know About

    Illinois moves to remove caps on health club fees, Kentucky works on some concerning tax code, and after a major development, PHIT needs your backing.

    Among summer vacations, congressional recesses, and legislative sessions ending, you may think there would not be much to discuss in August, but surprisingly, that’s not the case. We have important updates to talk about and some we want to bring to your attention.

    So, let’s start with the biggest news this summer that could impact the fitness industry.

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    PHIT Passed the House!

    By a vote of 277 to 142, the Personal Health Investment Today (PHIT) Act passed the U.S. House of Representatives and is one step closer to becoming a reality. Now it needs to pass the Senate. The Senate has different rules. Sixty votes are needed to pass a bill in the Senate, which means we need both parties to support PHIT. These 17 Senators already support PHIT.

    Current PHIT supporters in the Senate:

    • John Thune (R-SD) Sponsor
    • Tammy Baldwin (D-WI)
    • John Barrasso (R-WY)
    • Roy Blunt (R-MO)
    • Shelley Moore Capito (R-WV)
    • Tom Carper (D-DE)
    • Chris Coons (D-DE)
    • Joe Donnelly (D-IN)
    • Dean Heller (R-NV)
    • Johnny Isakson (R-GA)
    • Angus King (I-ME)
    • John McCain (R-AZ)
    • Jerry Moran (R-KS)
    • Chris Murphy (D-CT)
    • Gary Peters (D-MI)
    • Mike Rounds (R-SD)
    • Roger Wicker (R-MS)

    If your Senator is not listed, please ask them to support PHIT! You can send this industry-specific prewritten letter or customize it to your liking. We’ve also put together a customizable prewritten letter your members can send.

    If one of your Senators is already a supporter, thank them for supporting a healthier, more physically fit nation. Every piece of communication they receive regarding the PHIT Act can help!

    At the State Level

    On August 8, the Illinois governor signed House Bill 4275 (now Public Act 100-0658). This law removes caps on the maximum fee health clubs can charge for yearly memberships and reduced the initial term of a service contract to one year from the previous two years. These changes will take effect on January 1, 2019.

    Meanwhile, Kentucky legislators have already begun pre-filing bills for the 2019 session. One such pre-filed bill—Bill Request 76—would exempt nonprofit institutions from the 6% tax on sales of admissions and memberships. Applying this exemption exclusively to nonprofit fitness facilities would create an uneven playing field for health club businesses.

    IHRSA will continue to track this bill and work to educate members of the Kentucky Legislature on the importance of incentivizing physical activity and creating a level playing field for businesses.

    We will keep you informed as these and other issues develop. If you have a question or concern about legislative issues impacting the health and fitness industry, email the IHRSA team.

    Author avatar

    Jeff Perkins @JeffD_Perkins

    Jeff Perkins is the Assistant Vice President of Government Relations for IHRSA. He's responsible for monitoring and influencing legislation at the state and federal level to protect club business models and operations, and help promote the health benefits of exercise. Jeff enjoys running, soccer, ice hockey, and ice cream, not in that order.