Why does a tai chi business not have to pay sales tax, and an aikido school does? This a question the martial arts community is asking the State Department of Revenue. Starting in 2016 a new law will require all martial arts facilities to charge sales tax.
Bruce Bookman, the founder and head instructor of Tenzan Aikido in North Seattle, said the first time he learned of the new law requiring his business to charge sales tax on everything from lessons to uniforms, was when a letter arrived from the State Department of Revenue last October.
“I wasn’t aware of the hearings; I wasn’t notified. I felt like we didn’t have very much time to think about this at all or give our input,” Bookman said.
Kim Schmanke, a spokeswoman with the Department of Revenue said the agency is not responsible for notifying every interest group that might be affected by proposed bills.
“It would be impossible for the department to predict whether or not a bill in the form it drafted and being contemplated by the legislature, to know what form it’s going to take. And in this instance for us to try and contact every taxpayer or every potential taxpayer or potential taxpayer about this bill being introduced in the legislature and it’s possible impacts on them is in fact impossible for us to do,” said Schmanke.
The purpose of the new law is not raise extra revenue. The goal is to simplify the tax code. If you own a business that involves recreation and exercise, then you pay sales tax; if not, then you don’t.
Interest groups for yoga, tai chi, dancing; and qigong, a martial art very similar to aikido; made the case that what they do is more about instruction than fitness and recreation.
Bruce Bookman said he would have made the same case for martial arts, if he had known about the change to the tax code.
“It goes far beyond even self defense. It helps a person become a better person, to improve their citizenship, rather than just losing weight or whatever you’d do in a health facility,” said Bookman.
Martial arts Instructors and business owners across the state forming an association. They are asking the Department of Revenue to put the new law on hold for three months. The association’s first matter of business in 2016 will be to help draft a new law making martial arts exempt from having to charge sales tax.
Schmanke said the Department of Revenue will help by reviewing the legislation to make sure it’s ready to introduce.
“It doesn’t mean we’re in an advocacy position for the legislation,” said Schmanke, “But we will help them make sure that the bill that they draft and the language that they create is in fact something that if introduced and they pass in the legislature will work for the tax code.”
The one lesson the martial arts community said it has learned from all of this is that if you’re not at the dinner table in Olympia, staying informed on what’s happening during the session, then you just might be on the menu. To make sure they have a seat at the table in the future, the new martial arts association has hired a lawyer and a lobbyist.
