By Jessie Eisenmenger and Timothy Gustafson

The Missouri Supreme Court held that charges paid by a personal training company to a gym for the rental of office space and limited use of the fitness equipment when conducting personal training sessions are not subject to sales tax. The personal training company paid the gym $6,000 per month to rent office space and market and sell personal training services to the gym’s members. The Missouri Department of Revenue assessed sales tax on the monthly charge, asserting it was a fee paid to a place of recreation taxable under Mo. Rev. Stat. § 144.020.1(2). Because there was no sale of tangible personal property, the Court explained the rental fees would be taxable only if they were for the rendering of a taxable service. In its analysis, the court looked to the plain and ordinary meaning of the phrase “rendering a taxable service” and reasoned that the phrase required an affirmative act, rather than mere passivity. By renting office space and otherwise remaining passive regarding the interactions between the personal training company and its members, the court determined the gym did not perform an affirmative act for the personal training company. Accordingly, the court held the monthly rental fees were not subject to sales tax. Tatson, LLC v. Dir. of Revenue, No. SC94260 (Mo. Feb. 24, 2015).