New Jersey Governor Signs Sales Tax Exemption Bill

TRENTON, NJ – New Jersey Gov. Jon Corzine signed a bill today that would exempt the initiation fees, membership fees and dues charged by nonprofit health and fitness clubs from the state’s 7 percent sales tax.

The sales tax exemptions will be retroactive to Oct. 1, 2006, and the measure will create a system for consumers to receive a refund.

“Slapping the sales tax onto a gym membership is not a means of enticing someone who wants to take the first step to improve their health,” New Jersey Assemblyman Reed Gusciora says. “The ability to offer tax-free fitness memberships will allow us to further promote the ideal of a healthier New Jersey.”

The legislation passed 78-0 with two abstentions in the Assembly. The measure returned to the Senate, where a concurrence vote was taken before Corzine signed the bill into law.

When the bill was delayed in March, Corzine supported repealing the sales tax for nonprofit clubs but expressed concerns about the portion of the bill that included for-profit clubs also getting a tax break.

The International Health, Racquet and Sportsclub Association (IHRSA) opposed the bill, saying it wanted a sales tax repeal on all health clubs, nonprofit and for-profit.

IHRSA opposes a bill recently passed by the Maine House of Representatives allowing the expansion of that state’s 5 percent sales tax to include membership or fees paid for fitness training, health clubs and spas.

IHRSA did score a “victory” of sorts in Connecticut when that state’s legislative session ended June 7. Four bills that IHRSA opposed that would have required health clubs in Connecticut to purchase an automated external defibrillator (AED) without providing liability protection for clubs and their employees died at the end of the session.

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