Opinion ID: 1382721
Heading Depth: 2
Heading Rank: 2

Heading: Missouri Constitutionally Draws A Distinction Between Taxation of Retail Services Provided in a Place of Recreation and Independent Personal Training Services offered by Independent Contractors.

Text: Fitness Edge makes two additional arguments based on the fact that the type of services its personal trainers provide would not be subject to tax under section 144.020.1(2) if the services were provided to the same clients at locations other than a facility owned by the taxpayer. Specifically, Fitness Edge notes that when Mr. Jaudes provided personal training services to the same clients at other fitness facilities not owned by him, he did not have to pay sales tax on the fees, nor did the facility at which he worked. Therefore, it argues, these fees should not be subject to tax when the services are provided at Fitness Edge. As noted above, however, when Mr. Jaudes opened Fitness Edge and began providing his clients with training services for which they paid fees to the facility rather than their trainer, Fitness Edge came within the parameters of section 144.020.1(2) as a place of recreation that receives fees for taxable services at retail. Fitness Edge argues that if section 144.020.1(2) is interpreted to permit it to be taxed when those who provide fitness services as independent contractors would not be taxed, then the statute violates the uniformity requirement of article X, section 3 of the Missouri Constitution. That section states that taxes shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax. Mo. Const. art. X, § 3. The uniformity provision does not prohibit all distinctions among taxpayers; it prohibits only distinctions between those in the same class or subclass. See McKinley Iron, Inc. v. Director of Revenue, 888 S.W.2d 705, 708 (Mo. banc 1994) (The state . . . is not prohibited from treating one class of taxpayer differently from others). In order to comply with this provision, [i]t is only necessary that there be a reasonable basis for the . . . differentiation and that all persons similarly situated . . . be treated alike. Bopp v. Spainhower, 519 S.W.2d 281, 289 (Mo. banc 1975). [4] Gammaitoni v. Director of Revenue, 786 S.W.2d 126, 130-31 (Mo. banc 1990), is instructive. In that case, the taxpayer contested whether its sale of advertising could be subject to tax when similar sales by advertising agencies and broadcasting stations were exempt from tax, arguing that a taxing statute may not impose tax on some businesses and not on others for conducting what is, in essence, the same commercial activity. Id. at 130. This Court rejected this argument, concluding that the distinction drawn between the different natures of the entities that were or were not subject to tax was a reasonable one and, therefore, not constitutionally objectionable. Id. at 131. Similarly here, the relevant constitutional inquiry is whether the statutory distinction between those personal trainers who provide fitness training services in a place of recreation and those who provide it elsewhere is a reasonable or rational one. Training services provided by an independent contractor are different in kind from a business that offers training services along with the provision of exercise equipment, lockers, and other amenities at a permanent, established fitness facility. Distinguishing between these different business models is within the considerable freedom that the legislature enjoys in making classifications in order to produce reasonable systems of taxation. Gammaitoni, 786 S.W.2d at 131.