Reprinted from YogiJBrown. This is the best article I’ve read regarding the recent flurry of news around taxes and New York City yoga studios. Everyone practicing or teaching yoga should read it so here it is!
Yoga, Business and Government
With all the deserved criticism being leveled upon the yoga industry of late, it’s important to distinguish between the influence of corporate business and what is happening at the grassroots. There is no better example of the disparity between these two mores than the efforts of Yoga for NY, an organization of yoga centers and teachers that have banded together to see that their interests are represented in local government.
In 2009, faced with a decimated budget, the NY State Bureau of Proprietary Secondary Schools sought to re-interpret an old statute and fleece yoga teacher training programs by having them classified as vocational schools. The BPSS sent out 80 cease and desist letters to yoga centers throughout NY state threatening closure and heavy fines. The statute cited had an exemption clause for instruction in “dancing, music, painting, recreation and athletics.” Apparently, they didn’t think to include yoga when the statute was originally written in the 1940′s.
Had the BPSS been successful, the large majority of small independent yoga centers would have been forced to close. Fortunately, the NY yoga community rallied and formed Yoga for NY to challenge the BPSS assault. Yoga for NY was able to raise funds, hire lobbyists and ultimately solicit the support of then Senator and now, Attorney General Schneiderman, who ushered through new legislation that added yoga to the list of exemptions.
Recently, a new set of issues has arisen and, once again, Yoga for NY is being called to action. At a meeting last month, attended by representatives from 55 yoga centers and Senator Perkins, two topics of immediate concern were voiced:
1. Are yoga classes subject to a 4.5% sales tax?
2. Are yoga teachers employees or independent contractors?
When I opened a yoga center in 2007, I was informed by the Department of Taxation that yoga classes are a form of instruction, comparable to say a dance class, and are not subject to sales tax. However, several other centers who are currently under audit are being told something different. Upon further inquiry, the Department of Taxation referred to a vague notice on their website that includes the word yoga and is dated April 20, 2011. When pressed further on the lack of clarity in the notice, they returned that “the matter is under review.”
What I find particularly interesting here is that one of the reasons that yoga centers are being reevaluated for tax liability is the way that yoga is being advertised. There is a specific provision in existing law for taxation of “weight control salons.” So, those who have long lamented the superficialization of yoga in advertising have an even more legitimate gripe. Touting yoga as form of weight loss may well cause yoga classes to become newly taxed, which means that the cost of all yoga classes will go up. The added expense will most certainly be passed directly to the consumer. Smaller centers simply cannot afford to absorb the cost.
The second issue regarding the status of yoga teachers is even more alarming. If it were deemed that yoga teachers must be classified as employees, requiring yoga centers to abide by the corresponding regulations, most smaller centers would again be forced to close or operate illegally.
I made my living as a self-employed yoga instructor for over ten years before I opened a yoga center. In all that time, I never once received a W2. I was always an independent contractor with a stack of 1099′s. Many of the teachers working at my center have only one or two classes a week. Even those that do teach more still have classes at other centers. In order for a yoga teacher to make a living, they must teach at more than one center. Also, yoga teachers have their own websites and contract different pay scales and terms with different centers. Seems to me, yoga teachers are the very epitome of independent contractors.
Both of these issues are unresolved. Senator Perkins has made his office available to help Yoga for NY work through these matters. One important aspect that has become clear is that there is no official, government sanctioned, definition for what a yoga teacher does. From a yogic perspective, this is profoundly appropriate, but when it comes to the taxation of business, it is eminently problematic.
Whether or not a working definition for what a yoga teacher does can be formulated that will allow independent centers and teachers to do the small business of yoga in their local communities and still satisfy their civic obligations remains to be seen. However, these issues stem from the common misconception that yoga has become a lucrative career. In a recent study, yoga is listed as the 4th fastest-growing industry in America, just behind generic pharmaceuticals, solar panels and for-profit universities. From 2002 to 2012, the Pilates and Yoga industry grew an average of 12.1% per year and is projected to expand 5.1% in 2012. In the five years to 2017, industry revenue is expected to grow at an average annual rate of 4.8%.
What is lost in these statistics is the hard fact that little of this incredible growth has found its way into the pockets of independent yoga centers and teachers. In fact, the average pay for yoga teachers has not changed in the last fifteen years. These profits are being reaped by corporate entities who are capitalizing on the soul work being done by heart-felt practitioners who do it for love more than money.
I have often been highly critical of the NY yoga community. After attending the last Yoga for NY meeting, I felt proud to be a part of it. On the whole, the NY yoga community is not only earnest in its efforts to help people but is also doing its best to effect good governance. I sincerely hope that the state, and potentially federal, agencies charged with making the pertinent determinations will not simply play into the hands of corporate interests but do right by the constituents they are commissioned to serve.