Martial Arts Instructors Fight Back New WA State Sales Tax Discriminates Against Some Martial Arts

In January of this year, the Washington State Legislature passed a law (HB 1550) classifying martial arts instruction as “physical fitness”; this law lumps martial arts in with gyms and health clubs, and requires all martial arts schools to charge sales tax on tuition effective January 1, 2016. The law goes further to unfairly discriminate against martial arts by excluding yoga studios, and tai chi and qi gong schools, on the grounds that they are an educational, cultural, and/or spiritual practice.

The Department of Revenue did not announce these new taxes until November. And when they did make the announcement, they used the incorrect federal business codes (codes which clearly separate martial arts and fitness at the national level), so some schools, including Fighting Chance Seattle, never received a formal notice.

Sales tax unfairly burdens lower income earners, and as we mentioned in our post about growing income inequality in Seattle, Washington state has the most regressive tax system in the nation. Most states do not charge a retail sales tax on services.

After hearing about the law through a Facebook post, Sensei Jordan and Jason researched the issue and got in touch with the Washington State Martial Arts Association, an organization of school owners dedicated to overturning this law. As an adviser/school owner, Sensei Jordan joined the group in meeting with the Department of Revenue in Olympia to ask for a delay in implementation.

Representatives from the Department of Revenue discussed the law with us for about an hour. Those in attendance (pictured above) included (from left): Angie Lee (US Martial Arts Center), Bruce Bookman (Tenzan Aikido), Korbett Miller (Miller’s Martial Arts Academy), Jordan Giarratano (Fighting Chance Seattle), Mark Gjurasic (lobbyist), Andy Wilson (MKG Seattle), Chester Baldwin (attorney), Chris Herrman (Alpha Martial Arts), Joni Sharrah (USA Karate Academy), Jason Lee (US Martial Arts Center). Note that none of us are wearing shoes, as this photo was taken at our pre-event meeting with Master Angie Lee’s dojang in Olympia.

The DOR initially refused to offer a delay, but grassroots efforts from the Washington State Martial Arts Association and it’s lobbyists resulted in a letter of support from the State Legislature (pictured below). Due to this activism, there is a small chance we will receive a delay of enforcement on the sales tax, but we will continue to challenge this legislation in 2016. As of now, expect a 9.6% sales tax to apply to your tuition at Fighting Chance Seattle effective January 1, 2016.

Fighting Chance is a small business, not a big-box gym. Every relationship counts; every membership has a direct impact on our ability to stay open and continue to offer our programs and services. We will keep working with our lobbyists and legislators to change this law, but in the meanwhile we can only hope that you stand by us, stick with your training, and keep fighting the Good Fight.

Letter from WA State Legislature to Department of Revenue

LETTER SENT TO THE DEPARTMENT OF REVENUE

By Jordan