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Technical Assistance Advisory No. 88-005 Re: Consumer Sales Tax Imposed On Musical Exercise Program This is in response to your letter of June 9, 1988 requesting a ruling that your client, XYZ, a partnership offering a musical exercise program, is exempt from sales tax as a personal service. Your letter in pertinent part describes the program as follows. XYZ is a very small operation offering only five one hour classes a week of a musical exercise program. Classes are held at a church in West Virginia. The business of XYZ does not entail the sale of any tangible personal property. This musical exercise program is for persons of all ages and fitness levels. A normal class consists of a number of musically choreographed skeletal muscle exercises certain of which focus on overall body posture, body alignment, flexibility and stress and tension reduction. The remaining exercises target a particular body area for increased muscle endurance and strength and to tone and shape specific muscles. One of the most significant assets of the program is that it is a program which can be adapted to the needs of each individual student. The students range in age from high school teenagers to persons in their sixties and early seventies, all with diverse fitness abilities. Obviously with such an age and ability difference each student does not perform each exercise in the same way. It is the duty of the instructor to adapt and modify each exercise to fit the abilities and physical limitations of each student and this program is flexible enough to meet that challenge. At the beginning of each eight-week set there is a two week learning period. Each exercise is taught to the class as a whole with attention being given to proper technique, body position, etc. Many students have been participating in the program for years so that although they continue to improve they need onlyminimal instruction and body positioning. Other students are either new or are not as kinesthetically aware as others and they must receive special instruction and often the exercises must be modified to fit their particular needs. This special attention usually continues throughout the remainder of the eight-week period and generally into additional exercise sets and includes "hands on" instruction such as body positioning and movement, tailoring the exercises to meet the needs of specific injuries (usually knee and back) and to meet the needs of specific physical conditions such as arthritis, pinched nerves and stroke handicaps. The classes emphasize that physical fitness is a continual learning process. Not only does the choreography become better as a result of new research and increased education in the industry, but each student is responsible for continuing to learn from the class about their bodies -- about the muscle groups, how to isolate them and how to move the body in the most effective, efficient and synergistic manner. This program is not aerobic exercise in that it only exercises the skeletal muscle system and is not designed to improve the cardio-respiratory system. It is the position of XYZ that it is offering a personal service as defined in W.

Va. Code Sec. 11-15-2 to be a service "rendered to the person of an individual

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*" and as described in Consumer Sales and Service Tax Regulation 8.1.2 which states in part that qualification as a "personal service will be determined by the nature of physical contact, the degree and level of individual supervision and the degree to which the program is tailored to the requirements of the individual participant". The West Virginia Consumers Sales and Service Tax is imposed on sales of tangible personal property and selected services in this State. See W.

Va. Code §

11-15-3. All such sales are subject to the sales tax unless excepted or exempted. See W.

Va. Code §

11-15-6. The sales which are excepted from taxation are sales of professional services, personal services and services provided by corporations subject to regulation by the Public Service Commission. See W.

Va. Code §

11-15-8. There are twenty-six exemptions listed under W.

Va. Code §

11-15-9. It is presumed that all sales and services are subject to the tax until the contrary is clearly established. See W.

Va. Code §

11-15-6. The relevant subsections of 110 C.S.R. 15, §

8.1.2, "Personal Services," are set forth below. 8.1.2.1 Personal services shall include those services done to or performed on the person of an individual, and such services must be directly from one person to another. Personal services include barbering, massaging, nursing, manicuring, hair setting, hair washing and dyeing, services of dental hygienists and similar services. 8.1.2.2 As provided in Section 110-15-2 of these regulations, personal services are services rendered to the person of an individual without, at the same time, selling tangible personal property: Provided, That the tangible personal property is not used and consumed in the rendering of the personal service. In order for the service to be personal in nature, it is necessary for there to be physical contact of a continuing nature by the provider of the service to the recipient of such service. Additionally, it is necessary for such contact to directly affect the person or the clothing worn by such person. 8.1.2.3 Not all personal physical fitness programs qualify as personal services. The issue as to whether a program qualifies as a personal service will be determined by the nature of physical contact, the degree and level of individual supervision, and the degree to which the program is tailored to the requirements of the individual participant. Mere monitoring, even if by computer, of performance is insufficient to qualify; however, individual instruction and performance monitoring in conjunction with a program specifically designed to meet the needs of the individual would fall within the category of activity which would be considered as personal service. This activity should not be confused with courses of instruction in the martial arts, boxing, aerobic dancing, etc., which, while being physical in nature, are not service oriented. The above regulations have been in effect since July

1, 1987 and have been amended only once since then, by the addition on June

1, 1988 of the provision in 110 C.S.R. 15, §

8.1.2.2 that tangible personal property used and consumed in rendering a personal service would not be taxable. Since XYZ does not sell tangible property, this recent amendment is irrelevant to the question of its exemption status. The question to be decided is whether musically choreographed exercise classes are "personal services" as defined by the above regulations. Such classes are not among the examples specifically listed as personal services: "Barbering, massaging, nursing, manicuring, hair setting, hair washing and dyeing, services of dental hygienists and similar services." See 110 C.S.R. 15, §

8.1.2. Nor are such classes among the examples specifically excluded as personal services: "Courses of instruction in the martial arts, boxing, aerobic dancing, etc." Hence, further application of relevant law to the facts presented is in order to determine whether musically choreographed exercise classes are "similar services" to the personal services listed, or whether they are more like the examples of courses of instruction specifically excluded as personal services. According to 110 C.S.R. 15, §

8.1.2.1, personal services are those services directly done to or performed on the person of an individual by another. In order for the service to be personal in nature, it is necessary for there to be physical contact of a continuing nature by the provider of the service to the recipient of such service, such as that provided when a person's hair is cut or nails are manicured. See 110 C.S.R. 15, §

8.1.2.2. While XYZ's program "includes 'hands on' instruction such as body positioning and movement," such contact could not be fairly described as "contact of a continuing nature" since it is only included incidentally to the exercises, in much the same way physical contact occurs between teacher and pupil in the courses of instruction specifically excluded as personal services. Furthermore, the incidental physical contact used to teach XYZ's pupils correct body positioning and movement does not "directly affect the person [body] or the clothing worn by such person." Only if the purpose of such contact were body positioning could such contact properly be considered as having a direct effect on the pupil's body. However, the stated purpose of the workout program is to produce positive effects in the body which last more than the momentary changes in body position - specifically, changes in body posture, body alignment, flexibility and muscle strength and endurance. Since body positioning is only an intermediate step in accomplishing these purposes, assistance in body positioning affects the body indirectly rather than directly. Such incidental contact indirectly affects the pupils' potential physical fitness by teaching them how to properly perform the exercises so that they can themselves affect their own physical fitness in a positive way. As stated in 110 C.S.R. 15, §

2.15.3, personal services "must be done in person without the intervention of another." Requiring the pupils to exercise to improve their fitness is the most fundamental kind of "intervention by another," since no improved fitness could result from the instruction alone. Barbering, massaging, nursing, manicuring, hair setting, hair washing and dyeing, and services of dental hygienists do not require significant active participation of the customer in the rendering of the personal service. These services are "personal" because the continual personal touching of the client on a one-to-one basis is essential for their performance. On the other hand, courses of instruction in the martial arts, boxing, aerobic dancing, etc. - like your client's classes - do require significant active participation of the customer, do not involve continuing physical contact between the instructor or supervisor and the customer, and are aimed at teaching the student to perform the desired result rather than performing the desired result directly for the customer for a wage. Thus, it would seem that the group of services which musically choreographed group exercises most resembles is the courses of instruction excluded as personal services. Also, your client's exercise classes are conducted as a group, whereas instruction must be individualized before it, in conjunction with performance monitoring pursuant to a program designed to meet the needs of the individual, may be considered to be a personal service. 110 C.S.R. 15, §

8.1.2.3. Similarly, for a physical fitness program to qualify as personal services, the supervision must be individual supervision. See 110 C.S.R. 15, §

8.1.2.3. Each of these requirements for individualized treatment are in addition to the requirement for continuing physical contact discussed above. In short, while there is intermittent physical contact between your clients and their students, the essence of the service being provided is group physical education rather than personal service as described in the Tax Department's regulations. A tax law under which a person claims an exemption is to be strictly construed against the person claiming the exemption. Wooddell v. Dailey, 160 W.

Va. 65, 230 S.E.2d 466 (1976). Therefore, your client's exercise classes are not exempt from sales tax under the personal services exception. This applies only to the period of time subsequent to July

1, 1987 when the rules cited went into effect. __________________________ Michael E. Caryl State Tax Commissioner Date: August 24, 1988