New York – Taxability of Wellness Programs

3/1/2013

SALT Report 2207 – The New York Department of Taxation and Finance issued an advisory opinion regarding whether wellness related services sold to companies, who in turn provide the services to their employees, are subject to sales and use tax.

The wellness program consists of two types of service:  an online component that participants can access through a website and annual in-person visits with the companies’ employees.  The web portal provides participants with nutrition, exercise, and wellness information and an area where they can track their physical activity, eating habits, and weight. In addition to the two services, the Taxpayer also conducts annual biometric health assessments, which involves a questionnaire and a blood lipid panel performed by licensed medical personnel.

The Department determined that the fees charged by the Taxpayer for its wellness program are not subject to the New York City tax that is imposed on the use of, or services provided by, a weight control salon, health salon, or other establishment enumerated in Tax Law section 1212-A(a)(2) because the Taxpayer is not affiliated with any such establishment.

In addition, The Department noted that although the wellness program provides instructional materials to the companies, the materials are not considered an information service because they are an integral component of a broader service. Therefore, the wellness program is not subject to sales tax under Tax Law sections 1105(c)(1) or 1105(c)(9).

Finally, it was determined that the instructional materials are educational as they are designed to teach people how to improve their health, and educational services are not among the taxable services enumerated in section 1105(c) of the Tax Law.

For Further Information

New York Department of Taxation and Finance – TSB-A-13(6)S