Three specialty fitness club companies, SoulCycle, Flywheel Sports and The Bar Method, have received investigative subpoenas from the New York state attorney general's office for unpaid sales taxes.
According to a Crain's New York Business report, the companies have not been accused of any wrongdoing by Attorney General Eric Schneiderman.
At the heart of the matter is the New York City sales tax that is applied to fitness facilities but not yoga studios. Fitness clubs outside of New York City's five boroughs are exempt from the tax, Crain's reported.
Last year, the New York State Department of Taxation and Finance reversed its earlier decision and said that New York City yoga studios do not have to pay the 4.5 percent sales tax that other New York City clubs pay because yoga offers spiritual benefits. Fitness clubs that include yoga classes along with Pilates, group exercise classes and access to equipment are still subject to the city sales tax, the department added.
SoulCycle and Flywheel Sports are both cycling studios based in New York. SoulCycle has studios in New York City and California; eight of Flywheel Sports' 24 locations nationwide are in the New York City area. The Bar Method, headquartered in San Francisco, has one location in New York City.
SoulCycle and Flywheel Sports do not provide yoga, but according to the Crain's report, many riders attest to the spiritual nature of the workouts in those studios. The Bar Method exercises incorporate a ballet bar and mats and have been compared to Pilates, only without the use of a machine.
A SoulCycle spokesperson declined comment for this story. Flywheel CEO Jay Galluzzo said in a statement: "We received a subpoena and we intend to cooperate fully with the attorney general's office." A spokesperson for the company declined to provide further comments. The Bar Method has yet to respond to a request seeking comment.
Crain's reported that it is unknown whether or not Schneiderman's office is working with the state Department of Taxation and Finance in this case. A spokesman for the department told Crain's, "We don't discuss the specifics of our investigations or auditing activity, but we are continuously monitoring the business environment for widespread, as well as localized, tax evasion."
Earlier this month, a former SoulCycle instructor sued the company on the grounds of payment inconsistent with New York and California state laws.