Were a nonprofit association's membership fees subject to Florida admissions tax when membership did not provide recreational or fitness facilities?

Plain-English summary

The association's membership fees were not taxable admissions. Membership in the association did not give an individual access to recreational or physical-fitness facilities, and the association did not own, lease, maintain, or offer such facilities.

Affiliated clubs sometimes collected the association's dues, but they acted only as collection agents for those amounts. That did not turn the association's fees into taxable admissions. The ruling expressly left open the separate tax treatment of admission or grounds fees that a club charged on its own behalf.

What this means for you

Florida looked at the benefit purchased by the dues. Membership without recreational or fitness access was not an admission; a fee that does provide facility access may be taxable in whole or in relevant part.

Common questions

Q: Were the association dues taxable? No.

Q: Why were they not admissions? They did not entitle members to use recreational or physical-fitness facilities.

Q: Did club collection of the dues change the answer? No. The clubs were collection agents for the association.

Q: Did the ruling exempt a club's own facility charges? No. It did not address that separate transaction.

Citations and references

• Fla. Stat. § 212.02(1) — definition of admissions
• Fla. Stat. § 212.04(1)(a), (b) — tax on admissions
• Fla. Admin. Code r. 12A-1.005(4)(f) — club dues and recreational facilities
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-012

Original ruling text

SUMMARY

QUESTION: Are the Association's membership fees collected
by or on behalf of the Association subject to Florida sales
tax?

ANSWER - BASED ON THE FACTS BELOW: The fees are not
admissions as provided by section 212.02(1), F.S., because
no recreational facilities are provided. The taxpayer is
therefore not subject to Florida sales tax as provided by
section 212.04, F.S.

Mar 11, 2002

Subject: Technical Assistance Advisement 02A-012
Membership Fees
Sales and Use Tax
Section 212.04, F.S.
XXX, Petitioner ("Association")
FEI #: XX

Dear :

This is in response to your letter dated December 20, 2001,
regarding the taxability of membership fees collected by
Association. You have requested a Technical Assistance
Advisement (TAA).

ISSUE PRESENTED

Whether the Association membership fees, collected by or on
behalf of the Association, are subject to Florida sales and use
tax.

FACTS

The Association is a not-for-profit corporation organized under
the laws of the State of Florida. The Association is exempt

from federal income taxation pursuant to the provisions of
Section 501(c)(7) of the Internal Revenue Code of 1986, as
amended.

According to the organizational documents, the Association is a
not-for-profit corporation organized to XXX. The Association
furthers its purposes through many activities, including, but
not limited to, seeking the establishment and maintenance of
laws that will facilitate the Association's purposes and to
publish and distribute communication media in the furtherance of
the Association's purposes. The Association does not own,
lease, maintain or hold out to the public any recreational
facilities.

The Association has nearly XXX individual members.
Additionally, the Association has an affiliation with
approximately XXX clubs throughout the United States and Canada.
These clubs fall into one or more categories:

Proprietary clubs (clubs that are privately owned that
provide recreation facilities to individuals for a fee).

Co-operative clubs (social clubs owned by members thereof).

XXX clubs (clubs, both proprietary and co-operative, that
make facilities available).

XXX clubs (co-operative and proprietary clubs that do not
have facilities). The clubs are further classified into
one (1) or two (2) types: a "100% club" or a regular
contract club. In the case of a 100% club, each club
member must, as a prerequisite to becoming a club member,
be or become a member of the Association. In the case of a
regular contract club, a certain number of club members
must be Association members. The Association does not have
an ownership interest in any club and does not share in the
revenues of any club.

Clubs that become affiliated with the Association, whether as a
full member club or an affiliate club, receive certain benefits
from the Association. These benefits include participation in

the Association's governmental affairs programs, participation
in the Association's public education and awareness programs,
discounted or free advertising in the Association's
publications, and assistance in membership development.
Furthermore, the level of benefits received by a 100% club is
greater than the level of benefits received by an affiliate
club.

Clubs that become affiliated with the Association are required
to meet certain standards as established by the Association.
These standards are promulgated in an effort to provide
individual Association members with a "level of comfort" that
clubs the individual may join have been pre-screened by the
Association and maintain certain minimum levels of quality
standards. Similar, for example, are the "seal of approval"
given to hotels or motels by travel associations (such as the
American Automobile Association).

Individuals who become members of the Association, generally
join either directly or through a club. In the former instance,
membership dues are paid directly by the individual to the
Association. In the later case, the membership dues are either
paid to the Association by the club on behalf of the individual
or are collected from the individual on behalf of the
Association and remitted to the Association. For example, in
some cases a full member club will charge a prospective member a
set amount regardless of whether the individual is an
Association member. If the individual is not an Association
member, the club will purchase an Association membership on
behalf of that individual (for no additional charge). If,
however, the individual is an Association member, the club will
not purchase an Association membership on behalf of that
individual. In other cases, a full member club will require a
prospective member to join the Association, if the individual is
not already an Association member. In these instances, an
individual who is not already an Association member will be
required to pay both a membership fee to the club and
Association dues (which are collected by the club on behalf of
and remitted to the Association).

The Association does not own or operate any facilities, other

than facilities used to conduct administrative functions of the
Association. Any facilities that may be used by a member are
owned and/or operated by a club. The use of any such facility
can only be granted by a club. Furthermore, a significant
number of Association members do not belong to any club, but are
merely members of the Association.

Copies of the charter club contract, club election, direct
member application, and a club transmittal form were provided.
The charter club contract provides that the charter club will
provide its full support to the Association by promoting the
Association in its public relations, through its newsletter, and
to individual members. The charter club member is required to
support the Association by a timely submission of new and
renewing Association memberships into the national and regional
associations in accordance with membership procedures as
outlined in the Association procedure manual. The XXX clubs are
required to provide a discount of at least 20 percent off daily
ground fees to visiting Association members upon presentation of
valid identification. The charter club is required to allow the
printing of the club's name, address, and phone numbers in
Association publications.

By virtue of the charter club agreement, the Association is
required to provide a responsive and proactive government
affairs program. The Association is also required to provided a
progressive and continual program to develop comprehensive,
productive marketing strategy. In addition the Association
provides a reimbursement of advertising, cash rebates on new and
reinstated memberships, and legal counseling and financial
assistance.

When a charter club signs the election to be a 100% club, the
Association pays an additional $2.00 credit for each new and
renewing membership submitted to Association. Clubs also
receive additional advertising rights in Association_s bulletin,
free Association stationery and brochures, address labels for
each member, and loan eligibility.

TAXPAYER POSITION

Section 212.04(1), Florida Statutes, provides, in part, that the
value of items received from admissions is subject to sales tax.
Section 212.02(1), Florida Statutes, defines "admissions" to be
"... the net sum of money... for admitting a person... to any
place of amusement, sport or recreation or for the privilege of
entering and staying in any place of amusement, sport, or
recreation... and all dues and fees paid to private clubs and
membership clubs providing recreation or physical fitness
facilities...." If a fee is collected at the time a person is
admitted to a location, but the fee collected encompasses more
than a charge for the privilege of being admitted to the
facility, sales tax does not apply to the entire amount paid,
but only to that portion of the fee attributable to admission.

In applying the above rules to the Association's situation, no
portion of the fees received by the Association for membership
dues should be subject to Florida sales or use tax. The
Association does not maintain or otherwise provide recreational
facilities or access thereto. Therefore, no portion of the fee
received by the Association for membership in the Association
grants to any individual admission to any facility. Rather,
admission to a recreational facility is obtained only through
payment of an admission fee to a club. The fact that the
Association fees may be collected by a club on behalf of the
Association should not dictate a contrary result, since the club
is collecting those fees on behalf of the Association or is
purchasing the Association membership directly from the
Association. Dues paid or collected on behalf of the
Association merely provide membership in the Association.

APPLICABLE STATUTES AND RULES

Section 212.02(1), F.S., provides:

(1) The term "admissions" means and includes the net sum of
money after deduction of any federal taxes for admitting a
person or vehicle or persons to any place of amusement,
sport, or recreation or for the privilege of entering or
staying in any place of amusement, sport, or recreation,
including, but not limited to, theaters, outdoor theaters,
shows, exhibitions, games, races, or any place where charge

is made by way of sale of tickets, gate charges, seat
charges, box charges, season pass charges, cover charges,
greens fees, participation fees, entrance fees, or other
fees or receipts of anything of value measured on an
admission or entrance or length of stay or seat box
accommodations in any place where there is any exhibition,
amusement, sport, or recreation, and all dues and fees paid
to private clubs and membership clubs providing
recreational or physical fitness facilities, including, but
not limited to, golf, tennis, swimming, yachting, boating,
athletic, exercise, and fitness facilities, except physical
fitness facilities owned or operated by any hospital
licensed under chapter 395.

Section 212.04(1)(a) and (b), F.S., provides:

(1)(a) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
sells or receives anything of value by way of admissions.

(b) For the exercise of such privilege, a tax is levied at
the rate of 6 percent of sales price, or the actual value
received from such admissions, which 6 percent shall be
added to and collected with all such admissions from the
purchaser thereof, and such tax shall be paid for the
exercise of the privilege as defined in the preceding
paragraph....

Rule 12A-1.005(4)(f), F.A.C., provides:

(f) Dues and fees paid by persons for membership in clubs
that do not entitle the members to use recreational or
physical fitness facilities are not subject to tax.
Examples of such clubs are sewing clubs, bowling clubs,
square dancing clubs, bridge clubs, and gun clubs where the
dues or fees entitle the payor to be a member of the club,
but do not entitle the payor to use recreational or
physical fitness facilities.

RESPONSE

Section 212.04(1)(a), F.S., provides that a person who receives
anything of value for engaging in the business of selling
admissions is exercising a taxable privilege. Section
212.04(1)(b), F.S., imposes the tax for the exercise of this
taxable privilege at the rate of 6 percent of the sales price or
the actual value received from such admissions. As provided by
Rule 12A-1.005(4)(f), F.A.C., amounts paid for membership that
do not entitle members to use recreational or physical fitness
facilities are not admissions as defined by section 212.02(1),
F.S. Since Association is not entitling its members to use
recreational or physical fitness facilities, the membership fees
received by Association are not for admissions. Therefore,
Association is not exercising a taxable privilege, as provided
by section 212.04(1)(a), F.S.

Since the clubs act as mere collection agents in collecting
Association's fees on the behalf of Association, the Association
is not considered to be engaging in a taxable privilege, as
provided by section 212.04, F.S. Therefore, Association is not
required to collect tax on such income. The fact that different
clubs may choose to have varying percentages of their membership
as members of Association does not by itself subject the fees to
taxation. This advice does not address the separate transaction
between the club and its members regarding charges for
admissions or ground fees collected by the club on its own
behalf.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advice as specified in Section 213.22, F.S. Our
response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advise is based, may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the

conditions of s.213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734

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Enclosure