Were hourly professional golf lessons and the included range balls subject to Florida sales tax?

Plain-English summary

Florida exempted the hourly professional golf lessons from sales tax. The PGA professional provided instruction as an independent contractor, and the fee did not entitle the customer to use the golf facility beyond what was needed during the lesson.

Range balls included in the single lesson price were an inconsequential part of the exempt professional service. But the golf-course operator's own purchase of those balls was taxable because it was not buying them for resale.

What this means for you

Instruction fees should be limited to genuine professional instruction and incidental facility use. A separate ball charge, general recreational access, dues, or membership rights could change the analysis.

Common questions

Q: Did customers owe tax on the balls used during lessons? No, because there was no separate charge for them.

Q: Did the operator buy the range balls tax-free for resale? No. Its initial purchase was taxable.

Citations and references

• Fla. Stat. § 212.08(7)(v)1. — professional services and inconsequential sales
• Fla. Stat. § 212.04 — admissions
• Fla. Admin. Code r. 12A-1.005(4) — professional instruction and facility use
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-004

Original ruling text

SUMMARY

QUESTION: Are the golf lessons the Taxpayer provides to its
customers, for an hourly charge, subject to sales tax?

ANSWER - Based on the Facts Below: No. Pursuant to Section
212.08(7)(v)1., F.S., professional services such as
professional golf lessons are exempt from sales tax. In
addition, the provision of range balls is exempt because it
is an inconsequential element of the professional services
for which no separate charges are made. Because the
customer is not entitled to the use of the Taxpayer's
facilities, (other than that used in conjunction with the
professional services) the fees paid to the Taxpayer are
not subject to tax under Rule 12A-1.005(4), F.A.C.

Jan 28, 2003

Subject: Technical Assistance Advisement 03A-004
Golf Lessons
Sales and Use Tax
Sections 212.02, 212.04, and 212.08, F.S. (Florida
Statutes)
Rule 12A-1.005, F.A.C. (Florida Administrative Code)
XXX ("Taxpayer")
FEI: XX

Dear :

This response is in reply to your letter dated November 26,
2002, requesting this Department's issuance of a Technical
Assistance Advisement ("TAA") pursuant to Section 213.22, F.S.,
and Chapter 12-11, F.A.C., regarding the referenced matter and
party. An examination of your letter has established that you
have complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department is hereby granting
your request for issuance of a TAA.

ISSUE

Whether the golf lessons the Taxpayer provides to its customers,
for an hourly charge, are subject to sales tax.

FACTS

Your letter provides:

The Taxpayer operates a golf course including a driving
range. The Taxpayer proposes to provide golf lessons at its
driving range to customers for an hourly charge. A
Professional Golf Association (PGA) professional
instructor, operating as an independent contractor, will
teach the lessons. The Taxpayer will pay the PGA
professional instructor a percentage of the hourly charge
it collects from its customers for the instruction. In
addition to providing the PGA professional golf instructor,
the Taxpayer provides the driving range and the golf balls
to the customer the provision of which is included in the
hourly charge.

THE TAXPAYER'S POSITION

The transaction as contemplated by the Taxpayer is not subject
to sales tax, because the golf instructions are professional
services specifically exempted by Section 212.08(7)(v)1., F.S..
Further, the Taxpayer is not subject to the admission tax, since
the hourly charge does not entitle the customer to the use of
the club's facilities. Finally, the provision of the golf balls
is an inconsequential element of the nontaxable professional
golf instruction.

APPLICABLE STATUTES AND RULES

Section 212.02, F.S., provides in part:

The following terms and phrases when used in this chapter
have the meanings ascribed to them in this section, except
where the context clearly indicates a different meaning:

(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.

(14)(a) "Retail sale" or a "sale at retail" means a sale to
a consumer or to any person for any purpose other than for
resale in the form of tangible personal property or
services taxable under this chapter, and includes all such
transactions that may be made in lieu of retail sales or
sales at retail. A sale for resale includes a sale of
qualifying property. As used in this paragraph, the term
"qualifying property" means tangible personal property,
other than electricity, which is used or consumed by a
government contractor in the performance of a qualifying
contract as defined in s. 212.08(17)(c), to the extent that
the cost of the property is allocated or charged as a
direct item of cost to such contract, title to which
property vests in or passes to the government under the
contract. The term "government contractor" includes prime
contractors and subcontractors. As used in this paragraph,
a cost is a "direct item of cost" if it is a "direct cost"
as defined in 48 C.F.R. s. 9904.418-30(a)(2), or similar
successor provisions, including costs identified
specifically with a particular contract.

(15) "Sale" means and includes:

(a) Any transfer of title or possession, or both, exchange,
barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of
tangible personal property for a consideration

(16) "Sales price" means the total amount paid for tangible
personal property, including any services that are a part
of the sale, valued in money, whether paid in money or
otherwise, and includes any amount for which credit is
given to the purchaser by the seller, without any deduction
therefrom on account of the cost of the property sold, the
cost of materials used, labor or service cost, interest
charged, losses, or any other expense whatsoever. "Sales
price" also includes the consideration for a transaction
which requires both labor and material to alter, remodel,
maintain, adjust, or repair tangible personal property.
Trade-ins or discounts allowed and taken at the time of
sale shall not be included within the purview of this
subsection. "Sales price" also includes the full face value
of any coupon used by a purchaser to reduce the price paid
to a retailer for an item of tangible personal property;
where the retailer will be reimbursed for such coupon, in
whole or in part, by the manufacturer of the item of
tangible personal property; or whenever it is not
practicable for the retailer to determine, at the time of
sale, the extent to which reimbursement for the coupon will
be made. The term "sales price" does not include federal
excise taxes imposed upon the retailer on the sale of
tangible personal property. The term "sales price" does
include federal manufacturers' excise taxes, even if the
federal tax is listed as a separate item on the invoice.

Section 212.04, F.S., provides in part:

(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.

Section 212.08, F.S., provides in part:

The sale at retail, the rental, the use, the consumption,
the distribution, and the storage to be used or consumed in
this state of the following are hereby specifically exempt
from the tax imposed by this chapter.

(7)(v)1. Also exempted are professional, insurance, or
personal service transactions that involve sales as
inconsequential elements for which no separate charges are
made.

Rule 12A-1.005, F.A.C., provides in part:

(3) TAXABLE ADMISSIONS AND PARTICIPATION FEES. The
following paragraphs contain examples of admission charges
that are subject to tax, unless such admissions are
specifically exempt under the provisions of s. 212.04(2),
F.S. This list is not intended to be an exhaustive list.

(a) Admissions to any place of amusement, sport, or
recreation are subject to tax.

(g) Charges made for the privilege of bowling, golfing,
swimming, using trampolines, for playing billiards, ping
pong, tennis, squash, badminton, slot racing, go-kart
racing, and similar sports are admissions subject to tax.

(4) DUES AND INITIATION FEES, EQUITY AND NONEQUITY
MEMBERSHIPS, CAPITAL CONTRIBUTIONS AND ASSESSMENTS,
REFUNDABLE DEPOSITS, AND USER FEES.

(a)1. Dues and user fees paid to any organization,
including athletic clubs, health spas, civic, fraternal,
and religious clubs, and organizations that provide
physical fitness facilities or recreational facilities,
such as golf courses, tennis courts, swimming pools,
yachting, boating, athletic, exercise, and fitness
facilities, are subject to tax. Dues and user fees do not
include:

***
(d) Fees paid to private clubs or membership clubs that do
not entitle the payor to the use of the club's recreational
or physical fitness facilities are not subject to tax.
Examples of such fees are:

Charges to members or nonmembers to establish or maintain a
handicap, ranking, or average.

Charges for professional instructions in any sport
conducted at the club, so long as such charges are
exclusively for the instructions and include the use of the
facility only during the period of time the instructions
are taking place. It is not the intention of this rule to
allow a club to exempt what is in effect a dues or
membership fee by labeling such charges as instruction
fees.

RESPONSE

We will frame our response roughly along the organization of the
"Discussion and Analysis" section within your letter of November
26, 2002.

First, we agree that the golf lessons are "professional
services" and, therefore, that portion of the hourly charge
"paid" to the professional instructor is tax-exempt under
Section 212.08(7)(v)1., F.S. Likewise, so long as the golf
balls being used during the lessons are not separately charged
to the customer, their provision would be an "inconsequential"
sale under Section 212.08(7)(v)1., F.S., and be tax-exempt. The
initial purchase of the golf balls to be used at the driving
range ("range balls"), by the Taxpayer, is a taxable event
because the range balls are not for resale.

Second, we agree with your repeated opinion that the range balls
used during the lessons would not be taxed when used during the
professional instruction. We reiterate that the range balls are
tax-exempt, so long as there is no separate charge for them
(i.e., they are included in the hourly fee paid by the

customer). However, the initial purchase of the range balls by
the Taxpayer is a taxable event because the range balls are not
for resale.

Finally, because the fee paid by the customer to the Taxpayer
does not entitle the customer to full use of the Taxpayer's
facilities, the total fee paid by the customer is tax exempt.

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,

Eric R. Peate
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4714

ERP
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