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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