Were mandatory homeowners' association dues supporting common recreational facilities taxable admissions?

Plain-English summary

Resident members paid mandatory annual dues to a homeowners' association that owned and maintained recreational common areas. The governing documents required payment as a condition of owning or occupying specified parcels, and unpaid assessments could become liens.

Florida found that the payments maintained a property right—the easement running with and appurtenant to the parcels—rather than buying access to recreational facilities.

The dues therefore satisfied the homeowners'-association exclusion and were not taxable admissions.

What this means for you

Recreational amenities do not automatically make association dues taxable. Mandatory ownership-linked assessments for common areas are different from voluntary club payments for the right to use facilities.

Common questions

Did members use recreational facilities? Yes, but the dues maintained common-area property rights rather than purchasing admission.

Were the dues optional? No. They were mandatory as a condition of ownership or occupancy.

What happened if a member did not pay? The association could place and potentially foreclose a lien on the parcel.

Citations and references

• Fla. Stat. §§ 212.02(1) and 212.04(1) (admissions and admissions tax)
• Fla. Admin. Code r. 12A-1.005(4)(d)3. (mandatory homeowners'-association dues)
• Fla. Stat. § 720.301(2), (9) (common area and homeowners' association)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-002

Original ruling text

SUMMARY
QUESTION(S): Whether sales tax must be collected from Association's members on membership dues for use of
recreational facilities.
ANSWER - Based on Facts Below: Section 212.04(1), F.S., imposes sales tax on the sales price of "admissions" as
defined by section 212.02(1), F.S. Section 212.02(1), F.S., includes payments of dues or fees to membership clubs.
Rule 12A-1.005(4)(d)3., F.A.C., provides an exclusion from the definition of fees where the payment does not
represent payment for the right to use recreational facilities.
According to the county records, a deed was executed by the developer transferring all rights in the property to the
Association. The Association is a homeowners' association incorporated pursuant to section 720.301(9), F.S. The
payments are assessed and paid to the Association. The recreational facilities are common areas, as defined by
section 720.301(2), F.S. The assessments are mandatory, as provided by the governing documents. The governing
documents require the assessments to be paid as a condition of occupancy of certain parcels. Failure to pay the
assessments will result in a lien being placed upon the parcel, which may then be foreclosed upon. Furthermore, the
assessment payments are made for the maintenance of a property right, the easement that runs with and is
appurtenant to certain parcels. As such, the payments satisfy the requirements of Rule 12A-1.005(4)(d)3., F.A.C., and
are not taxable admissions, as provided by section 212.04(1), F.S., and section 212.02(1), F.S.

March 27, 2006

Re: Technical Assistance Advisement 06A-002
Homeowner Association Dues
Sales and Use Tax
Statutes: Sections 212.02(1), 212.04, 720.301, F.S.
Rule 12A-1.005, F.A.C.
Taxpayer Identification Number: XX
Dear :
This response is in reply to your letter dated XX, requesting the Department's issuance of a Technical Assistance
Advisement ("TAA") pursuant to s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding the referenced matter and
parties. An examination of your petition 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 sales tax must be collected from Association's members on membership dues formerly paid to xxx for use of
recreational facilities after Club and Club's recreational facilities are merged into Association.

FACTS
Your letter states in pertinent part:
The [Association] was incorporated on xx under the laws of the State of Florida as a not-for-profit corporation.
Amended and Restated Articles of Incorporation were filed on xx pursuant to the turnover of control of the Association
from the developer, [Club] to the members. The Association's purpose is to administer, maintain and operate the
[Club] and the XXX, which are located [in] Florida, in accordance with the provisions of Chapter 718, Florida Statutes,
and the terms of the various Declarations of Condominiums filed in connection with the creation of the [Complex]. The
Association serves as the master organization that oversees the common areas not owned by the XXX condominium
associations of the [Complex] and that manages the amenity operations of the [Club]. There are XXX condominium
residences in the [Complex]....
Each of the ...condominium associations operates as a separate entity and collects assessments from resident
members in order to maintain the common elements of each individual association....
Each individual Declaration of Condominium Association includes the following select provisions:
Article IV: Each Unit shall be conveyed as individual property in fee simple ownership.
Article V: All Units shall be used for residential purposes only.
Article VI: The common elements shall be subject to a non-exclusive easement in favor of each of the Unit Owners for
their use and the use of their immediate families, guests and invitees, for al proper and normal purposes. The
easement runs with each unit.
Article VIII: Each unit owner must become a member of their individual condominium association. Each individual
association has the power to charge assessments that are adequate to provide for the common expenses of their
individual condominium. Failure to pay these assessments results in a lien being placed on the individual unit owner.
Article IX: In order to purchase a Condominium Unit, each prospective owner/member must become a member of the
XXX (whose name was later changed to the [Association], as was mentioned above). Members are responsible to pay
all dues and assessments levied against the member. Failure to pay such dues and assessments shall result in a lien
against a member's unit.
The Amended and Restated Articles of Incorporation of [the Association], a copy of which is attached, indicate in
Article V that the Association has the power to levy and collect assessments from the members of the Association to
operate and maintain the [Complex], the [Club], and other Association property. In addition, Article VI states that every
owner of a fee simple interest in the [Complex] must be a member of the Association.
The Amended and Restated Bylaws of [the Association], a copy of which is attached, reiterate the ability of the
Association to levy and collect assessments for the [Complex] and the [Club] in Article 4.11. Article 6.2 states that all

assessments levied by the Board shall constitute a lien against each unit. It also goes on to say that no unit owner
may exempt himself from the requirement to pay said assessments by waiving his right to the use of the Club facilities.
The above facts relate to residents of the [Complex]. The [Club] also has social members who pay to utilize the Club’s
amenities. In addition, there are separate charges above and beyond the required assessments for tennis court
usage, exercise and massage facilities, and other amenity programs.
Annual assessments for the [Club] for both 2005 and 2004 (billed in mid- August) have amounted to $XX. These totals
are broken down as follows:
Membership Dues

$XXX

Capital Improvement Fund (reserve)
Subtotal
Sales Tax (7%)
Total

XXX

XXX
XXX
$XXX

The Association has historically charged, collected, and remitted sales taxes for the assessments on both resident
and non-resident members of the [Club]. In addition, sales taxes are charged for use of tennis courts and the other
amenity programs, which are additional charges.
You ask whether mandatory annual dues paid by resident members of the [Club] are exempt from sales taxes?
TAXPAYER POSITION
We believe that the dues charged to resident members of the Association are not subject to sales tax on admissions
since the requirements of Rule 12A-1.005(4)(d)3., F.A.C., are satisfied. The dues are (1) mandatory, (2) paid to a
homeowner’s association, condominium association, or cooperative association, (3) required to be paid as a condition
of ownership, and (4) the club facilities are part of the common elements or common elements or common areas of
real property.

APPLICABLE STATUTES AND RULES
Section 212.02(1), F.S., provides in part:
(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), 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)(d)3., F.A.C., provides:
(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:....

3. Mandatory dues and fees paid to a ... homeowners' association ... when they are required to be paid as a condition
   of ownership or occupancy of real property and the club facilities are part of the common elements or common areas
   of the real property.
   The definition of "common area" in reference to homeowners' associations is provided by section 720.301(2), F.S.,
   and the definition of a "homeowners' association" is provided by section 720.301(9), F.S., is as follows:
   (2) "Common area" means all real property within a community, which is owned or leased by an association or
   dedicated for use or maintenance by the association or its members....
   (9) "Homeowners association" or "association" means a Florida corporation responsible for the operation of a
   community or a mobile home subdivision in which the voting membership is made up of parcel owners or their agents,
   or a combination thereof, and in which membership is a mandatory condition of parcel ownership, and which is
   authorized to impose assessments that, if unpaid, may become a lien on the parcel....
   RESPONSE
   Section 212.04(1), F.S., imposes sales tax on the sales price of "admissions" as defined by section 212.02(1), F.S.
   Section 212.02(1), F.S., includes payments of dues or fees to membership clubs. Rule 12A-1.005(4)(d)3., F.A.C.,
   provides an exclusion from the definition of fees where the payment does not represent payment for the right to use
   recreational facilities.
   Here, the requirements of Rule 12A-1.005(4)(d)3., F.A.C., are satisfied. According to the county records, a deed was
   executed by the developer transferring all rights in the property to the Association. The Association is a homeowners'
   association incorporated pursuant to section 720.301(9), F.S. The payments are assessed and paid to the
   Association. The recreational facilities are common areas, as defined by section 720.301(2), F.S. The assessments

are mandatory, as provided by the governing documents. The governing documents require the assessments to be
paid as a condition of occupancy of certain parcels. Failure to pay the assessments will result in a lien being placed
upon the parcel, which may then be foreclosed upon. Furthermore, the assessment payments are made for the
maintenance of a property right, the easement that runs with and is appurtenant to certain parcels. As such, the
payments satisfy the requirements of Rule 12A-1.005(4)(d)3., F.A.C., and are not taxable admissions, as provided by
section 212.04(1), F.S., and section 212.02(1), F.S.
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 advice 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,
Michael T. Cavanaugh
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-9411
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