Were initiation fees and annual dues taxable when a yacht-owners club provided information and purchasing help but no recreational facilities?

Subject

Initiation and Membership Dues

Plain-English summary

The club's initiation fees and annual membership dues were not subject to Florida sales tax. The club served yacht owners by sharing industry information, advising on equipment and supplies, helping locate crew members, and arranging group purchases.

It did not own or operate a clubhouse, marina, dock, restaurant, vessel, or other recreational facility. Its only location was a small administrative office where no meetings or social events occurred. Because it provided no recreational or physical-fitness facilities, its dues were not taxable admissions under the rule.

What this means for you

Calling an organization a club did not make its dues taxable by itself. The Department focused on whether members received access to recreational, fitness, or similar facilities.

Common questions

Q: Were the initiation fees taxable? No.

Q: Were the annual dues taxable? No.

Q: What fact drove the exemption? The club provided no recreational or physical-fitness facilities for members.

Citations and references

• Fla. Stat. §§ 212.02(1) and 212.04 — admissions and club dues
• Fla. Admin. Code r. 12A-1.005(5)(e) — clubs without recreational or fitness facilities
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-065

Original ruling text

Sep 20, 1993

RE: TAA 93A-065
Sales Tax; Initiation and Membership Dues paid to a club
for yacht owners which does not provide any recreational
facilities
Sections 212.02(1), 212.04, F.S.
Rule 12A-1.005, F.A.C.

Dear :

This is in response to your letter dated July 7, 1993,
which seeks the issuance of a Technical Assistance Advisement on
the above referenced issue. Your firm represents XXXXX.
(hereinafter "Club"), which is a Florida not-for-profit
corporation. It is your contention that the fees charged by
Club to its members are exempt from sales tax. Your request
provides in part:

"... The [Club], however, is not a `yacht club' in the
traditional sense of the term. [Club] does not own or operate a
clubhouse, marina, dock, restaurant, or vessel. Instead, the
[Club] serves to: (i) inform its members about developments in
the yachting industry; (ii) offer advice concerning yacht
equipment and supplies; (iii) assist in locating potential crew
members; and (iv) arrange for group purchases of supplies by its
members at prices below the standard amounts charged by vendors.

"As for [Club's] facility, the company occupies a small
space that serves strictly as an administrative office. No
meetings or social events are held at the office.

"[Club] charges new members an initiation fee and all
members annual dues. The fees and dues are the organization's
only source of revenue. The club at this point does not collect
sales tax on the charges...."

In support of your argument that the fees charged by Club

are exempt from sales tax you offer In Re: Petition for
Declaratory Statement by St. Petersburg Yacht Club (Fla. Dept.
of Revenue, June 1981) which provides in pertinent part:

"The Department of Revenue has found no case law in Florida
defining the phrase recreational facilities'; however, at 76 CJS 173recreation' is defined as being a word of comprehensive
significance which includes in its general meaning sports and
like diversion. Webster defines the word in similar terms:

"1. refreshment in body or mind, as after work, by some
form of play, amusement, or relaxation.
"2. any form of play, amusement, or relaxation used for
this purpose, as games, sports, hobbies, reading, walking,
etc....'"

Your request additionally cites Technical Assistance
Advisement No. 89(A)-003 in support of its argument. The
Advisement stated that the term "recreational facilities" was
"not intended to include a site that is merely a waterfront lot,
unimproved except for paved parking and a covered picnic area."

DETERMINATION

The imposition of sales tax on admissions is governed by
section 212.04, F.S. In accordance with section 212.02(1),
F.S., the term "admissions" includes "... all dues and fees paid
to private clubs and membership clubs providing recreational or
physical fitness facilities...." Rule 12A-1.005(5)(e), F.A.C.,
provides that dues paid for membership in clubs which provide no
recreational or physical fitness or other facilities for their
members are exempt from sales tax.

Sales tax is not due on the membership fees or dues charged
by Club to its members since Club only operates an
administrative office and does not provide any recreational
facilities for its members' use.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Betsy Turner
Technical Assistant
Statutory Compliance Section

BT/
Enclosure
Control # 9738