Were mandatory dues paid to a private recreational club exempt from Florida admissions tax as homeowners-association dues?

Plain-English summary

The private club collected dues and fees for recreational or physical-fitness facilities, which ordinarily fit Florida's taxable definition of admissions paid to a private or membership club.

In its revised request, the club represented that the payments were mandatory as a condition of owning or occupying real property. Florida's rule excludes mandatory dues paid to a condominium, homeowners, or cooperative association when the club facilities are part of the property's common elements or common areas.

The Department said the club had not clearly established that it was a homeowners association. If it satisfied that status and the revised mandatory-property-payment facts, the dues and fees would be exempt.

What this means for you

Mandatory payment alone was not sufficient. The organization's legal status and the facilities' relationship to the real property's common areas also had to fit the rule.

Common questions

Were private-club recreational dues generally admissions? Yes.

Was the exemption unconditional? No. The club first had to establish that it was a homeowners association.

What property condition mattered? Dues had to be required for ownership or occupancy, with the facilities forming common elements or areas.

Citations and references

• Fla. Stat. §§ 212.02 and 212.04 and Fla. Admin. Code r. 12A-1.005(5)(d)2.d., as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-041R

Original ruling text

SUMMARY

A private club which collects dues and fees for the use of
its recreational or physical fitness facilities had not
establish it was a homeowner's association. However,
because the dues and fees collected were required to be
made as a condition of ownership or occupancy of real
property, Rule 12A-1.005(5)(d)2.d., F.A.C., applies. The
dues and fees are exempt if the club is a homeowner's

association.

Status: See Revision of TAA 97A-041 issued June 12, 1997

Nov 10, 1997

Re: Technical Assistance Advisement 97-(a)-041R
Sales and Use Tax - Admissions Paid to a Club
Sections: 212.02, 212.04, F.S.

Rule: 12A-1.005, F.A.C.
Petitioner: XXX

Dear:

This is a response to your revised petition received July 30,
1997, for the Department's issuance of a revised Technical
Assistance Advisement ("TAA") concerning the above referenced
matter as applied to XXX. Your petition has been carefully
examined and the Department finds it to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This
response to your request constitutes a TAA and is issued to you

under the authority of s. 213.22, F.S.

STATED FACTS

You provide the following facts, in part:

Club, is a Not-For-Profit Corporation organized pursuant to

the Not-For Profit Law of the State of Florida, set forth

in part one of Chapter 617 of the Florida Statutes.

The primary purpose for which this Corporation was formed
is to promote better living conditions throughout the...

Community...

In furtherance of such purpose, the corporation shall have
power to promote fellowship, goodwill, entertainment,
organize sporting, recreational and fund raising activities
among the residents of the... Community, and provide

services of a general nature to the members of the Club.

As outlined above, we are a Club organized specifically for
the residents of the... Community. We do not hold

ourselves out as a commercial Club where admission is open
to the public. One must be a member of the... Community or

their invited guest to attend a function.

The following are functions that are provided for and by
the members: shows made up of members, dances, Koffee
Klatch, dinners prepared and served by members. The
charges for these functions are to primarily cover costs

and in some cases are free will donations....

You also indicate in your original request that you are a member

of the club.

In the original TAA request during a telephone conference, you
indicated that the dues or fee payments were not required to be
paid as a condition of ownership or occupancy of real property.
You stated that "recreation" as provided in your request
included but was not limited to tennis, shuffleboard, and other

sports activities.
You now assert as part of your request that the dues or fee
payments are required to be paid as a condition of ownership or

occupancy of real property.

REQUESTED ADVISEMENT

You ask the Department to reconsider its ruling in the previous
TAA 97(A)-041 in light of the change in facts presented. You ask
whether Club is required to collect and remit Sales tax on the

admissions charge in light of these changes.

LAW AND ANALYSIS

Section 212.04, F.S, provides in part:

*212.04 Admissions tax; rate, procedure, enforcement.--
(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. (E.S.)

The term "Admissions" is defined in part under s. 212.02(1),
F.S., as:

212.02 Definitions.
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... 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. (E.S.)

Here, it remains clear that Club is a private club which
collects dues and fees for the use of its recreational or

physical fitness facilities. As you indicated in your original

request, the club organizes sporting and recreational
activities, including tennis, shuffleboard and other sports for

its members.

Rule 12A-1.005(5)(d)2.d., F.A.C., interprets the statutes on the
taxability of admissions regarding homeowner's associations.

That section provides, in part:

12A-1.005 Admissions.

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

(d)...

2. The following payments made to private clubs or
   membership clubs are not "fees" which are subject to tax on

admissions....

d. Mandatory dues and fees paid to a condominium

association, homeowners’ association, or cooperative

association when they are required to be paid asa

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. (E.S.)

CONCLUSION

You have not clearly established that Club is a homeowners’
association. However, if Club is a homeowners’ association, in
light of the change in the facts presented so that the subject
payments are required to be made as a condition of ownership or
occupancy of real property, the provisions of Rule 12A-
1.005(5)(d), F.A.C., would apply. Under those conditions and
limited to the revised facts presented, the subject payments

would be exempt.

RECORD KEEPING

According to Florida law, every taxpayer has the duty to

maintain adequate books and records.

Section 212.13(2), F.S., provides in part:

(2) Each dealer, as defined in this chapter, shall secure,
maintain, and keep as long as required by s. 213.35a

complete record of tangible personal property or services

received, used, sold at retail, distributed or stored,

leased or rented by said dealer, together with invoices,

bills of lading, gross receipts from such sales, and other

pertinent records and papers as may be required by the

department for the reasonable administration of this

chapter; all such records which are located or maintained
in this state shall be open for inspection by the
department at all reasonable hours at such dealer's store,
sales office, general office, warehouse, or place of
business located in this state.... Any dealer subject to
the provisions of this chapter who violates these
provisions is guilty of a misdemeanor of the first degree,
punishable as provided in s. 775.082 or s. 775.083. (E.S.)

Section 213.35, F.S., provides:

Each person required by law to perform any act in the

administration of any tax enumerated in s. 72.011 shall

keep suitable books and records relating to that tax, such

as invoices, bills of lading, and other pertinent records

and papers, and shall preserve such books and records until
expiration of the time within which the department may make
an assessment with respect to that tax pursuant to s.

95.091(3). (E.S.)

Section 212.12(6), F.S., expressly provides, in part:

(6)(a) ... It shall be the duty of every person required to
make a report and pay any tax under this chapter,... to
keep and preserve suitable records of the sales, leases,
rentals, license fees, admissions, or purchases, as the
case may be, taxable under this chapter; such other books

of account as may be necessary to determine the amount of

the tax due hereunder; and other information as may be

required by the department... (E.S.)

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 confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or

this response.

Should you have any further questions concerning this matter,

please do not hesitate to contact me.
Sincerely,

Eric A. de Moya, Esq.

Tax Law Specialist

Technical Assistance and Dispute Resolution

(850)922-4714

NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT

Persons needing an accommodation to participate in any
proceeding before the Department of Revenue, should contact the
Department at (904)488-0717 (voice), or 1-800-DOR-8331 (TDD), at
least five working days before such proceeding. You may also

call via the Florida Relay System at 1-800-955-8770.

Control No. 29850