Were dues paid to a mobile-home park homeowners' association subject to Florida sales tax?

Subject

Membership Dues

Plain-English summary

The mobile-home park homeowners' association did not have to collect Florida sales tax on its annual membership dues. The association charged $10 per unit for membership, voting, special functions, a monthly activity calendar, and general expenses, but it did not own, lease, maintain, or provide recreational or physical-fitness facilities.

The park owners—not the association—provided the clubhouse, furniture, billiard table, pool, and shuffleboard courts as part of lot rent. Every tenant could use those facilities whether or not the tenant joined the association. That allowed the association to use the exemption for clubs that provide no recreational, physical-fitness, or other facilities to members.

The association failed two other possible exemptions. It was not exempt under section 501(c)(3), and its dues were not required as a condition of owning or occupying property. The park facilities also were not association common areas. Those failures did not matter because the separate no-facilities exemption applied.

What this means for you

Association dues do not become taxable club admissions merely because members take part in social activities when the association itself provides no facility. Who owns, maintains, and grants access to the physical amenities is central.

The ruling was limited to dues. It reminded the association that separately charged event admissions, food or tangible-property sales, and the association's own purchases could still be taxable.

Common questions

Q: Did the association qualify as a section 501(c)(3) organization? No, so it could not use that nonprofit admission exemption.

Q: Were the dues required to live in the park? No. A tenant could rent a lot and use park facilities without joining the association.

Q: Why were the dues exempt anyway? The association itself provided no recreational or physical-fitness facilities; the park owners provided them to all tenants.

Q: Did the exemption cover separately charged events or sales? No. The ruling expressly distinguished event admissions, food, tangible-property sales, and association purchases.

Q: Could the association seek a refund of tax collected on dues? The source described a historical refund process requiring customer refunds first and a timely state claim. Current forms and deadlines should be verified.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04(1)(a) — admissions and club membership dues
• Fla. Stat. § 617.301(2) — common-area definition
• Fla. Admin. Code r. 12A-1.005(3)(g), (5)(d)2.d., (5)(e) — nonprofit, mandatory-association, and no-facilities exemptions
• Fla. Admin. Code rr. 12A-1.014(6), 12-26.002, 12-26.003 — refund procedure described in the advisement
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-032

Original ruling text

SUMMARY

A mobile home community homeowners' association requested a
ruling on whether their homeowners' association dues were
taxable. The homeowners' association did not qualify for
the homeowners' association exemption in Rule 12A1.005(5)(d)2.d., F.A.C. However, the association did
qualify under Rule 12A-1.005(5)(e), F.A.C., because it does
not provide any recreational or physical fitness
facilities. All of the recreational or physical fitness
facilities are provided, owned, and maintained by the Park
owners. Therefore, sales tax is not due on their
membership dues. If sales tax was collected and remitted,
a refund can be requested for the improperly paid taxes.

May 04, 1998

Re: Technical Assistance Advisement 98A-032
XXX ("the Association")
Membership Dues
Section 212.04(1)(a), 212.02(1), and 617.301(2),F.S.
Rule 12A-1.005(3)(g), (5)(d)2.d., and (5)(e), F.A.C.

Dear :

This is in response to your letters of February 18, 1998
and November 24, 1997, requesting a Technical Assistance
Advisement (TAA) regarding the applicability of sales tax to
homeowners' association dues paid by your members. This
response to your request constitutes a TAA under Chapter 12-11,
Florida Administrative Code (F.A.C.), and is issued to you under
the authority of s. 213.22, Florida Statutes (F.S.). The
Association has requested a ruling on whether sales tax must be
paid on its membership dues from tenants situated in River
Estates ("the Park").

REQUESTED ADVISEMENT

Is this homeowners' association required to collect and
remit sales tax on its membership dues?

STATED FACTS

Your letters provided the following:

1) The Association is a Not-for-Profit Corporation
organized pursuant to Chapter 617 of the Florida Statutes;
2) The organization became an association in 1984 for
social gatherings;
3) On July 2, 1985, the Association incorporated to take
advantage of the benefits and protection in Chapter 723, Florida
Statutes;
4) The Association has a federal tax identification number
and a Florida sales tax certificate number; however, it does not
qualify as an organization exempt from federal income tax under
s. 501(c)(3) of the United States Internal Revenue Code of 1986,
as amended;
5) The Association was organized for the residents of the
Park and is not open to the general public. The members pay
yearly dues to attend special functions, to vote on issues of
association business, and to cover general expenses. The
payment of membership dues is not mandatory to use Park owned
facilities;
6) The Park owners maintain and provide the club house and
furniture, billiard table, swimming pool, and shuffleboard
courts. Tenants rent land from the Park owners and pay quarterly
rent to the Park owners; so they do not own any real property,
but do own their mobile homes. Tenants and their guests may use
the Park facilities;
7) Members in good standing may vote on issues at the
monthly business meetings and may also participate in the social
activities (such as: dinners, cards, bingo, shuffleboard, and
horseshoes) provided by the Activity Committee; and
8) In early November 1997, the Association was told that
its dues, $10.00 per year per unit, were taxable.

The accompanying Articles of Incorporation and by-laws
provided additional information.

The Articles of Incorporation, in Article III, state that "The
members... shall consist only of bona fide owners of mobile
homes situated on lots in [the Park] who have paid all dues,
assessments and charges required to be a member of the
Corporation;..."

The by-laws, in Article III section 3.1, state that
"Membership... shall be limited to bona fide owners of mobile
homes in [the Park].... Each applicant for membership shall be
approved by the board and shall pay any fees required by these
by-laws...."

Also, per a telephone conversation with the Association's
Treasurer, on April 13, 1998, these additional facts were
established:

1) The Association does not own any facilities, nor does it
rent any facilities from the Park owners;
2) The Association does not provide any recreational or
physical fitness facilities for their members;
3) The Park owners provide all facilities, and any tenant
may use the Park facilities;
4) The use of Park facilities by tenants is provided as a
part of the tenants' rent which is paid to the Park owners; and
5) Dues paid to the Association allow members to vote at
meetings and receive a monthly calendar of activities.

APPLICABLE LAW
The following statutory and administrative law is relevant
to the issue under advisement:

Section 212.04(1)(a), 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.

Section 212.02(1), F.S., defining "admissions", provides in
part:

(1) The term "admissions" means and includes... 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,....

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

(3) EXEMPT ADMISSIONS....

(g) Dues, membership fees, and admission charges imposed by
not-for-profit sponsoring organizations or community or
recreational facilities are exempt. To receive this
exemption, the organization making any such charges must
qualify as a not-for-profit entity under the provisions of
s. 501(c)(3) of the United States Internal Revenue Code of
1986, as amended.

(5) DUES AND INITIATION 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 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.

(e) Dues paid by persons for membership in clubs such as
sewing clubs, bowling clubs, square dancing clubs, bridge
clubs, and gun clubs, which provide no recreational or
physical fitness or other facilities for their members, are
exempt. Any charge made by any such club for admission to
any event conducted or sponsored by the club is taxable,
except as provided in paragraphs (3)(g) and (j) of this
rule....

Section 617.301(2), F.S., defining "common area", provides
in pertinent part:

(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, including, regardless of whether title has been
conveyed to the association:

(a) Real property the use of which is dedicated to the
association or its members by a recorded plat; or

(b) Real property committed by a declaration of covenants
to be leased or conveyed to the association.

DETERMINATION

Pursuant to the above referenced authorities, all
admissions are taxable unless specifically exempted.
Additionally, Section 212.02(1), F.S., specifically provides
that dues and fees paid to private clubs and membership clubs
providing recreational or physical fitness facilities are
taxable admissions. The Association is charging a fee for
membership. Sales tax will be due if recreational or physical
fitness facilities are provided, unless there is a specific
exemption for this type of admission.

There are three exemptions allowed by Section 212.04, F.S.,
and interpreted by Rule 12A-1.005, F.A.C., which must be
examined to determine if these membership dues are exempt. The
first possible exemption is detailed in Rule 12A-1.005(3)(g),
F.A.C., which provides that the organization must qualify as a
nonprofit organization under s. 501(c)(3) of the United States
Internal Revenue Code of 1986, as amended, to be eligible for
the exemption. However, the stated facts indicate that the
Association does not qualify for s. 501(c)(3) I.R.C., status.
Therefore, the Association does not meet the requirement for
this exemption.

The second possible exemption is described in Rule 12A1.005(5)(d)2.d., F.A.C., which specifically provides that
membership dues that meet four (4) requirements are exempt. The
requirements are: (1) the dues are mandatory; (2) the dues are

paid to a condominium association, homeowners' association, or
cooperative association; (3) the dues are required to be paid as
a condition of ownership or occupancy of real property; and (4)
the club facilities are part of the common elements or common
areas of the real property. The first criterion appears to be
satisfied, because the membership dues are mandatory for
membership. The facts and accompanying documents indicate that
the members are required to pay membership dues. The second
criterion is satisfied, because the stated facts indicate that
the dues are paid to the homeowners' association. However, the
stated facts clearly indicate that the third and fourth criteria
are not met. The third criterion is not satisfied, because the
payment of dues is not a condition of property occupancy. A
tenant may lease a lot from the Park owners without becoming a
member of the Association.

Additionally, the by-laws specifically provide that the
Association's board is required to approve all applications for
membership. Thus, the board may, in its discretion, decide to
exclude a tenant from membership. This ability to exclude
certain tenants may be in recognition of the fact that, pursuant
to Section 723.075, F.S., a homeowners' association need only
have two-thirds of the mobile home owners as members in order to
take advantage of the protections of Chapter 723, F.S. However,
any tenant excluded from membership in the Association is not
prevented from renting a lot in the Park.

The fourth criterion is not satisfied, because the Park
facilities do not comply with the definition of "common areas"
found in s. 617.301(2), F.S. Such property is owned and
maintained by the Park owners, and thus, is not owned, leased,
or dedicated for use or maintenance by the Association or its
members. Moreover, the provided information indicates that the
use of these facilities is not limited to members only; in fact,
any tenant of the Park, whether an Association member or not,
can use the facilities. Since the membership dues, paid to the
Association fail to satisfy all of the requirements for this
exemption, the dues under consideration are not eligible for
this exemption.

The third possible exemption is described in Rule 12A-

1.005(5)(e), F.A.C., which states that dues paid for membership
in clubs which provide no recreational or physical fitness or
other facilities for their members are exempt. This Association
meets the requirements of this exemption, because it does not
provide any recreational or physical facilities. All
recreational or physical fitness facilities are, according to
your letter, provided, owned, and maintained by the Park owners.
The facts here establish that no dues paid to the Association
are for the provision of admission to any place of amusement,
sport, or recreation. Thus, the dues paid to this Association
are exempt from sales tax.

In summary, sales tax should not be collected for payments
of these dues regardless of whether the payment is for the
renewal of a current membership or the establishment of a new
membership. If sales tax has been collected and/or remitted for
these dues, a refund can be requested for the improperly paid
taxes. You are reminded that even though admissions are exempt,
sales (food, tangible personal property) and purchases by the
Association are still taxable.

To apply for a refund, the Association should complete and
submit Form DR-26, Application for Refund from the State of
Florida Department of Revenue, with any applicable supporting
documentation. However, if the Association collected taxes from
the members and remitted those taxes, the association must first
issue tax refunds to the members from whom tax was collected.
Under Rule 12A-1.014(6), F.A.C., the dealer must refund the tax
to the customer before the dealer's claim to the State for
credit or refund will be approved. Under Rule 12-26.002(1)(b),
F.A.C., the Comptroller is authorized to refund moneys paid into
the State treasury if a payment was made when no tax was due.
However, pursuant to Rule 12-26.003(1)(b), F.A.C., the
application for refund must be filed with the Department within
five (5) years of the taxes being paid. Copies of these rules
and Form DR-26 are enclosed.

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 requests
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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of Section 213.22,
F.S. Your name, address, and any other details that 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 response.

Sincerely,

Jennifer J. Silvey
Attorney
Technical Assistance &
Dispute Resolution

JJS/
Enclosures
Control #: 33036