Were golf tournament fees taxable to members, and which county's local surtax applied to a course spanning two counties?

Plain-English summary

Florida separated the tournament entry fee from the underlying golf membership and greens fees.

A tournament fee paid by a member was not a taxable admission when the member's existing membership already allowed use of the golf facilities at no additional charge and the tournament did not add golfing rights. A nonmember's fee was taxable because it purchased the privilege to play in the tournament. The pro shop also had to collect sales tax when participants redeemed gift certificates for merchandise.

The development's courses and trails crossed a county line, but residential members paid and made their agreements in the county without a local option surtax and could begin accessing the facilities there. Because the facts did not permit reasonable allocation, the Department accepted that county as the transaction location and found no surtax due on the membership, trail, and related fees at issue.

What this means for you

Golf clubs and community associations

The same tournament charge can receive different treatment depending on what the participant already has. A member fee may be outside the admissions tax when it adds no new course-use rights, while a nonmember fee that buys access is taxable.

Multicounty facilities

When an admission event spans counties and reasonable allocation is unavailable, document where the agreement and payment occur and where the customer first gains access. Those facts drove the surtax result here.

Common questions

Were member tournament fees taxable? Not on these facts, because membership already entitled the members to use the courses and the tournament fee added no golfing rights.

Were nonmember tournament fees taxable? Yes. The fee bought the privilege to play in the tournament.

Were ordinary membership and greens fees admissions? Yes. The TAA separately described both as taxable admissions even though the extra tournament fee for qualifying members was not.

Which county's surtax applied? The Department accepted the non-surtax county because payment, agreement, and some delivery or initial access occurred there and no reasonable allocation was shown.

Citations and references

• Fla. Stat. § 212.04
• Fla. Stat. § 212.054(3)(b)
• Fla. Admin. Code R. 12A-1.005(4)(k)
• Fla. Admin. Code R. 12A-1.005(5)(d)2.f.
• Fla. Admin. Code R. 12A-15.003(2)(a)3.c., (e)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-030

Original ruling text

SUMMARY

QUESTION 1: Are tournament fees charged to members taxable
as admissions?

ANSWER 1 - Based on Facts Below: Tournament fees charged to
members with existing membership rights entitling members
to use the club facilities at no additional charge are not
admissions. Guests or members who are required to pay
green fees would be required to pay tax on the tournament
fees.

QUESTION 2: Which county may impose local option surtax for
admissions located in multiple counties?

ANSWER 2 - Based on Facts Below: For admission events
located in more than one county, the surtax was properly
applied in the county where payment was made, the agreement
was made, and the initial access to the admission event
began.

Jul 13, 1999

Re: Technical Assistance Advisement (99A-030)
Tournament Fees; Surtax
Sales and Use Tax
Section 212.04, F.S.

Dear :

This is in response to your letter dated XX, requesting a
technical assistance advisement regarding tournament fees and
local option surtax charged on various admissions for a country
club located in two counties.

FACTS

Taxpayer constructs residential homes in its own development

community. Taxpayer provides security, basic cable, trash
pickup, a recreation building, and other services as part of a
maintenance agreement when the resident purchases a home. In
addition, receipts are generated from the use of XXX golf
course, a XXX golf course, club house, restaurant, and
bar/lounge. During the audit period, Operator operated the pro
shop.

Taxpayer's Development area is located in one contiguous area
that happens to be in two counties, Non-Surtax County and Surtax
County. Surtaxes are levied only in Surtax County. All resident
homes are located in Non-Surtax County. The administration
office, resident clubhouse, and the entrance are located in NonSurtax County. The resident clubhouse includes a pool.
Taxpayer provides an optional golf membership to residents. The
golf clubhouse, pro shop, restaurant, lounge, XXX golf course,
and their entrance are located in Surtax County. The XXX is
located in both Surtax County and Non-Surtax County. The XXX
golf course currently starts and ends in Surtax County with at
least XXX located in Non-Surtax County. The membership fee is an
annual charge, which gives the resident access to both golf
courses and the country club. Greens fees and cart fees are
collected at the country club, and are charged the Surtax County
surtax.

Taxpayer holds certain events, called "Ladies' day," "Men's
day," "Twi-Lite scramble," etc., in which participants pay a set
amount per person. The money received is charged to general
ledger account #660 titled "Golf Tournament Fees." Account 660
is a revenue account. Taxpayer then writes a check to Operator,
and charges general ledger account #893, an expense account.
Operator then provides the gift certificates to the winners, who
redeem them for merchandise in the pro shop. Not all
participants receive gifts. When the customer presents the gift
certificate to Operator, he collects tax on the merchandise
purchased with the gift certificate. There is no admission
charge for spectators. Taxpayer did not remit tax on this issue.
The amounts received and paid are recorded as income and
expenses for federal and financial purposes.

Taxpayer charges trail fees to residents who own their golf

carts and want to use the cart trails located on the golf
course. Like the golf course itself, these cart trails are
located in both Non-Surtax County and Surtax County. Residents
can ride their golf carts on the trails to get to the golf
courses. The administrative office does not charge surtax.

ISSUE I

Whether tournament fees are admissions.

TAXPAYER POSITION

Taxpayer believes there is only one transaction. Taxpayer is a
mere conduit, because it retains nothing, all money collected is
paid to Operator, and the total of the certificates is the same
as the money collected from the golfers.

APPLICABLE STATUTES AND RULES

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....

The term "admissions" is defined under s. 212.02(1), F.S., as
follows:

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 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,... games..., or any place
where charge is made by way of sale of... 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. (Emphasis supplied)

Rule 12A-1.005(4)(k), F.A.C., provides:

(4)(k) Charges made for the privilege of entering or
engaging in any kind of activity for which a taxable
admission charge is made to spectators are exempt. When no
admission charge is made to spectators, such participation
or entrance fees are taxable, except as provided in
paragraph (3)(g) of this rule. The purchase of taxable
gifts, trophies, and promotional items used by an entity
sponsoring an event is subject to tax, notwithstanding that
these items may be purchased with receipts from charges for
participation or entrance fees, unless such purchases are
made by a sponsoring organization issuing a valid
consumer's certificate of exemption.

1. EXAMPLE: A private golf club hosts a local tournament
   and charges $100.00 entry fee from all participants with no
   admission charge made to spectators. The entry fee covers
   the greens fees, cart rental, and a meal for each

participant, with the excess being used to purchase gifts,
gift certificates, and trophies to be given to the winners.
The entry fee is taxable, as are also gifts, trophies, and
other promotional items purchased by the club. If, instead
of a single entry fee covering the greens fees, cart
rentals, and meals, there is a separate charge made for
each, such charges are also taxable. If the club is
donating a gift that it has in its inventory for sale, the
club is required to accrue and remit the tax on the cost of
the gift at the time it is removed from inventory. When
the winning participants are given gift certificates to be
used to purchase merchandise from the club, the club is
deemed to be selling the merchandise, and it shall collect
the tax from the gift certificate holders at the time the
merchandise is sold.

2. EXAMPLE: A sponsoring golf association enrolls
   participants to participate in a tournament for a fee of
   $100.00 with $20.00 of the fee attributable to
   organizational services provided by the sponsor and $80.00
   attributable to the club's charges for an unlimited number
   of rounds and the use of a golf cart, with the excess being
   used to purchase gifts, gift certificates, and trophies to
   be given to the winners. No tax is due on the $100.00 fee
   paid by the participant to the sponsoring organization.
   The $80.00 entry fee paid by the sponsoring organization to
   the club is taxable, as are gifts, trophies, food,
   beverages, and other promotional items purchased by the
   association from the club. If, instead of the entry fee
   covering the greens fees, cart rentals, and meal, there is
   a separate charge made for each, such charges are also
   taxable. When participants are given gift certificates to
   be redeemed for merchandise from the club's pro shop, the
   club is deemed to be selling the merchandise and shall
   collect tax from the gift certificate holders at the time
   the holder redeems the certificate for merchandise.

Rule 12A-1.005(5)(d)2.f., F.A.C., provides:

f. User fees paid by those who are members or by those who
are nonmembers of an organization are taxable as charges

for admissions when they entitle the payor to use of the
organization's recreational or physical fitness facilities
or equipment.

DETERMINATION

The fees paid by nonmembers are taxable as admissions pursuant
to Section 212.04, F.S., as implemented, in part, by Rule 12A1.005(5)(d)2.f., F.A.C. Since the tournament entry fee does not
automatically provide a gift certificate to each non-member, the
only thing of value transferred to each non-member upon payment
of the entry fee is the privilege to play in the particular
tournament. Fees paid by members are not taxable as admissions
if the fees do not entitle members to any additional rights with
respect to their use of the golf courses. There are no facts to
suggest that members who participate obtain additional golfing
rights, as would be the case if, for example, their membership
rights either restricted or prohibited them from golfing during
tournament times. The pro shop, owned by Operator, should
collect tax on the sales of tangible personal property, which
result when participants redeem the gift certificates for
merchandise, since the participants, and not the club, are
purchasing the merchandise.

ISSUE II

Whether local option surtax is due on tournament fees, trail
fees, and membership fees.

TAXPAYER POSITION

Taxpayer believes that no additional surtax is due. As provided
by letter XXX Taxpayer's position is as follows:

The Taxpayer's entrance, administration building, resident
clubhouse, and almost all of its XXX site-built homes are
located in the [Non-Surtax County]. When the development
was started in XXX, all activities including all golf
holes, were located in [Non-Surtax County]. As the
development grew, a golf clubhouse and restaurant and some
new golf holes were constructed in [Surtax County] as homes

were built on some of the existing golf holes located in
[Non-Surtax County]. When the restaurant was constructed,
the developer was instructed by the Department of Revenue
to obtain a sales tax number for [Surtax County] since
restaurant activities would take place in that county.
Since inception, all residents who are golf members have
been billed for annual membership and trail fees, including
sales tax at the 6% rate, from the administrative building
and these fees have been reported on [Non-Surtax County]
sales tax returns. Residents aren't allowed to pay for
these charges at the pro shop located in [Surtax County].
Daily [greens] fees are only paid at the pro shop and have
always been reported at the 7% rate on [Surtax County]
returns. As of today, XXX golf holes, including the first
tee, are located in [Surtax County], but that was not the
case during most of the audit period. The development's
XXX, which are located in [Surtax County], were opened for
play in XXX. (Emphasis in original)

The Taxpayer believes that there is a fundamental difference
between the charges for greens fees and membership fees. The
XXX letter provides:

During "The Season" from November through May, the golfing
traffic is such that very few tee times are available.
Golf members are allowed to book tee times through a
computerized call-in phone system up to 7 days prior to
play while non-members can only book tee times, if
available, 1 day prior to play. Due to the access to the
tee time system, members are obviously afforded more of an
opportunity to play.... Attempting to characterize daily
[greens] fees and annual membership fees as being similar
would be the same as attempting to demonstrate seating
preferences to sporting events for season ticket holders is
the same as single game ticket purchasers. (Emphasis in
original)

The Taxpayer claims that from XXX through XXX, XXX holes were in
Surtax County. The taxpayer argues that Rule 12A-15.003,
F.A.C., establishes the presumption in multi-county service
transactions that taxation is where the payment, billing, or

sale occurs. The Taxpayer cites Department of Revenue v. Kelly
Boat Service, 324 So.2d 651 (Fla. 1st DCA 1975), rehearing
denied January 28, 1976; Department of Revenue v. Pelican Ship
Corporation, 257 So.2d 56 (Fla. 1st DCA 1972), rehearing denied
February 4, 1972; and Oklahoma Tax Commission v. Jefferson
Lines, Inc., 115 S.Ct. 1331 (1995), in support of this argument.

APPLICABLE STATUTE AND CASE LAW

Section 212.054(3), F.S., provides in part:

(3) For the purpose of this section, a transaction shall be
deemed to have occurred in a county imposing the surtax
when:....
(b) The event for which an admission is charged is located
in the county.

Rule 12A-15.003(2)(a)3.c. and (e), F.A.C., provide:

(2) For purposes of the surtax, a transaction... shall be
deemed to have occurred in a county imposing the surtax
when:....

(a)3. If the selling dealer is not located in a county
imposing the surtax..., and delivery of... a taxable
service... is made to a location within a county imposing
the surtax, the selling dealer is required to collect the
surtax at the rate imposed in the county where the...
services are delivered. If there is no reasonable evidence
of delivery of a service, the sale of a service is deemed
to occur in the county in which the purchaser accepts the
bill of sale....

c. Example: A dealer in County A (a county not imposing a
surtax) sells armored car service to a bank in County B (a
county imposing a 1/2% surtax). The armored car service is
provided to the bank's branches located in different
counties and to the main bank. Under this example, the
armored car service provider cannot reasonably allocate the
service provided to each county. The main bank located in
County B receives the bill of sale. The transaction is

deemed to have occurred in County B where the bill of sale
was accepted and the surtax imposed in County B applies.
Tax is due at the rate of 6 1/2% (6% state sales tax and
1/2% surtax)....

(e) The event for which an admission is charged is located
in a county imposing the surtax....

In Oklahoma Tax Commission v. Jefferson Lines, Inc., supra, the
United States Supreme Court held that Oklahoma's sales tax on
the sale of bus rides through several States did not violate the
Commerce Clause. The Court stated in part:

Here, in contrast, the tax falls on the buyer of the
services, who is no more subject to double taxation on the
sale of these services than the buyer of goods would be.
The taxable event comprises agreement, payment, and
delivery of some of the services in the taxing State; no
other State can claim to be the site of the same
combination. The economic activity represented by the
receipt of the ticket for "consumption" in the form of
commencement and partial provision of the transportation
thus closely resembles Berwind-White's "delivery of goods
within the State upon their purchase for consumption,"...
especially given that full "consumption" or "use" of the
purchased goods within the taxing State has never been a
condition for taxing a sale of those goods. Although the
taxpayer seeks to discount these resemblances by arguing
that sale does not occur until delivery is made, nothing in
our case law supports the view that when delivery is made
by services provided over time and through space a separate
sale occurs at each moment of delivery, or when each
State's segment of transportation state-by-state is
complete. The analysis should not lose touch with the
common understanding of a sale,... the combined events of
payment for a ticket and its delivery for present
commencement of a trip are commonly understood to suffice
for a sale.

In Department of Revenue v. Pelican Ship Corporation, 257 So.2d
56 (Fla. 1st DCA 1972), cert. denied, 262 So.2d 682 (Fla. 1972),

the Florida sales tax on admissions was due on the $6.00 fee
charged to patrons of fishing vessels which was paid at
dockside. The court reasoned that even if the fee was not
collected until after the vessel was beyond the territorial
limits of the State, the obligation to pay such fee arose when
the patron boarded the vessel at dockside and thus the
transaction was within the State's taxing jurisdiction.

DETERMINATION

Both membership fees and greens fees are taxable admissions,
despite variances in privileges afforded. Rule 12A15.003(2)(e), F.A.C., provides for the surtax to be imposed in
the county where the admission event is located. The golf
courses and trails are located in both counties. Neither
section 212.04, F.S., nor section 212.054, F.S., specifically
provides for apportionment of the local option surtax when the
event occurs partly in a taxable county.

Although Chapter 212, F.S., and the Rules do not address which
county may impose the tax for the sale of admissions for events
located in more than one county, there is some guidance
regarding the sale of services performed in multiple counties
where reasonable allocation is not available. The example in
Rule 12A-15.003(2)(a)3.c., F.A.C., imposes the surtax in the
county where the bill of sale is accepted when armor car
services are sold to a bank with offices in several counties.
Similarly, in Pelican and Jefferson, the transaction at issue
was deemed to occur where the combined events of agreement,
payment, and delivery of some of the services or admissions were
made.

Since there are no facts provided to suggest the possibility of
reasonable allocation of the tax, the taxpayer correctly
reported the transactions in the county where the payment was
made, agreement was made, and some of the admission event or
access to the trails took place. Thus, the surtax is not due on
such fees. Unlike greens fees payors, the memberships are only
available to residential homeowners, located in Non-Surtax
County. Members can use the common areas to directly gain
access to the trails or courses in Non-Surtax County, whereas

guests cannot. From 1989 through part of the audit period, the
golf course was only in Non-Surtax County, and the courses
continue to primarily serve the residential homeowners, all in
Non-Surtax County.

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 advise 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,

Charles Wallace
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-4734

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