Is a privately owned, for-profit public golf course's membership fee subject to New York's social/athletic club dues tax, even though residents of an adjoining housing community get a discounted rate?

Plain-English summary

Heritage Hills Golf Club is one of two golf courses owned by North American Golf Properties, LLC (NAGP), a for-profit business, and is located within the Heritage Hills town house community — though neither the club nor NAGP has any ownership or affiliation with that community. Membership is open to the public on a first-come, first-served basis, limited only by facility capacity, with the manager (hired by NAGP) holding sole control over accepting new members. Residents of the adjoining Heritage Hills community get a discounted membership rate — a pricing distinction set up by a previous owner (who had also developed the community) as a home-buyer incentive, which the current owner simply kept for goodwill. Aside from the price difference, resident and non-resident members get identical rights. Members have no ownership interest, no vote in management, no role in selecting the manager or new members, and no control over the club's social or athletic activities. An on-site restaurant is leased to a third-party concessionaire and open to the general public, with no special member perks or minimum-spend requirements.

New York taxes dues paid to a genuine "social or athletic club" — one where members have real governance control (over social/athletic activities, elections, committees, member/management selection) or an ownership stake. A resident discount, by itself, doesn't create that kind of control; it's just a price differential. The Department found Heritage Hills fails the club/organization test entirely: no proprietary interest, no control over activities, no say in management or membership decisions. So the dues tax under § 1105(f)(2) never applies.

As a second, independent basis, the Department found the membership fees are really charges for use of a sporting facility the member personally participates in — golf — which are separately excluded from tax as charges for admission to, or use of, facilities for participant sporting activities (the same exclusion covering bowling alleys and swimming pools).

What this means for you

Golf course and country club operators offering resident or community discounts

Offering a discounted rate to residents of a nearby community, on its own, doesn't turn your membership structure into a taxable "social or athletic club" — what matters is whether members actually control the club's activities, management, or membership decisions, or hold an ownership stake.

Businesses inheriting pricing structures from a prior owner

A pricing quirk (like a resident discount) that predates your ownership and was designed for marketing rather than governance doesn't, by itself, create club/organization status — document that the distinction is purely a price differential with no attached rights.

Accountants and tax professionals

This opinion runs the same two-layer analysis as its companion ruling issued the same day (TSB-A-02(46)S, Putnam Country Club): (1) the club/organization test under 20 NYCRR § 527.11(b), turning on member control/proprietary interest, and (2) the independent participant-sporting-facility exclusion under § 1105(f)(1). Either one defeats taxability on its own, and here both did — even with a resident discount in the fact pattern.

Common questions

Q: Does offering members-only discounts based on residency create a taxable "club"?
A: Not by itself — a price differential doesn't equal governance control. The Department looks at whether members control activities, management, or membership decisions, or hold a proprietary interest.

Q: Does it matter that the golf course sits inside a residential community?
A: Not here — the club and the community are unaffiliated with no shared ownership, so the club's proximity to (and historical marketing ties with) the community didn't affect the analysis.

Q: Are greens fees taxed the same as regular admission charges?
A: No — charges to a patron for use of a sporting facility in which that patron personally participates (like golf, bowling, or swimming) are specifically excluded from the admission-charge tax.

Citations and references

Statutes and regulations:

• Tax Law § 1101(d)(6) (dues definition); § 1101(d)(7) (initiation fee definition); § 1101(d)(13) (social or athletic club definition)
• Tax Law § 1105(f)(1) (admission charge tax; sporting-participant exclusion); § 1105(f)(2) (social/athletic club dues tax)
• 20 NYCRR § 527.11 (club dues imposition; definitions)

Prior rulings and cases referenced:

• Cobleskill Golf and Country Club, Inc., TSB-A-94(13)S
• Lafayette Golf & Country Club, L.L.C., TSB-A-97(23)S
• Antlers Country Club, Inc., TSB-D-92(79)S
• Shanty Hollow Corporation v. New York State Tax Commission, 111 AD2d 968

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_45s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(45)S
Sales Tax
September 18, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S011204A

On December 4, 2001, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Heritage Hills Golf Club, 16 School Street, Rye, New York 10580.
Petitioner, Heritage Hills Golf Club, submitted additional information with respect to the Petition
on February 20, 2002 and April 26, 2002.
The issue raised by Petitioner is whether the fees charged for golf membership are subject
to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is one of two golf courses owned and operated by North American Golf Properties,
LLC (NAGP). NAGP is a for-profit privately owned business entity doing business as a New York
limited liability company. The day-to-day operations of Petitioner are handled by the manager who
is hired by NAGP. Petitioner is a private golf club, located within the Heritage Hills community of
town houses. Neither Petitioner nor NAGP is affiliated with or has an interest in the Heritage Hills
community.
Membership is open to the general public on a first-come, first-served basis and is limited
solely by the capacity of the facilities. There are no residency requirements or priority or reserved
memberships for residents of the community. The manager, under direction of NAGP, maintains
sole control over the acceptance of new members.
Residents of the Heritage Hills community are offered a discounted membership fee. This
distinction was established by the previous owner of the golf course, who was also the developer
of the Heritage Hills community. Although the discount was offered as an incentive to prospective
home buyers, Petitioner has simply maintained the distinction for purposes of good will within the
community. Current membership includes residents and non-residents of the Heritage Hills
community. Aside from the price differential, there are no other rights, privileges or priorities
offered to resident members.
Members do not own a proprietary interest in Petitioner. Members do not participate in the
management of Petitioner, the selection of the manager, the selection or approval of new members,
and they do not control, plan or conduct the social or athletic activities of Petitioner.
There is a restaurant on the premises which is leased to a third party concessionaire and is
open to the general public. Members do not have any priority rights or other benefits in regard to
these facilities and are not required to spend a certain amount at these facilities.

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TSB-A-02(45)S
Sales Tax
September 18, 2002

Applicable Law and Regulations
Section 1101(d) of the Tax Law provides, in part:
When used in this article for purposes of the tax imposed under subdivision
(f) of section eleven hundred five, the following terms shall mean:
*

*

*

(6) Dues. Any dues or membership fee including any assessment, irrespective
of the purpose for which made, and any charges for social or sports privileges or
facilities, except charges for sports privileges or facilities offered to members’ guests
which would otherwise be exempt if paid directly by such guests.
(7) Initiation fee. Any payment, contribution, or loan, required as a condition
precedent to membership, whether or not such payment, contribution or loan is
evidenced by a certificate of interest or indebtedness or share of stock, and
irrespective of the person or organization to whom paid, contributed or loaned.
*

*

*

(13) Social or athletic club. Any club or organization of which a material
purpose or activity is social or athletic.
Section 1105(f)(2)(i) of the Tax Law imposes sales tax on “The dues paid to any social or
athletic club in this state if the dues of an active annual member, exclusive of the initiation fee, are
in excess of ten dollars per year, and on the initiation fee alone, regardless of the amount of dues,
if such initiation fee is in excess of ten dollars....”
Section 527.11 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. (1) A tax is imposed upon the dues paid to any social or
athletic club in this State if the dues of an active annual member, exclusive of the
initiation fee, are in excess of $10 per year.
(2) A tax is imposed on the initiation fee paid to any social or athletic club,
regardless of the amount of dues, if such initiation fee is in excess of $10.
*

*

*

(b) Definitions: As used in this section, the following terms shall mean:
*

*

*

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TSB-A-02(45)S
Sales Tax
September 18, 2002

(2) Dues. (i) The term dues includes:
(a) any dues or membership fee;
(b) any assessment, irrespective of the purpose for which made; and
(c) any charge for social or sports privileges or facilities.
*

*

*

(4) Initiation fee. Any payment, contribution or loan, required as a condition
precedent to membership, whether or not such payment, contribution or loan is
evidenced by a certificate of interest or indebtedness or share of stock, and
irrespective of the person or organization to whom paid, contributed or loaned.
*

*

*

(5) Club or organization. (i) The phrase club or organization means any
entity which is composed of persons associated for a common objective or common
activities. Whether the organization is a membership corporation or association or
business corporation or other legal type of organization is not relevant. Significant
factors, any one of which may indicate that an entity is a club or organization, are:
an organizational structure under which the membership controls social or athletic
activities, tournaments, dances, elections, committees, participation in the selection
of members and management of the club or organization, or possession by the
members of a proprietary interest in the organization. The organizational structure
may be formal or informal.
(ii) A club or organization does not exist merely because a business entity:
*

*

*

(b) restricts the size of the membership solely because of the physical size of
the facility. Any other type of restriction may be viewed as an attempt at exclusivity;
*
Example 18:

*

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A club owned by an individual which attempts to restrict its
membership by geographic area, income, race, religion or any
other means, is a club or organization. However, a “club”
owned by an individual which restricts its membership only
because of the physical capacity of its facilities is not a club
or organization.
*

*

*

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TSB-A-02(45)S
Sales Tax
September 18, 2002

(6) Social club. A social club is any club or organization which has a
material purpose or activity of arranging periodic dances, dinners, meetings or other
functions affording its members an opportunity of congregating for social
interrelationship.
*

*

*

(7) Athletic club. (i) An athletic club is any club or organization which has
as a material purpose or activity the practice, participation in or promotion of any
sports or athletics.
Opinion
In Cobleskill Golf and Country Club, Inc., Adv Op Comm T&F, March 30,1994,
TSB-A-94(13)S, it was held that since members in the petitioner’s golf and country club held no
proprietary rights, had no control over its activities or management, and membership was
not restricted, the dues paid by members were not subject to sales tax. See also Lafayette Golf &
Country Club, L.L.C., Adv Op Comm T&F, April 17, 1997, TSB-A-97(23)S; and Antlers Country
Club, Inc., Dec Tax App Trib, November 19, 1992, TSB-D-92(79)S.
Petitioner owns, operates and manages the golf facility described in this Petition. The
members possess no proprietary rights in Petitioner, have no control over its social or athletic
activities, and do not participate in the selection of members or management. Based on the
foregoing, Petitioner is not a “social or athletic club” within the meaning of Section 1105(f)(2) of
the Tax Law. Therefore, dues and initiation fees paid by its members are not subject to State and
local sales taxes.
The fees charged to Petitioner’s members are an admission to, for the use of, a sporting
facility. Such fees are excluded from tax under Section 1105(f)(1) of the Tax Law as charges for
“sporting activities in which such patron is to be a participant.” `Shanty Hollow Corporation v
New York State Tax Commission, 111 AD2d 968.

DATED: September 18, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.