Are a private golf and country club's dues, initiation fees, and add-on charges (locker, bag storage, tournament, etc.) taxable, even though its members don't run the club or control its activities?

Plain-English summary

Hamlet Golf and Country Club, Inc. is a for-profit club surrounding a 170-unit private-home community. It sells golf memberships (full facility access, including the golf course) and social memberships (everything except golf). Membership is open to the public on a first-come, first-served basis, capped only by physical facility capacity — the club actively looks for more members and hasn't sold out its available golf memberships. Members don't control the club, don't sit on committees, don't select other members, and have no ownership stake. But there's one catch: every homeowner in the surrounding private-home community must join as either a social or golf member, subject to the club's approval.

New York taxes the dues of any "social or athletic club" once annual dues exceed $10 (or the initiation fee alone exceeds $10). A club or organization is generally identified by things like member control over activities, elections, or a proprietary interest — none of which existed here. But the Department's regulations also say a club exists whenever there's an attempt at "exclusivity" beyond simply capping membership at the facility's physical capacity. The Department held that requiring every homeowner in the community to become a member — regardless of whether they'd otherwise choose to join — is itself an exclusivity restriction, separate from and in addition to the ordinary physical-capacity cap. That's enough to make Hamlet a taxable "social or athletic club" even though its members have zero say in how it's run. As a result, all of the club's charges — annual dues, the monthly dining minimum, and every add-on fee (hole-in-one fund, bag storage, handicap fee, driving range, lockers, valet parking, special-events surcharge, tournament fee, service charge, energy surcharge) — count as taxable "dues" under § 1105(f)(2).

What this means for you

Golf clubs, country clubs, and homeowner-tied clubs

If your club membership is mandatory for people in a surrounding community (a subdivision, condo development, or similar arrangement), that mandatory tie-in can be treated as club "exclusivity" on its own — even with an otherwise wide-open, first-come-first-served public membership policy and zero member control over club governance. Don't assume that only member-run, exclusive-feeling clubs get taxed as "social or athletic clubs."

Homeowners' association-adjacent recreational facilities

This is a useful contrast to the health-club trio addressed in earlier 2008 opinions, where ordinary gyms open to the general public with no membership-control structure were NOT "athletic clubs" for dues-tax purposes. The dividing line here wasn't member control — it was the mandatory tie between home ownership and club membership, a different kind of "exclusivity."

Accountants and tax professionals

Once a club is found to be a taxable "social or athletic club," essentially every add-on charge tied to membership — not just core dues — gets swept into the "dues" definition (§ 1101(d)(6)), including facility-use surcharges (locker, parking, tournament, energy) that might look like ordinary service fees. Review every line item on a country club's fee schedule, not just the headline dues figure.

Common questions

Q: Does a club have to control member selection or run democratically to be a taxable "social or athletic club"?
A: No. Member control is one factor, but the Department held that a facility can be found to attempt "exclusivity" — and thus be a taxable club — through other means, such as requiring surrounding homeowners to join as a condition of home ownership, even with zero member governance.

Q: Are add-on fees like locker rental or valet parking taxed the same as core dues?
A: Yes, once the underlying entity is classified as a taxable social or athletic club. New York's "dues" definition sweeps in "any charges for social or sports privileges or facilities," not just the base membership fee.

Q: Does opening membership to the general public avoid the dues tax?
A: Not by itself. Here the club was open to the public on a first-come, first-served basis and was actively recruiting new members, yet still qualified as a taxable club because of the mandatory-homeowner-membership requirement — a separate exclusivity factor from public accessibility.

Q: Can another club rely on this ruling?
A: No. This Advisory Opinion binds the Department only as to Hamlet Golf and Country Club, Inc. and the facts it described. A club without any mandatory tie to a surrounding community, or with different governance facts, could reach a different result.

Citations and references

Statutes and regulations:

• Tax Law § 1101(d)(6) (definition of "dues")
• Tax Law § 1101(d)(13) (definition of "social or athletic club")
• Tax Law § 1105(f)(2) (tax on club dues and initiation fees)
• 20 NYCRR 527.11(b) (dues, club/organization, social club, and athletic club definitions)

Prior authority cited:

• Epstein v United States, 357 F2d 928
• Fox Wander West Neighborhood Association, Inc., Adv Op St Tx Comm, July 29, 1980, TSB-H-80(156)S
• The Hamlet Golf and Country Club, Adv Op Comm T&F, October 18, 1994, TSB-A-94(47)S
• Cobblestone Creek Country Club, Inc., Adv Op Comm T&F, November 2, 1992, TSB-A-92(74)S
• Dapolito & Company, CPA's P.C., Adv Op Comm T&F, September 28, 1994, TSB-A-94(45)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_2s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-08(2)S
Sales Tax
January 7, 2008

Office of Tax Policy Analysis
Taxpayer Guidance Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S070213A

On February 13, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Hamlet Golf and Country Club, Inc., 400 Post Avenue, Westbury,
New York 11590. Petitioner, Hamlet Golf and Country Club, Inc., provided additional
information pertaining to the Petition on June 26, 2007.
The issue raised by Petitioner is whether its dues and fees are subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a for-profit, privately owned business entity. Petitioner sells golf
memberships that afford its members full use of all its facilities including a golf course, tennis
courts, the swimming pool, and the dining room. Petitioner also sells social memberships which
include all of the above except golf privileges. The total number of memberships is limited only
by the physical capacity of the facility.
Petitioner surrounds a 170-unit private-home community. The community is a separate
entity that was built by the company that owns and operates Petitioner. Club members include
both people from the private-home community (homeowners) and people from outside the
private-home community (non-homeowners).
In order to provide a continuous business base for the club, all homeowners are, subject
to the approval of the management of the club, required to be either social members or golf
members. Homeowners are not charged an initiation fee to join. Petitioner's by-laws allow non­
homeowners to be charged an initiation fee but, in practice, the fee is waived. Other than the
initiation fee, there is no difference in charges to homeowners and non-homeowners.
Petitioner's by-laws specify the number of memberships available as 170 golf
memberships for homeowners who wish to exercise this entitlement, 155 golf memberships to
non-homeowners, and 75 golf memberships and 100 social memberships to corporate members.
Social memberships, with no limitation on the number, are also available to non-homeowners.
All classes of membership enjoy the same privileges, except that social memberships do not
include golf privileges. The by-laws further permit the club to sell any or all of the 170
homeowner-entitled golf memberships that are not taken by a homeowner to any non­
homeowner on an annual basis. Over the past several years, there has been an average of 110
homeowner golf members, which has left 215 golf memberships available to non-homeowners in
addition to the 75 corporate golf memberships. Recently, Petitioner's golf memberships have not
been sold out, and Petitioner continues to actively seek additional members.

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Petitioner's management arranges golf outings for the public one day per week. On this
day, the membership is not permitted to use the facilities. Petitioner also conducts catered
parties for the public.
The members do not have any proprietary interest in the club, do not participate in any
way in management functions or selection of members, and do not control any social or athletic
activities.
Membership in the club for non-homeowners is open to the public on a first-come first­
served basis to any person of good character over the age of 21 with the financial ability to
sustain the membership. Club membership is limited only by the physical capacity of the facility.
All prospective members, whether homeowners or non-homeowners, must be interviewed by
Petitioner's board of directors before becoming club members.
The club charges annual dues to all of its members. A monthly dining room minimum
applies to all members. In addition, there are other fees for various items as listed below:
•

Annual hole-in-one fee - applicable to golf members only; it covers the traditional
provision of drinks when a member scores a hole in one;

•

Bag-storage charge - applicable to golf members only; it is for the storage of a
member’s golf clubs;

•

Handicap fee - applicable to golf members only; it pays for keeping track of a golfer’s
scores for the purpose of computing his or her handicap used for tournament play;

•

Range fee - applicable to golf members only; it permits a member to use the golf
driving range;

•

Locker fee – it is for the use of a locker in the club locker room;

•

Parking charge - it is for valet parking;

•

Special events charge - it is a charge to all members to supplement the annual dues to
help cover costs associated with events such as dinner dances; this is apart from the
costs for food and beverages;

•

Tournament fee - it is a charge to all golf members to supplement the annual dues to
help cover costs associated with golf tournaments; any food or beverage costs are in
addition to this cost;

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•

Service charge - it is a charge to all members to supplement the annual dues to help
cover costs associated with labor and costs other than for food or beverages; and

•

Energy surcharge - it is a charge imposed on all members to accommodate the
increased cost of utilities.

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.
*

*

*

(13) Social or athletic club. Any club or organization of which a material
purpose or activity is social or athletic.
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax. On and after June first, nineteen hundred seventy-one,
there is hereby imposed and there shall be paid a tax . . . upon:
*

*

*

(f)(2)(i) 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. Where the tax on dues applies to any such social or athletic club,
the tax shall be paid by all members, other than honorary members, thereof regardless of
the amount of their dues, and shall be paid on all dues or initiation fees for a period
commencing on or after August first, nineteen hundred sixty-five. . . .
Section 527.11(b) of the Sales and Use Tax Regulations provides, in part:

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Definitions. As used in this section, the following terms shall mean:
*

*

*

(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.
Example 1: A social club operates a restaurant and bar for the use of its members.
The club requires of each member a minimum expenditure during the year of
$200 for food and drink. If a member does not make actual expenditures totaling
$200, he is billed for an additional amount equal to the difference between his
actual expenditures and $200. The additional amount constitutes taxable dues or
membership fees, inasmuch as such charge must be paid for the privilege of being
a member of the club.
*

*

*

Example 3: A social club collects no regular dues or membership fees, but meets
its operating expenses by levying assessments on its members as funds are
required. These assessments constitute taxable dues or membership fees where the
fees, combined with annual dues, exceed $10.
Example 4: A social club wishes to expand its clubhouse by adding a new dining
room to it. In order to finance the construction, the club will assess each member
$100. The assessment is subject to tax as dues, regardless of the fact that the
proceeds will be used for a capital improvement.
Example 5: A social club collects $10 per year from each of its members as
regular dues. Members are entitled to use the clubhouse facilities without
payment of an additional charge. However, members who wish to use the golf
course may do so only upon payment of an additional charge. Since the golf
course is a social or athletic club facility, any charge made by the club to a
member for the use of the course constitutes dues. The fact that such charges are
made upon the member’s election to use the course is immaterial.
*

*

*

(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.

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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:
(a) charges for the use of facilities on an annual or seasonal basis, even if an
annual or season pass is the only method of sale and provided such passes are sold on a
first-come, first-served basis;
(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: 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.
*

*

*

(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
Section 1105(f)(2) 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,

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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.
Petitioner is a for-profit, privately owned business entity that surrounds a 170-unit
private-home community. Petitioner sells golf memberships that afford its members full use of
all its facilities including a golf course, tennis courts, the swimming pool, and the dining room.
Petitioner also sells social memberships that include all of the above except the golf privileges.
The total number of memberships is limited only by the physical capacity of the facility. In
order to provide a continuous business base for the club, all homeowners in the private home
community are, subject to the approval of the management of the club, required to be either
social members or golf members.
Petitioner's by-laws specify the number of memberships available as 170 golf
memberships for homeowners who wish to exercise this entitlement, 155 golf memberships to
non-homeowners, and 75 golf memberships and 100 social memberships to corporate members.
Social memberships, with no limitation on the number, are also available to non-homeowners.
The by-laws further permit the club to sell any (or all) of the 170 homeowner-entitled golf
memberships that are not taken by a homeowner to anyone from the public on an annual basis.
Although Petitioner offers numerous additional memberships to the general public, the
requirement that all homeowners in the private-home community, subject to the approval of
Petitioner, become golf or social members in Petitioner is a restriction on membership and an
attempt at exclusivity. See Epstein v United States, 357 F2d 928; Fox Wander West
Neighborhood Association, Inc., Adv Op St Tx Comm, July 29, 1980, TSB-H-80(156)S; and The
Hamlet Golf and Country Club, Adv Op Comm T & F, October 18, 1994, TSB-A-94(47)S.
Since Petitioner attempts to restrict membership in the club, it is considered to be a club or
organization within the meaning and intent of section 527.11(b)(5) of the Sales and Use Tax
Regulations. See Example 18 of section 527.11(b)(5). This is true even though no members of
the club control social or athletic activities, tournaments, dances, elections, or committees;
participate in the selection of members and management of the club; or possess a proprietary
interest in the club. See Cobblestone Creek Country Club, Inc., Adv Op Comm T & F,
November 2, 1992, TSB-A-92(74)S.
Since Petitioner is a club or organization of which a material purpose or activity is social
or athletic, Petitioner is a social or athletic club for sales tax purposes. See section 1101(d)(13)
of the Tax Law. Section 1101(d)(6) of the Tax Law defines dues as "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." Accordingly, Petitioner's charges to its members,
whether in the form of annual dues, monthly dining room minimum, or other fees (i.e., annual
hole-in-one fee, bag-storage charge, handicap fee, range fee, locker fee, parking charge, special­
events charge, tournament fee, service charge, energy surcharge) fall within the definition of
dues and are subject to sales tax pursuant to section 1105(f)(2) of the Tax Law. See section

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527.11(b)(2)(i) of the Sales and Use Tax Regulations and Dapolito & Company, CPA's P.C.,
Adv Op Comm T & F, September 28, 1994, TSB-A-94(45)S.

DATED: January 7, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.