My country club has both stockholder-members and non-stockholder members, with dues, initiation fees, and stock purchase charges — are membership dues and fees subject to New York sales tax?

Plain-English summary

A golf course and country club asked whether its membership dues and related charges — stock-purchase fees, assessments, initiation fees, and minimums — are subject to New York sales tax. All members get full access to the golf course, clubhouse, restaurant, and bar regardless of stockholder status. Individuals can join as $2,500 equity/stockholder members (refundable on surrender of stock) or $300 non-equity members. Of 287 total members, 226 are stockholders and 61 are not; of 262 stockholders, 226 are members and 36 are not. Stockholders vote on major decisions and elect the nine-member Board of Directors, which runs day-to-day operations — but members (whether or not they're stockholders) manage and run the club's tournaments, leagues, and committees, under the Board's general supervision.

New York taxes dues paid to a "social or athletic club" if annual dues exceed $10 or the initiation fee exceeds $10. A club or organization is defined, in part, by whether its "membership controls social or athletic activities, tournaments... [or] committees" — that's one of several factors that can establish club status, and only one needs to be present.

The Department held all of it is taxable. Even though membership itself doesn't automatically confer stock ownership, and even though the Board formally supervises them, members here directly manage and run tournaments, leagues, and committees without needing the Board's prior approval for each decision. That member-level control over the club's social/athletic activities is enough to make this a taxable "social or athletic club," regardless of the members' formal ownership status. This contrasts with an earlier case, Antlers Country Club, where members had no such control and no proprietary rights, and dues there were held not taxable.

What this means for you

Golf, tennis, and country clubs

The tax result doesn't turn on stock ownership or formal proprietary rights — it turns on who actually runs the club's activities. If your members organize and run tournaments, leagues, or committees (even informally, even under nominal board supervision), your dues, assessments, and initiation fees are likely taxable "social or athletic club" charges, regardless of your ownership structure.

Clubs weighing membership-structure changes

If you want dues to escape this tax, the Antlers precedent suggests you'd need members to have no meaningful control over club activities or management — not merely a lack of formal stock ownership. Simply offering non-equity memberships alongside equity ones, as this club did, isn't enough on its own.

Accountants and tax professionals

This opinion applies the multi-factor "club or organization" test in 20 NYCRR §527.11(b)(5) and directly distinguishes the leading no-tax precedent, Antlers Country Club, Inc. (Tax Appeals Tribunal, 1992) — worth reading both side-by-side when advising a membership club on whether its dues structure crosses the taxability line.

Common questions

Q: Does a member need to own stock in the club for dues to be taxable?
A: No. This opinion holds dues taxable even though membership by itself doesn't carry proprietary rights, and even though some members (61 of 287) aren't stockholders at all. What mattered was member control over club activities, not stock ownership.

Q: What's the key factor that makes club dues taxable versus exempt?
A: Whether members exercise meaningful control over the club's social or athletic activities — running tournaments, leagues, or committees, participating in selecting members, or holding a proprietary interest. Any one of these factors can establish taxable "club or organization" status; here it was member-run tournaments, leagues, and committees.

Q: We supervise our members' committee activity through our Board — does that keep dues untaxed?
A: Not necessarily. This club's Board supervised members' committee and tournament work, but the Department still found taxable member control because members could make day-to-day decisions in running those activities without needing prior Board approval for each one.

Q: Can our club rely on this opinion directly?
A: No. An advisory opinion binds the Department only as to the taxpayer who requested it, based on the specific facts described. A club with a genuinely different governance structure — like Antlers Country Club, where members had no control or proprietary interest — could come out the opposite way.

Citations and references

Statutes and regulations:

• Tax Law §1105(f)(2) (tax on social or athletic club dues over $10/year or initiation fees over $10)
• Tax Law §1101(d)(6) (definition of "dues": any dues, membership fee, assessment, or charge for social/sports privileges or facilities)
• 20 NYCRR §527.11(b)(2), (4), (5) (defining a taxable "club or organization")

Cited case:

• Antlers Country Club, Inc., Tax Appeals Tribunal, November 19, 1992 (dues not taxable where members had no proprietary rights and no control over club activities or management)

Source

• Landing page: NY Sales Tax Advisory Opinions, 2009
• Original opinion: TSB-A-09(17)S

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(17)S
Sales Tax
April 21, 2009

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S090202A

Name redacted (“Petitioner”) is the owner/operator of a golf course and country club. A
petition received on February 2, 2009 requests an advisory opinion about whether Petitioner’s
membership dues or any other membership fees or charges, such as stock purchase, assessments,
initiation fees and minimums paid by its members, are subject to sales tax.
Facts
Petitioner provides its members with the use of a golf course, clubhouse, restaurant and bar.
All members have full access to all facilities of Petitioner, with no priority of use to Petitioner’s
stockholders. Petitioner accepts membership from the general public on a first-come, first-served
basis, with the only restriction based solely on the size of the facility. Membership is available on an
annual basis. Individuals are offered equity ownership upon admission at a set fee of $2,500. This set
fee is redeemable upon surrender of stock ownership. Individuals can choose to be non-equity
members for a payment of a non-refundable fee of $300.
Petitioner is owned by 262 stockholders, of whom 226 are members (205 full members and 21
social members) and 36 are non-members. Petitioner has 287 members, of whom 61 are not
stockholders. While the majority of stockholders are members and the majority of members are
stockholders, an individual does not have to be a stockholder in order to be a member. Stockholders
can also be non-members as a result of withdrawal or transfer of stock certificates to non-members.
The stockholders vote on major decisions, while the day-to-day operations of Petitioner are
managed by a Board of Directors. Non-stockholders do not have voting rights. Members may manage
and run tournaments, leagues, and committees under the supervision of the Board of Directors. The
Board consists of nine members who are elected by the stockholders, and only stockholders can be
directors. The Board is governed by the by-laws of Petitioner.
Opinion
Tax Law §1105(f)(2) imposes sales tax on “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.” Tax Law §1101(d)(6) defines dues as “[a]ny dues or membership fee including any
assessment, irrespective of the purpose for which made, and any charges for social or sports privileges
or facilities….” Sales and Use Tax Regulation section 527.11(b)(5) defines a club or organization as
“any entity which is composed of persons associated for a common objective or common activities….
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,

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TSB-A-09(17)S
Sales Tax
April 21, 2009

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.”
In Antlers Country Club, Inc., Tax Appeals Tribunal, November 19, 1992, the Tribunal held
that, because members of the Antlers Country Club held no proprietary rights and had no control over
its activities or management, the dues paid by its members were not subject to sales tax pursuant to
Tax Law §1105(f)(2). In Antlers, the Tribunal recognized that mere membership does not
automatically confer an ownership interest on an individual. Antlers club members could not cast their
votes on business decisions or vote in the selection of the board of directors. Only Antlers
stockholders could elect the Board of Directors, but even then, the stockholders themselves did not
deal with the operations of the club. That authority rested solely with the Board of Directors. The
Tribunal held that even though most Antlers members were also stockholders (88%) and most Antlers
stockholders were also members (74%), these facts were not persuasive since the respective interests
were not identical. Antlers, supra. The Tribunal found that the Antlers members could not exercise
direct or indirect control of the social or athletic activities or management of the club and that its
promotional literature did not request that a potential patron become a stockholder in order to become a
member.1 Id.
In the present case, membership in Petitioner by itself does not carry with it any proprietary
rights and membership is only restricted based on the size of the facility. However, the members do, in
fact, have the ability to exercise direct control over Petitioner’s social and/or athletic activities.
Members manage and run tournaments, leagues and committees. These types of activities are
specifically set forth in the Sales Tax Regulations as “significant factors, any one of which may
indicate that an entity is a club or organization.” 20 NYCRR 527.11(b)(5).
Even when done under the “supervision” of the Board of Directors, we understand the facts to
state that members can make decisions regarding the tournaments, leagues and committees they
“manage and run,” without having to obtain the prior approval of the Board for every decision. In
addition, nothing in Petitioner’s by-laws appears to place limits on participation in the managing and
running of tournaments, leagues, and committees for those members who hold no proprietary rights.
This type of membership control over Petitioner’s social and athletic activities satisfies the criteria of a
“social or athletic club,” within the meaning of Tax Law §1105(f)(2) and NYCRR 527.11(b)(5).
We also find nothing in the by-laws that prevents a member from participating as an officer of
Petitioner by being selected by the Board of Directors as a Secretary and/or Treasurer. As described in
the by-laws, individuals holding these two officer positions are not required to be directors or even
stockholders.
1

While not definitive (since Petitioner has some members that are not stockholders), we note that Petitioner’s promotional
material facilitates and, in our view, encourages potential club facilities users to become stockholders, rather than mere
members. This apparent “push” towards ownership may also distinguish the facts from those in Antlers. In this regard, we
note that Petitioner’s promotional materials state: “If you are interested in becoming a member of [Petitioner], you will be
required to complete a membership package consisting of: an Application, a Purchase Plan Agreement, a Subscription and
Buy Back Agreement” (emphasis added). The required Purchase Plan and Subscription and Buy Back Agreements pertain
to stock purchases. In addition, Petitioner only posts on its website prices for membership dues for the upcoming season
which set forth the price “with purchase of stock.” There is no web posting of membership prices for non-equity
memberships. Indeed, as Petitioner itself notes, 226 of its 287 members are stockholders.

TSB-A-09(17)S
Sales Tax
April 21, 2009

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Thus, we conclude that dues paid by Petitioner’s members, and any other membership fees or
charges, such as stock purchase, assessments, initiation fees and minimums paid by its members for
membership in Petitioner are subject to sales taxes. Tax Law §§ 1101(d)(6) and 1105(f)(2); 20
NYCRR 527.11(b)(2),(4) and (5).

DATED: April 21, 2009

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

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.