If I sell memberships letting people drive their own cars on my private road course, are the membership fees and annual dues subject to New York sales tax as club dues or admission charges?

Plain-English summary

A private facility in upstate New York sells long-term membership licenses that let members drive their own cars on a roughly four-mile road course, plus access to a clubhouse with dining, a spa, locker rooms, and overnight rooms. Members pay for the license plus annual dues, and separately pay (with tax collected) for food, drink, car storage, and overnight stays. It asked whether the membership fees and dues themselves are taxable. The Department found two independent reasons they are not.

First, New York taxes admission or amusement-place charges generally, but specifically excludes "charges to a patron for admission to, or use of, facilities for sporting activities in which such patron is to be a participant." Driving on a road course is exactly that kind of participant sport — the member is the one behind the wheel — so the membership/license charge for using the track isn't taxed as an amusement charge, following the same logic the Department had already applied to a Go-Kart racing track in an earlier opinion.

Second, New York separately taxes dues paid to a social or athletic club over $10 a year — but this facility doesn't function as that kind of club. Members here have no ownership interest, no say in who else is admitted as a member, and no control over how the club or facility is run (the operator makes essentially all those decisions). The only limit on membership is how many people the physical facility can accommodate, and anyone is free to apply. Those are exactly the features the Department has previously said take an organization outside the "athletic club" dues tax (as it did for a golf club with the same open-membership, no-member-control structure). So the license fees and dues escape tax on this ground too — while food, car storage, and overnight stays remain separately taxable, as the facility itself already recognized.

What this means for you

Driving clubs, racetracks, and similar participant-sport facilities

Charges for the use of a facility where the customer is the one actually doing the physical activity (driving, not just watching) generally fall outside the amusement/admission tax, regardless of how exclusive or expensive the membership is.

Membership-based recreational facilities more broadly

Whether your membership dues are taxed as "athletic club" dues turns on member control, not the presence of amenities like dining or spas. If admission is open to anyone (limited only by physical capacity) and members have no say over who else joins or how the facility is operated, that weighs strongly against athletic-club-dues taxation — mirroring the same result reached for a golf club with equivalent structure.

Accountants and tax professionals

Remember these two exemptions are independent and both need separate confirmation: the participant-sporting-activity exclusion under §1105(f)(1) turns on the nature of the activity, while the athletic-club-dues question under §1105(f)(2)(i) and 20 NYCRR §527.11(b)(5),(7) turns on governance and membership control. A facility could pass one test and fail the other depending on its structure.

Facilities also selling food, storage, or lodging

Those ancillary sales remain separately taxable in the ordinary way — the exemptions here reach only the participant-sport admission/license charge and the non-athletic-club dues, not everything the facility sells.

Common questions

Q: We charge members to use a track/course where they drive/ride/participate themselves — is that an admission charge subject to sales tax?
A: Generally no. Charges for facilities where the patron is the actual participant in the sporting activity (as opposed to a spectator) are specifically excluded from the amusement admission tax.

Q: We also charge annual membership dues — are those separately taxable as club dues?
A: Only if the organization functions as a genuine "social or athletic club" with member control over membership and operations. If membership is open to anyone (limited only by capacity) and members have no say in governance, the dues generally aren't taxed under that provision either.

Q: Do we still owe tax on food, drink, car storage, or overnight lodging we sell separately?
A: Yes — those remain taxable in the ordinary way; the exemptions discussed here reach only the driving-facility admission charge and membership dues, not other separately sold goods and services.

Q: Does this ruling apply to any membership-based recreational facility?
A: Not automatically. An advisory opinion binds the Department only as to the taxpayer who requested it and only on the facts described; a facility with member control over admissions or operations could be analyzed differently on the club-dues question.

Citations and references

Statutes and regulations:

• Tax Law §1105(f)(1) (admission/amusement tax; participant sporting-activity exclusion)
• Tax Law §1105(f)(2)(i) (social/athletic club dues over $10/year)
• Tax Law §1105(c)(6), (d) (parking/storage; prepared food)
• 20 NYCRR §527.11(b)(5), (7) (athletic club definition)

Cited opinions:

• TSB-A-90(6)S (Go-Kart/racing track)
• TSB-A-93(56)S (golf club dues)

Source

• Landing page: NY Sales Tax Advisory Opinions, 2009
• Original opinion: TSB-A-09(26)S

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(26)S
Sales Tax
June 24, 2009

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

PETITION NO. S090413A

Petitioner name redacted asks whether its charges for the use of its driving facilities are subject to
sales and use tax. We conclude that those charges are not taxable.
Facts
Petitioner sells long-term licenses to persons wanting to access and use driving facilities that
petitioner operates on a 166-acre site in upstate New York. The site includes a road course that is
approximately four miles long and a clubhouse that features dining room facilities, locker rooms, spa, and
overnight accommodations.
Attached to the petition is an agreement entitled “Founding Resident Membership Agreement.”
Under the agreement, petitioner may sell a specified number of various classes of membership licenses
granting the license holders varying rights to use the facility. An individual wanting to use the facility must
purchase the membership license and also pay annual dues. At no extra charge, members are given a
specified number of qualified driver guest passes, which entitle the guest to drive on the road course, as well
as non-driver guest passes.
The agreement provides that persons possessing resident memberships have no interest in the club.
The agreement further provides that petitioner has the power to make most decisions regarding the facilities
and the club’s operating and financing activities. According to petitioner, members have no control over the
choice of members or the operation of the club. The membership license and the annual dues entitle only the
purchaser to use the facilities. Petitioner separately charges for food and drink, car storage, and over-night
occupancies. It collects tax on those charges. The only limitation on the number of memberships sold is the
size of the facility, and all are free to apply.
Analysis
Sales tax is imposed upon any admission charges or for the use of any place of amusement, but not
including “charges to a patron for admission to, or use of, facilities for sporting activities in which such
patron is to be a participant” (Tax Law section 1105[f][1]). Here, the licenses permit purchasers to use a
road track facility, a participatory sport. Accordingly, those charges are not taxable under section 1105(f)(1)
(TSB-A-90(6)S, Feb. 8, 1990 [charge for the use of a Go-Kart and racing track is exempt as charge for the
use of facilities for sporting activities]).
Sales tax is also imposed upon the dues of any social or athletic club in excess of ten dollars a year
(Tax Law section 1105[f][2][i]). In the present case, members do not control any social or athletic activities,
do not participate in the selection of members or club management, and do not possess any proprietary
interest in petitioner. The only limitation on the number of memberships sold is the size of the facility, and
all are free to apply. Therefore, petitioner is not operating an athletic club as defined in paragraphs (5) and
(7) of section 527.11(b) of the Sales and Use Tax Regulations, and its charges are not subject to tax as dues
paid to an athletic club under section 1105(f)(2) of the Tax Law (Sales Tax Reg. 527.11(b)(5][ii][Ex. 15];

TSB-A-09(26)S
Sales Tax
June 24, 2009

-2-

TSB-A-93(56)S [membership dues at a golf club not subject to sales tax because membership is limited
solely based on the facilities’ physical capacity and members had no control over the facilities management
or operation]).
Petitioner also makes other sales that would be taxable, such as car storage and meals (see Tax Law
section 1105[c][6], [d]). Petitioner separately charges for and collects tax on those sales, so those
transactions are not at issue here.

DATED: June 24, 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.