Are a yacht-club member's mooring fees subject to NY sales tax as club dues?
Plain-English summary
A yacht-club member asked whether the payments he makes to his club to moor his boat are taxable. The Department concluded yes -- they're taxable club dues under Tax Law 1105(f)(2) (which taxes dues paid to a social or athletic club).
It's a club. Under 20 NYCRR 527.11(b)(5), an entity is a "club" when its members control activities, elections, the selection of members, and management (or hold a proprietary interest). Here members elect the officers/directors, approve new members, can amend the bylaws, and overturn board decisions -- so it's a club.
It's a social and athletic club. It's a social club (527.11(b)(6)) because its stated objective is "the advancement, promotion and encouragement of boating and social enjoyment," and it offers communal amenities like a swimming pool (Merrick Estates). It's an athletic club (527.11(b)(7)) because it promotes yachting and aquatic sports (including jet skis).
The mooring fees are "dues." Tax Law 1101(d)(6) defines dues broadly: any dues or membership fee, any assessment (whatever its purpose), and any charge for social or sports privileges or facilities. The regulation's own Example 6 says a yachting club's docking/mooring charges (varying by boat size and slip location) are taxable dues, and the Tax Appeals Tribunal agreed in Youngstown Yacht Club. Dues even include utility charges (Hamlet Golf, TSB-A-08(2)S).
So all the member's mooring-related fees are taxable dues: marine rent (by slip size), the water-light fee, appliance/electricity charges, the taxes-insurance-grounds (TIG) charge, the fixed cable-TV fee, and personal-watercraft space rental.
What this means for you
Yacht, boat, golf, and similar member clubs
If your organization is member-controlled and exists for social or athletic purposes, the charges you bill members for using club facilities -- mooring, docking, slips, even bundled utilities -- are taxable dues, not separate nontaxable rentals or service charges. The broad statutory definition of "dues" sweeps in assessments and facility-use charges "irrespective of the purpose."
Members
Expect sales tax on your mooring/slip fees and related facility charges. The label on each line (marine rent, water-light, cable) doesn't matter -- as charges for club facilities, they're dues.
Common questions
Q: My mooring fee is for a slip and utilities, not 'membership' -- is it still dues?
A: Yes. 'Dues' includes any charge for social or sports privileges or facilities, and the regulations specifically treat a yacht club's mooring charges (and utility charges) as taxable dues.
Q: What makes the yacht club a taxable 'club'?
A: Members control its elections, member selection, and management, and its purpose is boating and social enjoyment -- so it's a member-controlled social and athletic club.
Q: Are the cable-TV and electricity charges really taxable?
A: Yes. Bundled, non-optional facility/utility charges billed to members are part of taxable dues.
Citations and references
- Tax Law section 1105(f)(2) (sales tax on dues paid to a social or athletic club)
- Tax Law section 1101(d)(6) (definition of dues)
- 20 NYCRR section 527.11(b)(5) (definition of club)
- 20 NYCRR section 527.11(b)(6) (social club)
- 20 NYCRR section 527.11(b)(7) (athletic club)
- Matter of Youngstown Yacht Club, Inc., DTA No. 813503 (mooring charges are taxable dues)
- Hamlet Golf and Country Club, Inc., TSB-A-08(2)S (dues include utility charges)
Source
- Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
- Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_36s.pdf
Original ruling text
New York State Department of Taxation and Finance
TSB-A-10(36)S
Sales Tax
August 10, 2010
Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
PETITION NO. S100413A
On April 13, 2010, the Department of Taxation and Finance received a Petition for Advisory
Opinion from name redacted (Petitioner), address redacted. Petitioner asks whether the payments that he
makes to the name redacted (yacht club) pertaining to the mooring of a boat are subject to sales tax.
We conclude that these payments are subject to sales tax under Tax Law section 1105(f)(2) because
the yacht club is a social or athletic club, Petitioner is a member of the club, and the amounts paid by
Petitioner for mooring are dues.
Facts
Petitioner is a member of the name redacted (yacht club). According to the yacht club’s constitution
and bylaws, the objective of the club is the advancement, promotion and encouragement of boating and
social enjoyment. The club’s board of directors is responsible for the government and management of the
club. All officers of the club, who are elected annually by members, sit as directors on the board. The
members directly elect the non-officers members of the board. Club members have the right to amend the
bylaws and overturn decisions made by the board of directors. New members are nominated by current
members and must be approved by the board of directors. The board has the right to expel members who are
delinquent in the payment of dues and fees.
The yacht club’s facilities include docking space, a swimming pool, and a building that contains
showers and space for club meetings. The second floor of the building is rented to a business that operates a
restaurant on the premises. The restaurant has a single entrance, which is open to the public, i.e. club
members do not have special access to the restaurant. The club sponsors golf outings and barbecues and has
a license from the State Liquor Authority to dispense wine and beer at club functions.
The yacht club has a reciprocity agreement with other yacht clubs on the Hudson River that permits
name redacted (yacht club) members to dock their boats at other clubs’ facilities without charge.
All yacht club members pay dues. Club members are entitled to a slip for a designated mooring
space at the club for a designated boat. Members who use a mooring slip at the club must pay the following
fees:
(a) “marine rent,” which is based on the size of the mooring slip used by the member;
(b) “water-light fee,” which is a charge for maintaining the common area in the marina area of the
club and includes an allocated non-metered cost for the consumption of electricity in the common
area;
(c) “appliance, stove, refrigerator, A/C and associates fees,” which is a charge for an allocated nonmetered estimated cost of the consumption of electricity by the member at his or her slip;
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Sales Tax
August 10, 2010
(d)”TIG” (Taxes, Insurance and Grounds), which are charges related to the common mooring area;
(e) “cable tv,” which is a fixed non-optional fee for yearly use of cable tv service at a slip;
(f) personal water craft space rental, which is a charge for the storage in a designated area of the
marina’s waters of small crafts such as dinghies and jet skis.
Analysis
Tax Law § 1105(f)(2) imposes sales tax on dues paid to any social or athletic club. Section
527.11(b)(5)(i) of the Sales Tax Regulations defines “club” as follows:
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.
The regulations go on to provide that a club or organization does not exist merely because it restricts
the size of the membership solely because of the physical size of the facility but any other type of restriction
may be viewed as an attempt at exclusivity. 20 NYCRR 527.11(b)(5)(ii)(b).
The name redacted (yacht club) is a club for purposes of sales tax imposed on dues. It is an
organization composed of persons who associate for a common objective or common activities. Members of
the club control elections of officers and directors, and participate in the selection of new members and
management of the club.
Section 527.11(b)(6)(i) of the Sales Tax Regulations defines “social club” as “any club or
organization which has a material purpose or activity of maintaining quarters for arranging periodic dances,
dinners, meetings, or other functions affording its members an opportunity of congregating for social
interrelation.”
Section 527.11(b)(7)(i) of the Sales Tax Regulations defines “athletic club” as “any club or
organization which has as a material purpose or activity the practice, participation in or promotion of any
sports or athletics.”
The name redacted (yacht club) is a social or athletic club for purposes of the sales tax imposed on
dues. It is a social club because its bylaws declare that the objective of the club is the advancement,
promotion and encouragement of boating and social enjoyment. In addition, the club provides members with
communal amenities such as use of a swimming pool. See Merrick Estates Civic Ass'n, Inc. v. State Tax
Commission, 65 A.D.2d 669, (1978). The organization is also an athletic club because it promotes yachting
and aquatic sports (e.g., use of jet skis).
Tax Law § 1101(d)(6) 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….”
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August 10, 2010
The Sales Tax Regulations set forth examples of charges that are considered dues within the meaning of the
statute. Example 6 in 20 NYCRR 527.11(b) provides as follows:
A club organized and operated for the promotion of yachting and other aquatic sports, which
is a social and athletic club, owns and maintains docking and mooring facilities for the use of its
members. The club makes a charge to each member using its facilities. The amount of the charge
depends upon the size of the member's boat and the location of the docking and mooring facilities
used. The charges made by the club for these facilities constitute taxable dues or membership fees.
The Tax Appeals Tribunal, relying in part on this example in the regulation, has held that mooring
charges billed by a yacht club to members were subject to sales tax as dues. Matter of the Petition of
Youngstown Yacht Club, Inc., December 11, 1997, DTA No. 813503. Further, dues can encompass utility
charges. Petition for Advisory Opinion from Hamlet Golf and Country Club, Inc., Adv Op Comm T&F,
January 7, 2008,TSB-A-08(2)S. Accordingly, all fees billed by the yacht club to Petitioner and other
members who use mooring space at the club are dues subject to sales tax under Tax Law section 1105(f)(2).
DATED: August 10, 2010
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.