Are a social clubs fees charged to non-members for lessons, camps, sing-alongs, and facility rentals taxable?

Plain-English summary

A residential-district social club (about 220 member-owners) collects sales tax on member activity fees but asked whether four fees charged to non-members are taxable: (1) tennis lessons, (2) childrens mini-camps, (3) childrens sing-along programs, and (4) facility rentals.

The Office of Counsel started from a key point: although a clubs member dues are taxable (Tax Law section 1105(f); 20 NYCRR 527.11), non-member activity fees are not taxable merely because of the clubs status (TSB-A-02(8)S) — you must look at each activitys nature. The conclusions:

• Tennis lessons — not taxable. Giving a lesson is instruction, which is not an enumerated taxable service.
• Childrens mini-camps — not taxable. The camp activities are instructional or supervised play and crafts. The included lunch does not make the fee taxable as long as the foods value is incidental to the overall camp charge (the camp ran ~$385-$400 for a weeks half-days; lunch was incidental).
• Sing-along programs — not taxable. Although admission to a place of amusement is taxable under section 1105(f), there is an exclusion for dramatic or musical arts performances. The hired musician singing childrens songs is a musical arts performance, so it is excluded.
• Facility rentals — depends on catering. A bare rental is not taxable. But under section 1105(d), a caterers receipts include any other charge; so when the club rents a facility in conjunction with its own catering (food or alcoholic beverages — and the club requires it cater all alcohol), the rental fee becomes an other charge and the entire receipt, including the rental, is taxable (20 NYCRR 527.8(f)).

What this means for you

Clubs, camps, and rec programs

Dont assume a fee is taxable (or exempt) just because a club charges it. Instruction, supervised childrens activities, and musical/dramatic performances are generally not taxable, even when sold to non-members.

Incidental food doesnt taint the fee

A lunch or snack included in a non-taxable program (camp, excursion) does not make the whole charge taxable if the foods value is incidental to the program. Separately priced or substantial food is different.

Rentals + catering = fully taxable

The trap is bundling. A facility rental alone is non-taxable, but rent it together with your own catering — even just the alcohol you insist on providing — and the whole receipt, rental included, is taxable.

Common questions

Q: Are non-member fees taxable because the club itself is a taxable social club?
A: No. Non-member fees are not taxable merely from the clubs status; each activity is judged on its own nature.

Q: The mini-camp includes lunch — does that make it taxable?
A: No, as long as the value of the food is incidental to the overall camp charge.

Q: Why is the sing-along untaxed when admission to amusement is taxed?
A: Because the amusement tax excludes admission to dramatic or musical arts performances, and the hired musician is a musical arts performance.

Q: When is a facility rental taxable?
A: When it is sold in conjunction with the clubs own catering of food or alcoholic beverages; then the whole receipt, including the rental, is taxable.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(f) (tax on social club dues and admission charges)
• Tax Law section 1105(d) (tax on food and drink sold by restaurants/caterers, including other charges)
• 20 NYCRR 527.11 (social clubs)
• 20 NYCRR 527.8(f) (caterers; rental as an other charge)
• TSB-A-02(8)S (non-member activity fees not taxable merely because of club status)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2017.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a17_5s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-17(5)S
Sales Tax
March 3, 2017

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

PETITION NO. S140512B

The Department of Taxation and Finance received a Petition for an Advisory
Opinion from REDACTED REDACTED REDACTED REDACTED (Petitioner), REDAC
REDACTED REDACTED REDAC. Petitioner requests guidance on whether receipts from
certain fees paid by non-members would be subject to New York State and local sales tax.
Specifically, Petitioner seeks an opinion in regard to (1) tennis lessons, (2) mini-camps for
children, (3) children’s sing-along programs, and (4) rentals of its facilities.
We conclude that receipts from (1) tennis lessons, (2) mini-camps for children, and
(3) children’s sing-along programs are not subject to New York State sales tax. However,
(4) rental of its facilities is subject to sales tax if the rental is in conjunction with any
catering services performed by Petitioner.
Facts
Petitioner is a club of approximately 220 members, each member being considered
an owner of the club and its property. Membership is restricted to property owners within a
certain legally recognized residential district in the county in which the club is located.
Petitioner’s members annually elect board members and have the power to amend its bylaws.
Petitioner operates from Memorial Day to Labor Day. Petitioner offers social
events, the use of a lake, and sporting facilities such as tennis, volleyball, and softball.
Petitioner offers activities for young children, such as sing-alongs and crafts. Additional
activities are offered for older children, including the above sporting activities. Petitioner
also offers a snack bar. Otherwise, occasional dinner parties are hosted on club premises,
which are catered by outside caterers.
As a social club, Petitioner collects New York State and local sales tax on all
receipts from member activity fees. Petitioner seeks guidance on the taxability of its
activity fees charged to non-members. The non-members possess no rights whatsoever in
relation to the club, except the ability to participate in the activity for which payment is
made. Specifically, the club-sponsored activities for non-members are (1) tennis lessons,

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(2) mini-camps for children, (3) children’s sing-along programs, and (4) rentals of its
facilities.
The mini-camps for children are half-day programs for children of kindergarten age
or younger. The activities include instructional swimming, tennis, sports, games, crafts, and
other outdoor play. Lunch is provided by the snack bar, which is included in the cost of the
program and not billed separately.
The sing-along program consists of scheduled times when a professional musician is
hired by the club to sing popular children’s songs to the participants. The participating
children are invited to sing along with the musician. The musician is given no equipment
and performs seated on a deck surrounded by the children. The club does not have any
performance venue such as an auditorium or theatre.
The facility rentals consist of several options. First, the outdoor facilities can be
rented, e.g., the beach front, lake, or basketball court. In conjunction with such rental, any
catering services by Petitioner’s snack bar are charged separately and additionally. Second,
the dining areas may be rented for an occasion such as a wedding.
These events are
catered by a separate, outside catering service. However, the club requires that it cater all
alcoholic beverages in conjunction with any catering performed by an outside food caterer.
Outside caterers cannot provide alcoholic beverages on club premises.
Analysis
Petitioner is operating a social club as defined by Sales and Use Tax Regulation 20
NYCRR 527.11(b) and its receipts from dues paid are taxable under Tax Law § 1105(f).
However, the fees charged to non-members for activities would not be subject to tax merely
as a result of the club’s relationship to its members. See TSB-A-02(8)S. Accordingly, the
nature of each activity must be reviewed to determine its taxability.
Tennis Lessons -- The receipts from tennis lessons are not taxable. Providing a
tennis lesson is in the nature of an instructional activity that is not a service subject to sales
tax.
Mini-Camps for Children -- The nature of the purchase here is a mini-camp and its
activities for small children. The activities of the camp by themselves are not subject to
sales tax, because the activities are instructional in nature or otherwise involve supervised
play and crafts. However, the mini-camps include lunch; that fact requires additional
consideration.
Sales tax is generally imposed on the entirety of a receipt where the receipt includes
a sale of prepared food. Specifically, Tax Law § 1105(d) imposes sales tax on receipts from

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every sale of any drink of any nature, or from every sale of
food and drink of any nature or of food alone, when sold in or
by restaurants, taverns or other establishments in this state, or
by caterers, including in the amount of such receipts any
cover, minimum, entertainment or other charge made to
patrons or customers.
Notwithstanding Tax Law § 1105(d), a receipt is not subject to tax where the inclusion of
food is incidental to the actual purchase. Merely incidental inclusion of food and drink is
considered ancillary to the purchase itself, such as the inclusion of a simple box lunch or
beverage on a charter sailing excursion. See TSB-A-97(52)S (determining that boxed
lunches consisting of sandwiches, soda and chips provided in conjunction with a charter
sailing excursion were not subject to sales tax where the charge for the 6-hour excursion for
three people, including the boxed lunch, was $150.00).
The cost of the mini-camp here ranges from $385.00 to $400.00, depending on the
date of registration. Each mini-camp runs daily, 9 a.m. to 1 p.m., for a period of one week.
All of the children are kindergarten age or younger. Lunch provided by a snack bar in such
circumstances would appear to be incidental. Therefore, as long as the value of the food
provided is incidental to the overall charge for the camp, the receipts for the mini-camp
would not be taxable.
Sing-Along Programs -- Tax Law § 1105(f) imposes sales tax on receipts from any
admission charge to a place of amusement. A place of amusement includes, without
limitation, “a theatre of any kind, concert hall, opera house, or other place where a
performance is given.” See 20 NYCRR 527.10. However, Tax Law § 1105(f) excludes
receipts for admission to dramatic or musical arts performances from sales tax.
Here, the club hires a professional singer to perform children’s songs on its covered
deck. This constitutes a musical arts performance for the children and, therefore, is within
the exclusion in Tax Law § 1105(f). Accordingly, the receipts from the sing-along program
are not subject to sales tax.
Facility Rental -- By itself, a receipt for the rental of a room or another of the club’s
facilities would not be subject to sales tax. However, as outlined by the petitioner, such
rental is often made in conjunction with the petitioner’s sale of its catering services. As
cited previously, Tax Law § 1105(d) imposes tax on the receipts from every sale by caterers,
including in the amount of such receipts any “other charge” made to its customers.
Accordingly, the imposition of sales tax on the receipts from its facility rentals depends on
whether the petitioner is also providing catering services.
On the occasions when the Petitioner rents its facilities without providing any catering
services whatsoever, the rental fee would not be subject to sales tax. When the petitioner rents a

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facility in conjunction with a catering service, whether for food or for alcoholic beverages, the
rental charge for the facility constitutes an “other charge” made to the customer. Thus, if
catering services are sold in conjunction with a facility rental, then the entire receipt, including
the rental fee, is subject to sales tax. See 20 NYCRR 527.8(f); TB-ST-110.

DATED: March 3, 2017

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

NOTE:

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. The information provided in this
document does not cover every situation and is not intended to replace
the law or change its meaning.