Are a member-owned golf club's membership dues subject to New York sales tax?
Plain-English summary
New York imposes sales tax on the dues of a "social or athletic club" if an active annual member's dues run more than ten dollars a year. The petitioner is a for-profit, member-stockholder-owned club organized to promote golf, with a member-elected Board that runs everything — membership categories, dues, course rules, and so on. It sells several membership tiers (full, associate, intro, social, weekend).
The Office of Counsel concluded the club's dues are taxable. It qualifies as a "social or athletic club" because golf is its material purpose and the membership controls the club's activities and holds a proprietary interest in it (key factors under 20 NYCRR 527.11(b)(5)). Because the dues of an active annual full member exceed ten dollars per year, the statute reaches all charges for dues, initiation fees, and assessments. The opinion distinguishes Antlers Country Club, where the entity was not a club because non-member stockholders controlled the activities — here, the members themselves control the club.
What this means for you
Golf, tennis, and other member clubs
If your club's material purpose is social or athletic and an active annual member pays more than ten dollars a year in dues, your dues, initiation fees, and assessments are subject to New York sales tax. Member ownership and member control of activities are strong indicators that you're a taxable "club or organization."
How far the tax reaches
Once the ten-dollar threshold is crossed for active annual members, the tax applies across the board to dues and initiation fees — not just to the top membership tier. (A later companion opinion, TSB-A-20(4)S, confirms even non-voting "limited members" owe tax on their dues.)
Accountants and tax professionals
The analysis turns on the club-or-organization factors in 20 NYCRR 527.11(b)(5) (member control, proprietary interest) and the definitions of "social or athletic club" and "dues" (Tax Law § 1101(d)(13), (d)(6)). Contrast Antlers Country Club, where control by non-member stockholders took the entity out of the definition.
Common questions
Q: Are golf club dues taxable in New York?
A: Yes, if the club is a social or athletic club and an active annual member's dues exceed ten dollars a year. Then all dues, initiation fees, and assessments are taxable.
Q: What makes an organization a taxable "club"?
A: Factors like the membership controlling the club's activities and elections, and members holding a proprietary interest in the organization. Any one factor can indicate a club.
Q: Does the ten-dollar threshold mean small dues escape tax?
A: No. Once an active annual member's dues exceed ten dollars, the tax applies to all members' dues and to initiation fees over ten dollars.
Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your club's specific structure.
Citations and references
Statutes and regulations:
- Tax Law § 1105(f)(2) (tax on social/athletic club dues)
- Tax Law § 1101(d)(13) (definition of social or athletic club)
- Tax Law § 1101(d)(6) (definition of dues)
- 20 NYCRR 527.11(b)(5) (factors defining a club or organization)
Decisions cited:
- Antlers Country Club (Tax Appeals Tribunal, Nov. 19, 1992)
Source
- Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
- Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-2s.pdf
Original ruling text
New York State Department of Taxation and Finance
Office of Counsel
TSB-A-20(2)S
Sales Tax
February 3, 2020
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (the Club). The Club asks whether its membership dues are subject to sales tax. We
conclude that the Club’s membership dues are subject to sales tax under Tax Law § 1105(f)(2).
Facts
The Club is a for-profit entity owned by member-stockholders and organized to promote golf.
There are no athletic activities other than golf and there are limited social activities. The Club owns a
building that is used as a combination pro shop, club storage, and cart storage facility. The pro shop
business is owned and operated by the Club golf professional, who is also an employee of the Club
and runs the day-to-day operations of the golf course. The Club owns a building that houses a
restaurant and dining facility that is leased to an individual who operates the restaurant as a separate
business entity. Club members are encouraged to support both the pro shop and restaurant, but are
under no obligation to do so. The Club is open to outside play but nonmembers are limited to eight
rounds per year, except that there are two public leagues that would allow nonmembers to exceed the
eight rounds limit. The course is open from April 1st until November 20th - weather permitting.
The Club sells several golf memberships that afford members differing levels of access to the
facilities. The initiation fees and dues for membership vary. There are no restrictions on who may
become a member and the membership options are as follows:
1. Full membership
Full members pay the full dues rate applicable to their age. The dues of an active annual full
member exceed ten dollars per year. These members can vote and run for the Board of Directors.
They are required to purchase a share of stock for $100. They have unlimited playing privileges,
unlimited use of the range, and can make tee time reservations two weeks in advance. Full members
are also allowed to designate a second person as an associate member. This is a buy one/get one free
deal. There is no additional charge for the associate membership. There are a few lifetime members
that are full members who paid a one-time fee of $10,000 in exchange for membership for life.
2. Associate membership
Associate members are members who have been so designated by a full member. Associate
members pay no dues, they cannot vote for or be elected to the Board of Directors, and they cannot
own stock. Otherwise there are no additional restrictions on associate members. They have unlimited
playing privileges, unlimited use of the range, and can make tee time reservations two weeks in
advance. Membership as an associate is limited to three years.
-2-
TSB-A-20(2)S
Sales Tax
February 3, 2020
- Intro membership
Intro members are new members who receive a reduced rate that increases each year until full
membership is attained. The dues of an active annual intro member exceed ten dollars per year. They
have unlimited playing privileges, unlimited use of the range, and can make tee time reservations two
weeks in advance. Intro members cannot vote for or be elected to the Board of Directors and are not
permitted to own stock.
4.
Social membership
These members are allowed two free rounds of golf with a cart, unlimited range privileges, and
a member’s charge account. Social members cannot vote for or be elected to the Board of Directors.
A stock purchase is not required, although some social members who were previously playing
members do own stock.
5. Weekend membership
These members have unlimited playing privileges on Saturdays and Sundays after 11:00AM,
as well as unlimited range privileges. Weekend members cannot vote for or be elected to the Board of
Directors and are not permitted to own stock.
All members (other than social members) are entitled to purchase club storage, as well as use
of the handicapping system. All members (other than social and weekend members) are required to
use at least 20 carts per season. Unused carts are billed to the member at the end of the season. All
members have a charge account that can be used to charge carts and pro shop purchases. There is no
monthly assessment for restaurant services. The restaurant owner has established separate charge
accounts for members who want a charge account for restaurant and bar purchases.
Responsibility for the operation of the Club rests solely with the Board of Directors and the
various member-comprised committees established by the Board. These responsibilities include:
hiring and supervising department heads, establishing membership categories, setting dues and
initiation fees, establishing the rules governing the use of the golf course, approving outside
(nonmember) play, maintaining the buildings owned by the Club, purchasing machinery, and
establishing the rent paid by the restaurant lessee and monitoring compliance with conditions of the
lease.
The Board is made up of 13 full members who are elected for three-year terms by the eligible
member-stockholders. Members of the Board who serve three consecutive terms are not eligible for
reelection in the tenth year, but may be reelected after not serving for a year. Members of the Board
elect a president, vice president, secretary, and treasurer who must be members of the Board.
Analysis
Tax Law § 1105(f)(2) imposes sales tax on all dues paid to any social or athletic club if the
dues of an annual active member are greater than ten dollars, exclusive of any initiation fee, and on
any initiation fee in excess of ten dollars regardless of the amount of the dues. A social or athletic club
-3-
TSB-A-20(2)S
Sales Tax
February 3, 2020
is “[a]ny club or organization of which a material purpose or activity is social or athletic.” Tax Law §
1101(d)(13). Dues are any “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.” Tax Law § 1101(d)(6).
20 NYCRR 527.11(b)(5) defines a club or organization:
[A]ny 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, 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 Club is a private for-profit entity organized for social and athletic purposes: to promote golf.
It is member-owned and member-managed through its Board of Directors even though not all classes of
members can own stock and run or vote for the Board of Directors. Member-stockholders have a
proprietary interest in the Club and only member-stockholders can run and vote for the Board of
Directors. Compare Antlers Country Club, Tax Appeals Tribunal, November 19, 1992, (deciding that an
entity was not a club within the meaning of 20 NYCRR 527.11 because the activities were controlled by
the stockholders and not all stockholders were members).
Accordingly, the Club is a social or athletic club within the meaning of 20 NYCRR 527.11(b)(5)
and for purposes of Tax Law § 1105(f)(2). Because the dues of an annual active member are greater than
ten dollars, all charges for dues, initiation fees, and assessments are subject to tax.
DATED: February 3, 2020
/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.