Are the dues and initiation fees of a golf and country club owned by one company taxable, when members have no ownership or control and anyone on the waiting list can join?

Plain-English summary

Brierwood Village, Inc. solely owns and operates the Brierwood Golf & Country Club — an 18-hole golf course, tennis courts, an outdoor pool, a clubhouse, and restaurant and bar facilities. It asked whether its dues and initiation fees are taxable as those of a "social or athletic club."

The Department said no — this is not a taxable club — but flagged two other charges that are taxable.

• Dues and initiation fees → not taxable. Tax Law § 1105(f)(2) taxes the dues of a social or athletic club. The regulation (20 NYCRR § 527.11(b)(5)) says the hallmarks of a "club" are member control over activities, tournaments, elections, and the selection of members, or member proprietary interest in the organization. Here the members have none of that: the owner controls the golf course, tournaments, and all social functions, and members have no ownership stake and no vote on new members or club policy. And under Example 18, an individually owned club that restricts its membership only because of the physical capacity of its facilities — new members come off a first-come waiting list — is not a club. So the dues and initiation fees are not subject to sales tax.
• Locker and club storage → taxable. Charges to members for lockers and golf-club storage are taxable as the storage of tangible personal property under § 1105(c)(4).
• Food and drink (and the monthly-minimum assessment) → taxable. Charges for food and beverages sold at the club are taxable under § 1105(d)(i), which reaches any "cover, minimum … or other charge." So the assessment billed to a member who fails to meet the required $45 monthly food-and-beverage minimum is also taxable.

What this means for you

Who "controls" the club is what decides the dues question. New York's dues tax targets member-controlled or member-owned clubs. If a single owner runs the operation for profit and the members are just customers buying access — no ownership, no governance, no control over who else joins — the operation generally is not a taxable "social or athletic club," and the dues and initiation fees fall outside § 1105(f)(2).

Limiting membership to your physical capacity is not "exclusivity." Capping the membership because the course, pool, or dining room can only hold so many people — and filling openings from a first-come waiting list — does not make you a club. But restricting membership by geography, income, race, religion, or other selective means would.

Dues being untaxed doesn't make everything untaxed. Even at a non-club operation, ordinary taxable sales are still taxable: storage charges (lockers, club storage) under § 1105(c)(4), and food and drink — including a shortfall assessment against an unmet food-and-beverage minimum — under § 1105(d)(i).

Common questions

Q: We own and run a golf club for profit. Are our membership dues taxable?
A: Not on these facts. Because the members had no proprietary interest and no control over management or membership, and membership was limited only by facility capacity, the club was not a "social or athletic club" under § 1105(f)(2), so the dues and initiation fees were not taxable.

Q: We keep our roster small. Does that make us an exclusive club?
A: Not if the only reason is the physical capacity of your facilities and you fill openings from a first-come waiting list. Example 18 treats that as not-a-club. Restricting by geography, income, race, or religion would be different.

Q: If our dues aren't taxable, are our locker fees and restaurant sales also untaxed?
A: No. Locker and club-storage charges are taxable storage under § 1105(c)(4), and food and drink — including an assessment for missing a required monthly minimum — are taxable under § 1105(d)(i).

Citations and references

Statute and regulation:

• Tax Law § 1105(f)(2) — imposes sales tax on the dues of a social or athletic club when active-member dues exceed $10 per year
• 20 NYCRR § 527.11(b)(5) — definition of "club or organization" (member control or proprietary interest as significant factors) and Example 18 (individually owned club limited only by facility capacity is not a club)
• Tax Law § 1105(c)(4) — tax on the service of storing tangible personal property not held for sale
• Tax Law § 1105(d)(i) — tax on receipts from food and drink, including any cover, minimum, or other charge

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a89_6s.pdf

Original ruling text

1 Finance
New York State Department of Taxation and

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (6)S
Sales Tax
February 13, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S881208C

On December 8, 1988, a Petition for Advisory Opinion was received from Brierwood
Village, Inc., S 5324 Rogers Road, Hamburg, New York 14075.
The issue raised is whether Brierwood Village, Inc. D/B/A Brierwood Golf & Country Club
is a club or organization as defined under Section 1105(f)(2) of the Tax Law and Section
527.11(b)(5) of the Sales and Use Tax Regulations and whether it's "Dues and Initiation Fees" are
subject to state and local sales tax.
Petitioner is the sole owner and operator of the Brierwood Country Club which provides its
members the use of an eighteen hole golf course, tennis courts, outdoor swimming facilities, a
clubhouse, and restaurant and bar facilities.
All regular general members are eligible to participate in the use of the golf course and golf
tournaments. The tournaments are controlled by Petitioner and are subject to Petitioner's discretion.
The general members and social members are entitled to participate in all social gatherings,
dances and other social functions which are completely sponsored and controlled by Petitioner.
Petitioner retains sole control and authority over the use of the golf course and full facilities.
The membership does not have any control or rights over social functions or golf tournaments.
New members are appointed and accepted from a waiting list. Petitioner approves new
applicants as members to fill vacancies in the membership. Members have no control over the
acceptance of new members. The size of the membership is limited only because of the size of the
facilities.
Club members do not have a proprietary interest in Brierwood Village, Inc. and are not
permitted by the owner to participate in either the selection of new members or management of the
club. Petitioner is not obligated to accept opinions or suggestions from members regarding club
policies and/or rules.
Members are charged a daily greens fee for guests.
Separate charges are made to members for lockers and club storage.
Members are required to charge a monthly minimum of $45.00 per month for both food and
beverage. In the event a member charges less than the minimum required amount for a month, the
difference between the minimum required amount and the actual amount charged will be billed to
the member.

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TSB-A-89 (6)S
Sales Tax
February 13, 1989
Section 1105(f)(2) of the Tax Law imposes a tax on "The 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...."
The term "club" is defined as:
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 . . . 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.
(ii)

A club . . . does not exist merely because a business entity:

(a)

charges for the use of facilities on an annual or seasonal basis, even if an annual or
season pass is the only method of sale and provided such passes are sold on a first­
come, first-served basis:

(b)

restricts the size of the membership solely because of the physical size of the facility.
Any other type of restriction may be viewed as an attempt at exclusivity:

(c)

uses the word club or member as a marketing device:

(d)

offers tournaments, leagues and social activities which are controlled solely by the
management . . . .

Example 18:

A club owned by an individual which attempts to restrict its membership by
geographic area, income, race, religion or any other means, is a club . . . .
However, a "club" owned by an individual which restricts its membership
only because of the physical capacity of its facilities is not a club or
organization. 20 NYCRR 527.11(b)(5)

Accordingly, inasmuch as (1) the membership of Petitioner's club possess no proprietary
rights therein and have no control over its activities or management and (2) membership in the club
is not exclusive, with members being appointed and accepted from a waiting list maintained by
Petitioner, the subject club is not a "social or athletic club" within the meaning of section 1105(f)(2)
of the Tax Law. Annual membership "fees" or "dues" are thus not subject to tax imposed under such
statutory provision.
Section 1105(c)(4) of the Tax Law imposes a sales tax on the service of storing all tangible
personal property not held for sale in the regular course of business. Accordingly, Petitioner's charges

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TSB-A-89 (6)S
Sales Tax
February 13, 1989
to members for lockers and golf club storage are subject to State and local sales taxes.
Section 1105(d)(i) of the Tax Law imposes a sales tax on the receipts from "every sale of
beer, wine or other alcoholic beverages or any other drink of any nature, or from the 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." (Emphasis added) Therefore,
Petitioner's charges to its members for sales of food and drink, including any assessments made
against a member for failure to meet the monthly minimum, are also subject to State and local sales
taxes.

DATED: February 13, 1989

s/FRANK J. PUCCIA
Director
Technical Services

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.