Are membership dues at a public, management-controlled golf and country club taxable as social or athletic club dues?

Plain-English summary

Bluff Point Golf and Country Club, Inc., owns and operates an 18-hole golf course, clubhouse, restaurant, and bar in Plattsburgh. It asked whether the membership dues it collects are subject to New York State and local sales tax.

The Department said no, applying Tax Law § 1105(f)(2), which taxes "dues paid to any social or athletic club" (where annual dues exceed ten dollars). Regulation § 527.11(b)(5) lists the factors that make an entity a taxable "club or organization" — chiefly, whether members control the activities, tournaments, dances, elections, committees, member selection, or management, or hold a proprietary interest. It also spells out what does not make a club: charging for facility use on a season-pass basis sold first-come, first-served; restricting membership solely by the physical size of the facility; using "club" or "member" as a marketing device; and offering tournaments, leagues, and social activities controlled solely by management.

On Bluff Point's facts, every indicator pointed away from taxable-club status:

• Membership is open to the public, first-come, first-served, and not restricted in any way.
• Members have no proprietary interest in the club.
• Members have no control over its activities, tournaments, social functions, member selection, or management — the club retains sole control, and the members' "advisory board" is merely a channel of communication; all decisions are made by management.
• The terms "club" and "member" are used solely as a marketing device.

Following Brierwood Village, Inc. (TSB-A-89(6)S) — where a club whose members had no proprietary rights or control, and whose membership was non-exclusive, was held not to be a social or athletic club — the Department concluded Bluff Point is not a social or athletic club, so its dues are not taxable.

What this means for you

Owning a golf course doesn't make you a taxable "club"

The § 1105(f)(2) dues tax is about member control and ownership, not the amenities. A business can run a golf course, clubhouse, and restaurant and still fall outside the tax if members are just customers — no proprietary interest, no vote over management or activities. The presence of fairways and a bar isn't what triggers the tax.

The four safe-harbor facts

Regulation § 527.11(b)(5) makes clear that none of these, by themselves, create a taxable club: (a) selling only season/annual passes on a first-come, first-served basis; (b) capping membership solely by the facility's physical capacity; (c) using "club"/"member" as marketing; (d) running tournaments and social events controlled solely by management. Bluff Point hit all four. Note the flip side from Example 18: restricting membership by geography, income, race, religion, or any other means signals exclusivity and points toward taxable-club status.

An "advisory board" is not member control

Bluff Point's members sat on an advisory board, but because it only relayed communication and management made all decisions, that didn't amount to control. If you want dues to stay non-taxable, keep genuine decision-making with the owner/management, not the membership.

Accountants and tax professionals

This is a companion to the other 1992 club-dues opinions — TSB-A-92(24)S (Ocean Watch Beach Club) and TSB-A-92(28)S (Kingbrook) — all reaching the same non-taxable result under the Brierwood framework. The common thread: public, non-exclusive membership + no proprietary interest + management control = not a taxable club.

Common questions

Q: Are the golf club's membership dues taxable?
A: No. Because membership is public and non-exclusive and members have no proprietary interest or control, the club isn't a social or athletic club under § 1105(f)(2), so dues aren't taxed.

Q: Doesn't running a golf course and social events make it an athletic/social club?
A: No. What matters is member control and ownership, not the activities. Tournaments and social functions controlled solely by management don't create a taxable club.

Q: What would have made the dues taxable?
A: Members holding a proprietary interest or controlling the club's activities or management, or membership restricted by something other than facility size (e.g., geography or income).

Q: Does the members' advisory board count as control?
A: No. It only served as a communication channel; all decisions were made by management, so it wasn't member control.

Citations and references

Statutes, regulations, and authorities:

• Tax Law § 1105(f)(2) (tax on dues over ten dollars paid to a social or athletic club)
• Sales and Use Tax Regulations § 527.11(b)(5) (definition of club or organization; control/proprietary-interest factors; facility-size, season-pass, marketing, and management-controlled-activity carve-outs; Example 18)
• Brierwood Village, Inc., Adv. Op. Comm. T&F, February 13, 1989, TSB-A-89(6)S (non-exclusive club with no member control or proprietary interest is not a social or athletic club)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1992.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a92_13s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-92 (13) S
Sales Tax
February 19, 1992

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S920103A

On January 3, 1992, a Petition for Advisory Opinion was received from Bluff Point Golf and
Country Club, Inc., Box 9A, Lakeshore Road, Plattsburgh, New York 12901.
The issue raised by Petitioner, Bluff Point Golf and Country Club, Inc., is whether
membership dues paid to Petitioner are subject to State and local sales taxes.
Petitioner is the sole owner and operator of a golf course and country club which provides
its members with the use of an eighteen hole golf course, a clubhouse and restaurant and bar.
All 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 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. The
membership does not participate in the selection of other members and management. Membership
is open to the general public on a first come, first serve basis and is not restricted in any way.
Members do not possess a proprietary interest in Petitioner.
The term "club" and "member" are used solely as a marketing device.
Members serve on an advisory board to act as a form of communication between members
and management. Ail decisions are made strictly by the management.
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 .... "
Section 527.11(b)(5) of the Sales and Use Tax Regulations defines the term "club or
organization" as follows:
(5) Club or organization. (i) 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
TP-9 (9/88)

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TSB-A-92 (13) S
Sales Tax
February 19, 1992

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.
(ii) A "club or organization" 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 or
organization". 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.

In Brierwood Village, Inc., Adv Op Comm T&F, February 13, 1989, TSB-A-89(6)S, the
Commissioner advised that inasmuch as (1) the membership of the club possessed no proprietary
rights therein and had no control over its activities or management and (2) membership in the club
was not exclusive, with members being appointed and accepted from a waiting list maintained by
Petitioner, the subject club was not a "social or athletic club" within the meaning of section
1105(f)(2) of the Tax Law. Annual membership "fees" or "dues" were thus not subject to the
imposition of sales tax.
Accordingly, pursuant to Section 1105(f)(2) of the Tax Law, Section 527.11(b)(5) of the
Sales and Use Tax Regulations and Brierwood Village, Inc., supra, since membership is not
exclusive, members possess no proprietary interest in Petitioner and have no control over its

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TSB-A-92 (13) S
Sales Tax
February 19, 1992

activities or management, and the term "club" and "member" are used solely as a marketing device,
Petitioner, is not a social and athletic club and, therefore, membership dues paid by members are not
subject to State and local sales taxes.

DATED: February 19, 1992

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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