Are a yacht club's charges for boat mooring and sailing-instruction tuition subject to sales tax, and does it matter whether the person paying is a club member or a member of the public?

Subject

Issues raised are whether charges for tuition for sailing instructions and charges for mooring boats are subject to sales tax.

What this means for you

A yacht club, formed to promote sailing, runs junior and adult sailing-instruction programs (open to the public, though relatives of members get preference and most students are members' relatives) and also maintains two permitted mooring areas near its waterfront property, contracting each spring to place moorings and assigning them to boat owners. Historically both members and non-members have paid mooring fees, though at the time of this opinion only members actually held moorings there (non-members mostly use cheaper nearby private mooring areas).

New York's regulations separately exempt mooring/storage charges (an example in the storage regulation specifically says boat mooring charges aren't taxable) and treat sailing tuition as exempt educational/sport instruction. So charges to NON-members for either mooring or sailing tuition escape sales tax entirely on those grounds. But New York also taxes "dues" paid to a social or athletic club, defined broadly to include any charge for social or sports privileges or facilities -- and the regulations give a specific example of a yachting club's docking/mooring charge to its OWN members being taxable club dues. This opinion applies that member/non-member distinction squarely: because this is a private social and athletic club, the identical mooring and tuition charges, when paid by MEMBERS (as opposed to the general public), are recharacterized as dues for club privileges and become taxable under the club-dues provision -- even though the same charge to a non-member isn't taxable at all.

Q&A

Q: We're a yacht/sailing club and charge the general public for sailing lessons and boat moorings -- is that taxable?
A: No, per this opinion -- non-member mooring charges are exempt as storage charges, and non-member sailing tuition is exempt as educational/sport instruction.

Q: We charge our own CLUB MEMBERS the identical fee for the same mooring or sailing-instruction services -- is that taxable?
A: Yes, per this opinion -- because the club is a social/athletic club, charges to members for these facilities and instruction are treated as club dues under Tax Law § 1105(f)(2) and 20 NYCRR § 527.11, which are taxable regardless of what the same charge would be called for a non-member.

Q: Does it matter that our sailing programs are technically open to the public, even if most students happen to be members' relatives?
A: This opinion doesn't turn on that -- it distinguishes based on whether the specific paying customer is a member or non-member, not on whether the program is nominally open to outsiders.

Citations

• Tax Law § 1105(f)(2) -- imposes sales tax on dues paid to a social or athletic club in New York.
• 20 NYCRR § 527.6 -- exempts charges for storage of tangible personal property, with an example specifically covering boat mooring charges.
• 20 NYCRR § 527.11 -- defines taxable club dues to include any charge for social or sports privileges or facilities, with an example taxing a yachting/aquatic-sports club's docking and mooring charges to its own members.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_22s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (22)S
Sales Tax
May 3, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940208A

On February 8, 1994 a Petition for Advisory Opinion was received from Youngstown Yacht
Club, Inc., P.O. Box 379, Youngstown, NY 14174.
The issues raised are whether charges for tuition for sailing instructions and charges for
mooring boats are subject to sales tax.
Petitioner, Youngstown Yacht Club, Inc., is a private social and athletic club owning real
property adjacent to the Niagara River in Youngstown, New York. Petitioner was formed to promote
the sport of sailing. In furtherance of this purpose, Petitioner provides a junior sailing program and
an adult sailing program for the instruction of sailing techniques, on-the-water safety, seamanship,
and in the case of the junior sailing program, sailboat racing.
The junior and adult sailing programs are open to the public, although preference is given
to relatives of club members. Most (but not all) students in the junior and adult sailing programs are
relatives of club members. Petitioner provides the Village of Youngstown a scholarship to award
to any individual without the means to pay for junior sailing program tuition.
Also in furtherance of Petitioner's purposes, Petitioner maintains (pursuant to permits issued
by the US Army Corp of Engineers) two mooring areas in the general vicinity of Petitioner's real
property. In connection with administering the mooring areas, Petitioner contracts with a third-party
every spring to place moorings in the two areas. A mooring consists of a steel weight attached by
chain and/or rope to a mooring float. Boat owners contract with Petitioner for moorings, and each
boat owner is assigned a particular mooring within the two areas administered by Petitioner.
Historically, boat owners who are not members of the club have had moorings in the areas
administered by Petitioner. For the privilege of maintaining a mooring in these areas, non-members
are required to pay Petitioner a mooring fee equivalent to that paid by members. Currently, no non­
members have moorings in the two areas administered by Petitioner. However, while Petitioner may
exercise a preference to provide moorings to club members, it is Petitioner's policy to provide
moorings to non-members if moorings are available. The major reason no non-members currently
maintain moorings in the two areas administered by Petitioner is economic -- two
privately-administered mooring areas are adjacent to Petitioner's areas, and virtually all non-members
who have moorings in the vicinity of Petitioner maintain their moorings at these privately­
administered and sometimes less-expensive areas. Petitioner's areas and the private areas are
currently undersubscribed.

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TSB-A-94 (22)S
Sales Tax
May 3, 1994
Petitioner charges a fee to members for providing moorings, (i.e., mooring charges).
Petitioner also charges tuition to students in its junior and adult sailing programs.
Section 527.6 of the Sales and Use Tax Regulations states, in part:
Storage of tangible personal property. [Tax Law, § 1105(c)(4)]
(b)

Imposition.

Example 1: A person moors his boat in a slip, at a marina, during the summer
months, and places it in storage during the winter months. The charges for mooring are not
taxable....
Section 527.11 of the Sales and Use Tax Regulations states, in part:
Dues. [Tax Law, § 1105(f)(2)] (a) Imposition.
(1)
A tax is imposed upon the dues paid to any social or athletic club in this
State....
(b)

Definitions. As used in this section, the following terms shall mean:
(2)

Dues. (i) The term dues includes:

(b)

any assessment, irrespective of the purpose for which made; and

(c)

any charge for social or sports privileges or facilities.

Example 6:

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.

In the instant matter, Petitioner's mooring charges to non-members tuition and charges to
non-members for sailing instructions are not subject to sales or use tax. Section 527.6 of the
Regulations, Example 1, provides that mooring charges are not taxable. Furthermore, since sailing
instructions are considered to be educational and participation in a sport, the tuition charges to
non-members for sailing instructions are also not subject to sales or use tax.

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TSB-A-94 (22)S
Sales Tax
May 3, 1994
However, Petitioner's charges to its members for mooring facilities and for sailing
instructions are considered to be charges for dues in accordance with Section 527.11(b)(2)(b) and
(c) and Example 6 of the Sales and Use Tax Regulations, and, accordingly, are subject to the sales
tax imposed upon the dues paid to a social or athletic club in accordance with Section 1105(f)(2) of
the Tax Law.

DATED: May 3, 1994

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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