Did historical SC Revenue Ruling 90-7 tax membership fees for health clubs, gyms, spas, and fitness centers?

Plain-English summary

South Carolina Revenue Ruling 90-7 treated a paid membership in a for-profit health club, spa, gym, fitness center, or similar facility as a taxable admission to a place of amusement.

The ruling applied to membership fees received on or after May 1, 1991. It exempted charges paid by members of a nonprofit organization for use of that organization's facilities. It also preserved fees paid under a binding written contract executed before May 1, 1991 when the contract permitted no increase in fees or charges.

Why the fees were admissions

Section 12-21-2410 defined an admission as the right or privilege to enter or use a place. The facilities offered weightlifting, aerobics, indoor tracks, exercise machines, and similar activities in exchange for membership dues.

Using ordinary meanings, the Commission defined a place of amusement as a location offering an activity that occupies spare time, distracts, relaxes, entertains, or gives pleasure. It also relied on Venture Management Inc. v. South Carolina Tax Commission, which upheld admissions tax on membership fees to a place of amusement.

Nonprofit-member exemption

The historical statute exempted a charge to a member of a nonprofit organization or corporation for use of that organization's own facilities. The exemption depended on both nonprofit status and the member's use of the organization's facilities.

Transition rule and supersession

RR 90-7 rescinded RR 90-4 and delayed the operative rule to May 1, 1991. Its binding-contract exception required a pre-May 1 written contract that did not permit any increase in fees or charges.

Later admissions-tax rulings replaced this historical guidance. RR 05-14 superseded prior conflicting advisory opinions, and RR 26-2 later superseded RR 05-14.

Common questions

Q: Were for-profit gym memberships taxable?

A: Yes, for fees within the ruling's effective rule.

Q: Were nonprofit facility dues automatically taxable?

A: No. The stated exemption covered a nonprofit organization's charge to its member for use of its facilities.

Q: Did every pre-May 1, 1991 contract qualify for transition protection?

A: No. It had to be binding, written, executed before that date, and prohibit fee or charge increases.

Q: Is RR 90-7 current guidance?

A: No. Later admissions-tax rulings superseded the historical guidance chain.

Citations and references

• S.C. Code Ann. § 12-21-2410 — historical admissions-tax definitions
• S.C. Code Ann. § 12-21-2420 and (4) — historical admissions tax and nonprofit-member exemption
• Venture Management Inc. v. South Carolina Tax Commission, No. 80-CP-40-4157 (1981)
• SC Revenue Ruling 05-14 — later superseding guidance: https://dor.sc.gov/sites/dor/files/policies/RR05-14.pdf
• SC Revenue Ruling 26-2 — later superseding guidance: https://dor.sc.gov/sites/dor/files/policies/RR26-2.pdf

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR90-7.pdf

Original ruling text

SC REVENUE RULING #90-7

SUBJECT:

Membership Fees To Health Clubs, Spas, Etc.
(Admissions Tax)

TAX ANALYST:

Deana West

EFFECTIVE DATE:

May 1, 1991

SUPERSEDES:

SC Revenue Ruling #90-4

REFERENCE:

S. C. Code Ann. Section 12-21-2410 (1976)
S. C. Code Ann. Section 12-21-2420 (1976)

AUTHORITY:

S. C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how
tax law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until
superceded by a Regulation or is rescinded by a subsequent Revenue
Ruling.

Question:
Are charges for membership fees to health clubs, spas, gyms, fitness centers and the like subject
to the admissions tax, pursuant to Code Sections 12-21-2410 and 12-21-2420?
Facts:
Health clubs, gyms, fitness centers, spas, and the like offer activities, such as weightlifting,
aerobics, indoor running tracks and exercise machines, to the general public for a membership
fee.
Individuals obtain access to enter and use the facility by completing a contract specifying the
terms of membership, dues and membership expiration date.

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Discussion:
Code Section 12-21-2420 imposes the admissions tax and reads, in part:
There shall be levied, assessed, collected and paid upon all paid admissions to all places of
amusement within this State a license tax of...four percent...

The tax imposed by this Section shall be paid by the person or persons paying
such admission price and shall be collected and remitted to the South Carolina
Tax Commission by the person or persons collecting such admissions price
(emphasis added).
Code Section 12-21-2410 defines various terms found in Section 12-21-2420 and reads, in part:
For purposes of this article and unless otherwise required by the context:
(1)

The word "admission" means the right or privilege to enter into or use a
place or location;

(2)

The word "place" means any definite enclosure or location; and

(3)

The word "person" means individual, partnership, corporation, association
or organization of any kind whatsoever.

The Commission has consistently imposed the admissions tax on membership fees to places of
amusement, such as golf courses and racquet clubs. This position was upheld in Venture
Management Inc. v South Carolina Tax Commission, Richland County Circuit Court, Case No.
80-CP-40-4157 (1981). Therefore, charges for membership to places of amusement are subject
to the admissions tax. However, the statute does not define the term "amusement".
One of the primary rules of statutory construction is that words used in a statute should be taken
in their ordinary and popular meaning, unless there is something in the statute which requires a
different interpretation. Hughes v. Edwards, 265 SC 529, 220 SE2d 231 (1975); Investors
Premium Corp. v. South Carolina Tax Commission, 260 SC 13, 193 SE2d 642 (1973).
It is an accepted practice in South Carolina to resort to the dictionary to determine the literal
meaning of words used in statutes. For cases where this has been done, see Hay v. South
Carolina Tax Commission, 273 SC 269, 255 SE2d 837 (1979); Fennell v. South Carolina Tax
Commission, 233 SC43, 103 SE2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax
Commission, 217 SC 484, 60 SE2d 682 (1950).
Black's Law Dictionary, Fifth Edition, defines the term "amusement" to mean: "Pastime,
diversion, enjoyment. A pleasurable occupation of the senses or that which furnishes it."
The Second College Edition of the American Heritage Dictionary provides the following
definitions:

2

"Amusement" -

1. The state of being amused, entertained or pleased.
2. Something that amuses.

"Pastime"

-

An activity that occupies one's mind and relaxes or entertains.

"Diversion"

-

Something that distracts the mind and relaxes or entertains.

"Enjoyment" -

1. The act or state of enjoying.
2. The use or possession of something beneficial or pleasurable.
3. Something that gives pleasure.

Based on the above definitions, a "place of amusement" is any enclosure or location consisting of
an activity that occupies one's spare time, distracts the mind, relaxes, entertains or gives pleasure.
Additionally, Code Section 12-21-2420(4) provides an exemption from the tax and reads, in part:
...No admission tax shall be charged or collected by reason of any charge made to any
member of a nonprofit organization or corporation for the use of the facilities of the
organization or corporation of which he is a member.
Conclusion:
Charges for membership to health clubs, spas, gyms, fitness centers and other similar places are
subject to the admissions tax, pursuant to Code Sections 12-21-2410 and 12-21-2420.
Furthermore, "any charge made to any member of a nonprofit organization for the use of the
facilities of the organization" (health club, spa, gym, etc.) is exempt from the admissions tax,
pursuant to Code Section 12-21-2420(4).
NOTE: This ruling is not applicable to membership fees paid pursuant to a binding, written
contract, one which does not permit any increase in fees or charges, that is executed prior to May
1, 1991.
This Revenue Ruling rescinds SC Revenue Ruling #90-4.
SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Commissioner
s/T. R. McConnell
T. R. McConnell, Commissioner
Columbia, South Carolina
August 22
, 1990
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