Ezel / Tax Rulings / TX
TX 8509L0725G05 Sales and/or Use Tax (State,Local,MTA) 1985-09-03

Could a health club treat on-site equipment as rented to members because membership fees were taxable?

Short answer: No. Members' on-site use was not an equipment rental, so the health club owed tax when purchasing its equipment and supplies.

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This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1985 Texas Comptroller taxpayer-response letter limited to health-club equipment and supplies used by members at the club's location. It explains that taxable memberships did not create an equipment rental and concludes that the club owed tax on its purchases. The reproduced body cites no numbered statute or rule. Current health-club, membership, rental, equipment, supply, and sales-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The health club owed tax when it purchased equipment and supplies used to provide its service. Taxable membership fees did not mean the club rented the equipment to members.

Members could use the equipment only at the club's location. Because they could not remove it or otherwise exercise discretionary use, their access was not treated as a rental.

Common questions

Did taxable membership fees make the equipment use a rental? No.

Why was it not a rental? Members could use the equipment only at the club and could not remove it or exercise other discretionary use.

Who owed tax on the equipment and supplies? The health club owed tax at the time of purchase.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

September 3, 1985

Dear ***:

Thank you for your recent letter regarding the taxability of health club
equipment and supplies.

The fact that the memberships are taxable in no way implies that there
is a rental of equipment to the member. If that had been the case, the
proceeds would have been taxable prior to 10-2-84.

Health club members have the right to use the equipment at the location
only. They cannot remove the equipment or exercise other discretionary
use of the equipment.

The equipment and supplies are taxable to your client at the time of
purchase.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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