Ezel / Tax Rulings / TX
TX 9003L0995C12 Sales and/or Use Tax (State,Local,MTA) 1990-03-28

Could an exempt organization buy an athletic-club membership tax-free for its members?

Short answer: Yes, but only if the exempt organization paid the entire initiation fee and monthly dues and gave the club an exemption certificate. If the individual member paid, the membership remained taxable even when the member worked for a nonprofit or religious organization.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

Athletic-club initiation fees and monthly dues were generally taxable amusement services.

An exempt entity could buy the amusement service tax-free for itself or its members if it provided an exemption certificate and paid the entire initiation fee and monthly dues. If the individual member paid, the charges were taxable even when that person worked for a nonprofit or religious organization.

Common questions

Were athletic-club dues normally taxable? Yes.

When did the exempt-organization rule apply? When the organization paid the entire fee and gave the seller an exemption certificate.

What if the member paid personally? The membership was taxable.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

March 28, 1990

Dear ***:

We received your letter concerning the taxability of athletic club
membership dues. Athletic club membership charges are taxable as
amusement services. This includes the initiation fee and the
monthly dues. See the enclosed Rule 3.298, relating to amusement
services, section (a)(1)(D)(i).

However, sales tax is not due on the purchase of an amusement
service by an exempt entity for its own amusement or for the
amusement of its members. The exemption organization must provide
the amusement seller with an exemption certificate. Enclosed is a
copy of Rule 3.322 relating to exempt organizations. This rule
will help you determine which organizations are considered exempt
entitles for sales and use tax purposes. Also enclosed, is a copy
of Rule 3.287 relating to exemption certificates.

The exempt organization must pay the entire membership fee,
meaning the initiation fee and the monthly dues, to qualify for
this exemption. If the member pays for the membership fee, then
the membership fee is taxable, even if the member works for a non-
profit or religious organization.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions you may call or write Tax
Correspondence. You may call toll free 1-800-252-5555, or our
regular number is 512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence

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