Were a nonprofit club's charges for horse-stall space and feeding taxable when stable access was a membership privilege versus being offered to members and nonmembers alike?

Plain-English summary

The Section 501(c)(7) nonprofit club charged monthly dues and separate amounts for horse-stall space and feeding. The Comptroller made the stall charge depend on access.

If the right to stable a horse was a privilege of membership, the charge was subject to sales tax effective October 1, 1991. If the stable facilities were available to members and nonmembers alike, the stall charge was not taxable.

What this means for you

The same stall-and-feeding charge could receive different treatment depending on whether it was tied to club membership. The letter did not analyze separate components such as cleaning or feeding independently.

Common questions

Was a members-only stabling privilege taxable? Yes. What if nonmembers could use the stable too? The stall charge was not taxable. What effective date did the letter use? October 1, 1991.

Citations and references

• Internal Revenue Code § 501(c)(7) (the club classification stated in the letter)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9110L1138C09

Original ruling text

October 22, 1991

Dear *****:

This is in response to your recent telephone call and follow-up FAX
transmission regarding charges made to your members by the CLUB ABC.
You state:

CLUB ABC is classified by the IRS as a 501(c)(7) nonprofit organization.
CLUB ABC charges monthly dues which I know are taxable. The question
is are the stall charges taxable. The stall charge is basically a
charge for space and feeding of horses.

Response: If the right to stable a horse is a privilege of membership
in CLUB ABC, the charge is subject to sales tax effective October 1,
1991. If the stable facilities are available to members and
nonmembers alike, the stall charges are not subject to sales tax.

This opinion is based on the facts you presented. Other facts, though
similar, may yield different results.

If you have questions or need more information, please call or write.
You may reach me by calling toll free, 1 (800) 531- 5441. My direct
line number is (512) 463-4680. The number for FAX transmissions is
(512) 475-0900. You may write to me in care of Tax Administration
Division.

Sincerely,

Al Van Allen
Tax Administration Division