Were capital assessments charged to proprietary members of a nonprofit Texas country club subject to sales tax?

Plain-English summary

The nonprofit country club assessed capital charges to proprietary members and argued they were not taxable. The Comptroller disagreed.

Tax Code Section 151.007(e) defined the sales price of private-club membership to include dues, fees, initiation fees, and other assessments required for membership or for a special privilege, status, or membership classification. The capital assessments therefore entered the taxable membership sales price.

What this means for you

Calling a required member charge a capital assessment did not remove it from the taxable membership price under this letter. The connection to membership or special status controlled.

Common questions

Were the capital assessments taxable? Yes. Why? They were required assessments within the statutory membership sales price. Did nonprofit status avoid the tax? No on these facts.

Citations and references

• Texas Tax Code Section 151.007(e)
• Texas Tax Code Sections 151.010 and 151.051(a)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1142B01

Original ruling text

November 5, 1991

Dear **:

Thank you for your letter of September 30, 1991, concerning the
taxability of fees assessed to proprietary members of a nonprofit country club.

We disagree with your conclusion that the capital assessments are not
taxable. Section 151.051(a) of the Texas Tax Code imposes a sales tax on the
sales price of a taxable item. Section 151.010 of the code defines taxable
items to mean tangible personal property and taxable services. The basis for
taxing the capital assessments is found in Section 151.007(e) of the tax code
which states:

The sales price of membership in a private club or organization consists
of the dues, fees, and other assessments, including initiation fees, required
for membership or a special privilege, status, or membership classification in
the club or organization. (Emphasis added.)

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

You may call toll free 1-800-252-5555 if you have any questions or need
more information. You may write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division