Is a country club's optional 'buyer's club' membership fee (which gives members a discount on Pro Shop purchases) subject to Texas amusement services sales tax?

Plain-English summary

A country club offered members an optional "buyer's club" that gave them a discount on Pro Shop purchases; members who didn't join the buyer's club paid full price. The requester noted that other country clubs with similar programs weren't charging sales tax on this fee, but believed it should actually be taxed as an amusement service.

The Comptroller agreed with the requester, not the industry practice. Rule 3.298(b), Amusement Services, taxes "membership dues, initiation fees, and other assessments and fees charged for a special privilege, status, or membership classification in a private club or organization" that provides amusements — and specifically lists examples like liquor pool dues, boat slip rental fees, golf cart storage fees, and locker fees. The buyer's club fee fits this pattern: it's offered only to members, and it buys a special privilege (a Pro Shop discount) that plain country club members don't get. So the fee is taxable as an amusement service, regardless of what other clubs were doing.

What this means for you

Country clubs and private clubs offering optional membership tiers

If you charge an extra fee for an optional program, tier, or add-on membership that gives paying members a special privilege — a discount, an amenity, priority access — that non-paying members don't get, that fee is very likely taxable as an amusement service under Rule 3.298(b), even if it's framed as a "buyer's club" or discount program rather than a traditional membership dues increase.

Accountants and tax professionals advising private clubs

Don't rely on "everyone else in the industry isn't charging tax on this" as a defense — this letter shows the Comptroller will apply Rule 3.298(b)'s broad "special privilege" language regardless of common practice. Rule 3.298(b)'s illustrative list (liquor pool dues, boat slip fees, golf cart storage, locker fees) is non-exhaustive ("include, but are not limited to"), so similar discount-tier fees are likely to be treated the same way.

Common questions

Q: Is a discount-club membership fee at a country club taxable?
A: Yes, according to this letter — if it's a fee charged only to certain members for a special privilege (like a Pro Shop discount), it's taxable as an amusement service under Rule 3.298(b).

Q: Does it matter that other country clubs aren't charging tax on similar programs?
A: No. The Comptroller's answer here doesn't depend on industry practice — it applies the rule's plain language regardless of what other clubs are doing.

Q: Is regular country club membership itself taxable?
A: This letter doesn't address base membership dues directly, but Rule 3.298(b) as quoted taxes dues, initiation fees, and special-privilege assessments and fees at clubs that provide amusements — the buyer's club fee is one specific example the Comptroller found taxable.

Q: Can I rely on this letter for my own club's program?
A: No — a Texas letter ruling can be the basis of a detrimental reliance claim only for the taxpayer it was issued to. Other clubs with similar-but-not-identical programs should get their own ruling.

Citations and references

• 34 Tex. Admin. Code Rule 3.298(b) (Amusement Services — taxes membership dues, initiation fees, and other assessments/fees charged for a special privilege, status, or membership classification in a private club providing amusements)

Subject

Country/Private Club Buyer's Club Membership (Pro Shop Purchase Discount)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9712968L

Original ruling text

December 2, 1997

Dear****:

This is in response to your request for a sales tax ruling on behalf of your
client, the **** (CLUB).

CLUB has a buyer's club that is sold to membership. By joining this club,
members receive a discount on Pro Shop purchases. Club members who do not join
this buyer's club pay full price in the Pro Shop (you provided a club news
letter article that explains the advantages of the buyer's club). Membership
in the buyer's club is not required as a condition of membership in the
country club.

In conversation with other country clubs who have similar programs, you have
found that no one is charging sales tax for this membership. You believe that
this fee should be subject to amusement service sales tax.

Response: Subsection (b) of Rule 3.298, Amusement Services, provides:

Charges to private club members and guests. The membership dues, initiation
fees, and other assessments and fees charged for a special privilege, status,
or membership classification in a private club or organization, including
organizations described by the Internal Revenue Code of 1986, sec. 501(c)(7),
if the organizations provide amusements, are taxable. Taxable fees for special
privileges in the organization include, but are not limited to, liquor pool
dues, boat slip rental fees, golf cart storage fees, locker rental fees, locker
room use fees, and fees for access to the restaurant and bar. ...

Emphasis added.

The buyer's club membership is taxable as an amusement service because it is
only offered to members and bestows a special privilege to those members of the
country club.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please
call me toll-free at 1-800-531-5441, extension 3-4502. The direct line is
512/463-4502. You may also write to Tax Policy Division, Comptroller of Public
Accounts. You may also e-mail our tax help section at:

Sincerely,

Gilbert Zamora
Tax Policy Division