CT Ruling 90-69 Dues Tax 1990-10-19

Which tax applied when a private-club member failed to meet a required food-and-beverage spending minimum?

Short answer: Amounts actually spent on food and beverages were subject to sales and use tax. But when a member spent less than the required monthly or quarterly minimum and had to pay the shortfall, that difference was an assessment charge payable regardless of purpose and therefore qualified as 'dues' under Conn. Gen. Stat. § 12-540(5). The shortfall was subject to the dues-tax treatment rather than sales tax on food or drink.

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

Disclaimer: This is an official Ruling of the Connecticut Department of Revenue Services (DRS), typically issued to a specific taxpayer in response to that taxpayer's request and based on the specific facts presented and the Connecticut tax law in effect when it was issued. DRS may later declare a Ruling obsolete or supersede it by a subsequent Ruling, Policy Statement, or Announcement, so a taxpayer with different facts should not assume it still applies. Taxpayer-identifying details are redacted. Connecticut imposes its sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut 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 as a PDF) is the authoritative source for any reliance.

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Plain-English summary

Private clubs sometimes required members to spend a minimum amount on food and beverages each month or quarter. DRS distinguished the member's actual purchases from a billed shortfall.

Food and beverages actually purchased were subject to sales and use tax. If the member failed to reach the minimum and the club billed the difference, that mandatory shortfall was an assessment charge and therefore "dues" under Conn. Gen. Stat. § 12-540(5), regardless of the club's purpose for collecting it.

What this means for you

Invoice the two amounts according to their real character: actual consumption versus a membership assessment for failing to meet the minimum.

Common questions

What tax applied to actual food purchases? Sales and use tax.

What was the unspent minimum? Dues, because the member had to pay it as an assessment charge.

Citations and references

Conn. Gen. Stat. § 12-540(5).

Source

Landing page: Connecticut DRS Rulings
Ruling: Ruling 90-69

Original ruling text

Ruling 90-69, Dues Tax

Ruling 90-69

Dues Tax

Private clubs may require their members to spend a certain amount on food and beverage during specified time periods which are normally monthly or quarterly. The amounts actually spent are subject to sales and use tax.

If a member does not spend the required minimum amount during the allotted time period, the club charges the member for the difference. The issue arises as to whether the club should charge the sales tax or the dues tax when billing the member for the difference.

Because the unspent portion of the food and beverage requirement must be paid to the club, such payments come within the definition of "dues" set forth in Section 12-540(5) of the Connecticut General Statutes as "assessment charges to members irrespective of the purpose for which made."

LEGAL DIVISION

October 19, 1990

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