Is a condominium association's mandatory unspent food-and-beverage minimum subject to Florida sales tax as an admission charge?

Plain-English summary

A private condominium community required every unit owner to meet a monthly food-and-beverage minimum. Owners who spent less than the minimum at the restaurant were billed for the difference as an "unspent minimum." The association invoiced it with the owners' dues, the governing documents made payment a condition of ownership, and an unpaid charge could become a lien on the property.

Florida held that this mandatory charge was not subject to sales tax as an admission. Although Florida's admissions rules generally include dues and fees paid to private or membership clubs with recreational facilities, Rule 12A-1.005 excludes qualifying mandatory homeowners-association payments when they are required by property ownership or occupancy and do not purchase the right to use recreational facilities.

The Department relied on the association's structure and the stated purpose of the assessment. The association met the statutory homeowners-association definition; membership followed parcel ownership; the charge was enforceable through a lien; and the payments maintained a property right—an easement running with the parcels—rather than paying for access to the community's restaurants, marina, tennis club, or spas.

What this means for you

The label on the charge is not controlling

Calling an assessment a food-and-beverage minimum did not make the unpaid portion a restaurant purchase or club admission. The ruling focused on why payment was mandatory and what right the owner received.

Property-linked assessments can fall outside admissions tax

The strongest facts were that payment was inseparable from ownership or occupancy, the obligation appeared in the governing documents, and nonpayment could become a lien on the parcel.

A recreational facility connection can change the analysis

The regulatory exclusion applies when the payment is not for the right to use recreational facilities and the facilities are part of the common elements or common areas. A fee that actually buys access to a club or amenity may not fit this ruling.

This answer is specific to the unspent assessment

The Department ruled on the mandatory amount billed when an owner did not meet the restaurant-spending minimum. It did not use this advisement to decide the tax treatment of the owner's separate food or beverage purchases.

Common questions

Q: Was the mandatory food-and-beverage minimum taxable?
A: No. Under the facts presented, the unspent minimum was a property-linked homeowners-association assessment, not a taxable admission charge.

Q: Why did the lien matter?
A: The ability to place a lien supported the conclusion that the charge was a mandatory ownership assessment under the governing documents, not an optional payment for club access.

Q: Did the community's restaurants and recreational amenities make the charge taxable?
A: No, because the Department found that the assessment maintained an easement and was not payment for the right to use those facilities.

Q: Does this mean all condominium club fees are exempt?
A: No. The result depended on the association qualifying under section 720.301(9) and the payment satisfying Rule 12A-1.005(4)(d)3. Different governing documents or access rights can produce a different result.

Citations and references

• Fla. Stat. § 212.02(1) (admissions include certain private-club and membership-club dues and fees)
• Fla. Stat. § 212.04(1) (sales tax imposed on admissions)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Stat. § 720.301(9) (homeowners-association definition)
• Fla. Admin. Code r. 12A-1.005(4)(d)3. (exclusion for qualifying mandatory homeowners-association payments)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09A-019

Original ruling text

QUESTION: Are mandatory fees imposed by a property owners’ association to its
members as a condition of occupancy, subject to sales tax?
ANSWER: The mandatory charge imposed by a property owners’ association to its
members as a condition of ownership or occupancy of real property, is not an admission
charge and is not subject to sales tax
April 9, 2009
XXX
Re:

Technical Assistance Advisement 09A-019
Sales and Use Tax – Mandatory Food & Beverage Minimum Charges
XXX (Condominium)
XXX (Taxpayer)
Federal Employment Identification Number: XXX
Sections 212.02 and 212.04, F.S.
Rule 12A-1.005, F.A.C.

Dear XXX:
This response is in reply to your letter to the Department, dated August 29, 2008,
requesting the Department's issuance of a Technical Assistance Advisement ("TAA")
pursuant to s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding the referenced matter
and parties. An examination of your petition has established that you have complied with
the statutory and regulatory requirements for issuance of a TAA. Therefore, the
Department is hereby granting your request for issuance of a TAA.
ISSUE
Whether mandatory fees imposed by a property owners’ association to its members as a
condition of ownership, are subject to sales tax.
FACTS
XXX is an exclusive private-member condominium located in XXX. Facilities and
amenities include restaurants, a marina, a tennis club, and spas. Taxpayer is incorporated
in XXX under Chapter 617, F.S., and is governed as a homeowners association by
Chapter 720, F.S. According to Article III of the Articles of Incorporation, the purposes
for which the association is formed are to own, operate, and maintain the easement area.
Each property owner is a member of the association and membership shall be appurtenant
to and may not be separated from ownership of the property within Condominium by

Technical Assistance Advisement
Page 2
virtue of which the member is an owner.
In XXX XXX, the homeowners’ board approved a mandatory monthly food and
beverage minimum of $XXX that is applicable to all unit owners. Member owners that
spend a minimum of $XXX per month in the restaurant are not billed for the food and
beverage minimum charge. Member owners that spend less than $XXX per month in the
restaurant are billed for the difference. The “unspent minimum” is required to be paid as
a condition of ownership at Condominium and is confirmed in Section 9 of the Second
Amended and Restated Declaration of Covenants. The charge is invoiced to the
homeowner three times a year along with the dues and becomes a lien on the property if
not fully paid to Taxpayer. You state that the “unspent minimum” was implemented to
subsidize the loss that Taxpayer incurs to operate the facility and is not related to
purchases of food and beverages.
LAW AND DISCUSSION
Section 212.04(1), F.S., provides in part:
(1)(a) It is hereby declared to be the legislative intent that every person is
exercising a taxable privilege who sells or receives anything of value by
way of admissions.
(b) For the exercise of such privilege, a tax is levied at the rate of 6
percent of sales price, or the actual value received from such admissions,
which 6 percent shall be added to and collected with all such admissions
from the purchaser thereof, and such tax shall be paid for the exercise of
the privilege as defined in the preceding paragraph... .
Section 212.02(1), F.S., includes as admissions, “all dues and fees paid to private clubs
and membership clubs providing recreational or physical fitness facilities, including golf,
tennis, swimming, and exercise facilities.”
Rule 12A-1.005(4)(d)3., F.A.C., provides an exclusion from the definition of fees that are
subject to tax where the payment does not represent payment for the right to use the
recreational facilities. Examples of such fees include mandatory dues and fees paid to a
homeowners' association when they are required to be paid as a condition of ownership
or occupancy of real property and the club facilities are part of the common elements or
common areas of the real property.
Section 720.301(9), F.S., defines a “homeowners’ association” as “a Florida corporation
responsible for the operation of a community or a mobile home subdivision in which the
voting membership is made up of parcel owners or their agents, or a combination thereof,

Technical Assistance Advisement
Page 3
and in which membership is a mandatory condition of parcel ownership, and which is
authorized to impose assessments that, if unpaid, may become a lien on the parcel.”
RESPONSE
Here, the mandatory monthly food and beverage charge, imposed by Taxpayer to its
members as a condition of ownership or occupancy of real property, is not an admission
charge and is not subject to sales tax. Taxpayer is a homeowners' association
incorporated pursuant to the definition in Section 720.301(9), F.S., and the payments are
assessed and paid to Taxpayer. The governing documents require the assessments to be
paid as a condition of occupancy, and failure to pay the assessment will result in a lien
being placed upon the parcel. Furthermore, the assessment payments are made for the
maintenance of a property right, the easement that runs with and is appurtenant to certain
parcels, and not for the right or privilege to use recreational facilities. As such, the
payments satisfy the requirements of Rule 12A-1.005(4)(d)3., F.A.C., and are not taxable
admissions, as provided by section 212.04(1), F.S., and section 212.02(1), F.S.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S. which
is binding on the department only under facts and circumstances described in the request
for this advice as specified in s. 213.22, F.S. Our response is predicated on those facts
and the specific situation summarized above. You are advised that subsequent statutory
or administrative rule changes or judicial interpretations of the statutes or rules upon
which this advice is based may subject similar future transactions to a different treatment
than expressed in this response.
You are further advised that this response, your request and related backup documents
are public records under Chapter 119, F.S., and are subject to disclosure to the public
under the conditions of s. 213.22, F.S. Confidential information must be deleted before
public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses and any other details
which might lead to identification of the taxpayer. Your response should be received by
the Department within 15 days of the date of this letter.
Sincerely,

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 922-4838
Ctrl. No.: 50597