Were a private club's dues and initiation fees taxable as admissions when members gained clubhouse access?

Plain-English summary

The Florida Department of Revenue held that a private club's dues and initiation fees were taxable as admissions because they provided access to a recreational clubhouse.

The clubhouse had televisions, gathering amenities, and scheduled social activities, while the club described social and boating activities as its primary purpose and offered access to other yacht clubs. The fact that the city owned the building and other organizations also used it did not prevent the facility from being recreational for the club's members.

The ruling also stated that separate fees for activities such as cruises or races would be taxable admissions.

What this means for you

Private and social clubs

Dues can be taxable when they buy the right to use a facility supporting recreation, even if the club does not own the building.

Club accountants

Review initiation fees, regular dues, and separate event charges under the admissions rules.

Common questions

Q: Were the dues and initiation fees taxable?
A: Yes.

Q: Did city ownership of the clubhouse change the result?
A: No.

Q: Were separate cruise or race fees potentially taxable?
A: Yes; the ruling said the club must collect tax on those admissions.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04, and 213.22
• Fla. Admin. Code r. 12A-1.005(4)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14A-028

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: ARE DUES CHARGED BY CLUB SUBJECT TO TAX AS ADMISSIONS?
ANSWER: YES. THE CLUB HOUSE USED BY CLUB IS A RECREATIONAL FACILITY. AS
SUCH, INITIATION FEES AND DUES PAID TO CLUB ARE SUBJECT TO TAX AS ADMISSIONS.
October 30, 2014
Re:

Technical Assistance Advisement – TAA 14A-028
Sales and Use Tax – Admissions
Sections: 212.02, 212.04, Florida Statutes (F.S.)
Rule: 12A-1.005, Florida Administrative Code (F.A.C.)
Petitioner: XXXX [hereinafter “Club”]
FEI: XXXX

Dear XXXX:
This letter is a response to your petition dated XXXX, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced party and matter. It follows Letter of
Technical Advice 13A-1138, dated October 9, 2013, which was issued in response to your previous
correspondence dated August 19, 2013. Your petition has been carefully examined and the Department
finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, Florida Administrative
Code. This response to your request constitutes a TAA and is issued to you under the authority of Section
213.22, F.S.
Issue
Whether dues charged by Club are subject to tax as admissions.
Facts
Your petition sets forth the following information:
•

[Club] is organized as a not-for-profit corporation with the Florida Division of
Corporations, and [it] has applied with the IRS [] for tax-exemption as a [501(c)(7)]
organization. . . .

•

As defined in Sections 4 and 6 of the [] By-Laws, membership in the club is limited to
persons over 18 years of age. New members must be sponsored by an existing member and
approved by a majority of the club board. Members are required to pay an [] initiation fee
($200) then an annual membership fee ($55 individual, $75 family) to participate in club
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Howard Moyes, Interim Director  Information Services – Damu Kuttikrishnan, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2
functions and events. Membership does not include any equitable ownership in the
organization, and [it] is not transferable to another person. Participation in club functions
and events is limited to club members, their guests, and potential new members.
•

The club provides no boats or other recreational or physical fitness facilities to its members
as part of their membership. All members are provided a key for access to the clubhouse
for members and their guests as noted in Section 5 of the [] By-Laws. The clubhouse is
owned by the City [] and provides the club members access to the facility through a Use
Agreement. The club is responsible for minor maintenance, upkeep, supplies, and utilities
for the building. Membership dues and initiation fees are used, in part, to support these
operational costs. The city is responsible for large capital expenditures such as roofing, etc.
The building has no air conditioning or heat. Facilities include restrooms, storage, tables &
chairs, refrigerator, microwave, and a TV used to view educational and informational
videos. There is also a bar-b-que grill on the city property adjacent to the building
available for use by those organizations authorized by the city to use the club house facility
(including [Club] members) and a second grill located in the nearby public park.

•

All facilities at the ‘clubhouse’ are available for other authorized organizations operating
for the good of the community. Presently 6 different organizations which are [] tax-exempt
organizations under [either 501(c)(3) or 501(c)(7)], as well as being used by the City [] for
city operated programs.

You cite a Technical Assistance Advisement (TAA 98A-032), wherein the Department found that certain
dues were not paid for the right to use recreational facilities. 1
In addition to the presented facts, a review of the public federal form 990-EZ, Return of Organization
Exempt From Income Tax (2007), for Club, indicates the organization’s primary exempt purpose as,
“provides social and boating activities.”
Further, the web site for Club indicates, in its 2014 calendar, a super bowl party, spaghetti dinner, movies
and pizza, and FuFu party, as included in its scheduled events. Further, the web site indicates Club
members are entitled to utilize facilities of “over 700 yacht clubs across America.”
Determination
Section 212.02(1), F.S., defines the term “admissions” as follows:
The term “admissions” means and includes the net sum of money after deduction of any federal
taxes for admitting a person or vehicle or persons to any place of amusement, sport, or recreation
or for the privilege of entering or staying in any place of amusement, sport, or recreation,
including, but not limited to, theaters, outdoor theaters, shows, exhibitions, games, races, or any
place where charge is made by way of sale of tickets, gate charges, seat charges, box charges,
season pass charges, cover charges, greens fees, participation fees, entrance fees, or other fees or
receipts of anything of value measured on an admission or entrance or length of stay or seat box
accommodations in any place where there is any exhibition, amusement, sport, or recreation, and
1

The cited Technical Assistance Advisement determined the subject dues did not provide a right to use a recreational facility

Technical Assistance Advisement
Page 3
all dues and fees paid to private clubs and membership clubs providing recreational or physical
fitness facilities, including, but not limited to, golf, tennis, swimming, yachting, boating, athletic,
exercise, and fitness facilities, except physical fitness facilities owned or operated by any hospital
licensed under chapter 395. (Emphasis Supplied)
Section 212.04, F.S., generally imposes tax on the sale of admissions. Section 212.04(2)(a)2.a., Florida
Statutes, provides a specific exemption on admission charges made by section 501(c)(3), I.R.C.,
sponsoring organizations.
Rule 12A-1.005(4), Florida Administrative Code, states in pertinent part as follows:
DUES AND INITIATION FEES, EQUITY AND NONEQUITY MEMBERSHIPS, CAPITAL
CONTRIBUTIONS AND ASSESSMENTS, REFUNDABLE DEPOSITS, AND USER FEES.
(a)1. Dues and user fees paid to any organization, including athletic clubs, health spas, civic,
fraternal, and religious clubs, and organizations that provide physical fitness facilities or
recreational facilities, such as golf courses, tennis courts, swimming pools, yachting, boating,
athletic, exercise, and fitness facilities, are subject to tax. . . . (Emphasis Supplied)
Because no definition of "recreational facility" is provided by statute, it is necessary to look to principles
of statutory construction. Words of common usage, when used in a statute, should be construed in their
plain and ordinary sense. Pederson v. Green, 105 So.2d 1 (Fla. 1958).
The word "recreation" is defined in Merriam-Webster’s Collegiate Dictionary (Tenth Edition, 1999) as
meaning:
… refreshment of strength and spirits after work; also: a means of refreshment or diversion:
HOBBY – recreational … adj
Merriam-Webster’s defines the word “facility” as meaning:
… something (as a hospital) that is built, installed, or established to serve a particular purpose. Id.
The club house does represent a facility and dues permit Club members to participate in recreational
activities. The facility is recreational, since it contains televisions and facilitates recreational activities.
Further, activities relating to boating are described as its primary exempt purpose on Club’s federal return.
Further, the web site suggests access to recreational facilities all over the United States.
As such, initiation fees and dues paid to Club are subject to tax as admissions.
As to your contention regarding TAA 98A-032, it is important to note that a Technical Assistance
Advisement has no precedential value except to the taxpayer who requests the advisement. Moreover,
such an advisement is not an order or rule or policy of general applicability. See Section 213.22(1), F.S.
Notwithstanding the cited TAA’s lack of precedential value, it is not on point with the facts in this case.

Technical Assistance Advisement
Page 4
In that instance, the dues did not provide access to a recreational facility. Rather, the payments for the
usage of the subject facility were included in the tenant’s rent (as opposed to dues). Here, the admittance
to Club’s Clubhouse is only permitted through Club dues.
Please note, if Club charges admissions or other fees to participate in any activities, such as cruises or
races, these admission fees are also subject to sales tax. The Club is required to collect and remit tax on
such admissions.
Conclusion
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding
on the Department only under the facts and circumstances described in the request for this advice, as
specified in Section 213.22, F.S. Our response is predicated upon 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 from that which is 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 Section 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 10 days of the date of this letter.

Sincerely,

R. Clay Brower
Revenue Program Administrator
Technical Assistance and Dispute Resolution
Control # 158440