After a Florida HOA merges with a recreational club, which portion of annual dues is subject to admissions tax?

Plain-English summary

The Florida Department of Revenue split an HOA's annual dues after its merger with a recreational club. The mandatory base amount supporting association-owned non-golf common areas was not taxable as an admission because it was required as a condition of homeownership.

Members could pay higher annual assessments for full or limited golf rights. Those additional amounts were taxable because the golf access was optional. Green fees and other optional dues and fees were also taxable, as were payments by nonresidential users.

The result depended on the surviving association remaining a licensed homeowners' association and the non-golf property becoming common areas under its governing documents.

What this means for you

Homeowners' associations

Separate the minimum ownership-based assessment from elective recreation charges. A single dues invoice can contain both exempt and taxable amounts.

Golf communities

Making basic club property common area does not exempt an optional golf upgrade. The voluntary increment remains a taxable admission.

Accountants and tax professionals

Review the amended articles, facility ownership, member rights, and assessment tiers. Nonresident and optional-use payments should be tracked separately.

Common questions

Q: Was the base non-golf assessment taxable?
A: No. It was mandatory and supported association common areas.

Q: Were higher dues for golf rights taxable?
A: Yes. Members elected those additional rights.

Q: Were green fees taxable?
A: Yes.

Q: What about nonresident users?
A: Their facility payments were taxable because they were not ownership-based HOA assessments.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04, and 213.22
• Fla. Admin. Code r. 12A-1.005(4)(d)3.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 18A-016

Original ruling text

October 2, 2018
TAX: Sales and Use Tax
TAA NUMBER: 18A‐016
ISSUE: Admissions
STATUTE CITE(S): Section(s) 212.02(1) and 212.04, F.S.
RULE CITE(S): Rule 12A‐1.005(4)(d)3., F.A.C.
QUESTION: Are certain assessments paid by members of a homeowners’ association to the
homeowners’ association subject to sales tax?
ANSWER: No, the payments meet the criteria of the Rule. The payments will be mandatory,
the payments will be made to a homeowners’ association, the payments will be made as a
condition of ownership of a home in the association area, and the recreational facilities are for
common areas used by the members who will be paying the assessment. All optional payments
will be subject to sales tax.

XXXXXXXX
XXXXXXXX
XXXXXXXX
XXXXXXXX
Subject: Technical Assistance Advisement (“TAA”)
TAA 18A‐
AMS#: XXXXXXXXX
Sales and Use Tax‐Admissions
Section(s) 212.02(1) and 212.04, Florida Statutes (“F.S.”)
Rule(s) 12A‐1.005(4), Florida Administrative Code (“F.A.C.”)
XXXXXXXXX (“Petitioner”)(“Club”)
Business Partner Number: XXXXXXX
FEIN: XX‐XXXXXXX

XXXX XXXXX
October 2, 2018
Florida Department of Revenue
Page 2

XXXXXXXXXXXXX (“Homeowners’ Association”)
Business Partner Number: XXXXX
FEIN: XX‐XXXXXX
XXXXXXXXX (“Homeowners’ Association II)
Dear XX XXXXXXXXXX:
This letter is a response to your petition dated June 13, 2018, for the Department’s issuance of
a Technical Assistance Advisement (“TAA”) to Petitioner, regarding member assessments. Your
petition has been carefully examined, and the Department finds it to be in compliance with the
requisite criteria set forth in Rule Chapter 12‐11, F.A.C. This response to your request
constitutes a TAA and is issued to you under the authority of section 213.22, F.S.
Facts
Club is a XXXXXXXXX that owns a XXXXXXXX and other recreational facilities in a community of
which the homeowners are members of Homeowners’ Association. The website for the Florida
Department of Business and Professional Regulations (“DBPR”) identifies Homeowners’
Association as a reporting Homeowners’ Association. Most members of Homeowners’
Association are members of Club. Four members of Club are not members of Homeowners’
Association.
Club will be merged into Homeowners’ Association, and Homeowners’ Association will be the
surviving entity. All of Club’s property will be owned by Homeowners’ Association. After the
merger, Homeowners’ Association will change its name to Homeowners’ Association II.
Homeowners’ Association will keep the homeowners’ association license issued by DBPR.
Homeowners’ Association will own the property previously owned by Club. All members,
except for the Association members who were not Club members, will continue to have access
to all Club property as common area use, without payment of additional fees, except for the
golf course and golf driving range.
XXX members of Homeowner’s Association may obtain full golf use rights without payment of
additional green fees by making a payment of an increased annual dues assessment. XXX
members of Homeowners’ Association may obtain limited golf use rights. These members also
pay a higher annual dues assessment, but the amount is lower than the members with full golf
rights.
The other members who were previously Club members may use the golf course and facilities
upon payment of green fees or user fees with special permission. The members pay a lower
amount for the annual assessment amounts. That amount is a mandatory minimum payment
amount for all Homeowners’ Association members, except for the members who were not Club

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October 2, 2018
Florida Department of Revenue
Page 3

members. Homeowner’s Association members who were not Club members may upgrade use
rights by paying the annual dues assessment.
The articles of incorporation will be amended to provide that the property owners have
easement use rights in the common areas, except for the golf use rights, which will be
characterized as a license to use the golf course. When a Homeowners’ Association member
who was not a Club member sells his property, the new owner will be required to pay the
mandatory annual dues assessment.
In addition to the annual dues assessment, Homeowners’ Association may levy capital
assessments as a required capital contribution and special assessments if the annual dues
assessment is insufficient to meet operating expenses. A lien will be placed on the member’s
residential property if the assessments are not paid.
Issue
What portion of the annual dues assessment is subject to sales tax?
Law and Discussion
Section 212.04, F.S., provides that sales tax must be collected by a person on the amount
received from the sale of admissions. Section 212.02(1), F.S., provides, in part, the following:
dues and fees payments to a private club or membership club are admissions. Rule 12A‐
1.005(4)(d)3., F.A.C., provides the following:
Fees paid to private clubs or membership clubs that do not entitle the payor to
the use of the club’s recreational or physical fitness facilities are not subject to
tax. Examples of such fees are:

3. Mandatory dues and fees paid to a condominium association, homeowners’
   association, or cooperative 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.
   As provided by Rule 12A‐1.005(4)(d)3., F.A.C., Homeowners’ Association will not be required to
   collect sales tax on the portion of the annual dues assessment for non‐golf rights. The amounts
   paid are mandatory payments, they are paid to a homeowners’ association, and are required as
   a condition of property ownership. The amended articles will require the non‐golf areas to be
   common areas.

Sales tax must be collected on the additional amount collected from the members making the
optional payment as to increased amount of annual dues assessment for golf use rights. Sales

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October 2, 2018
Florida Department of Revenue
Page 4

tax must be collected on green fees, and on other optional dues and fees. Sales tax must be
collected on the amounts paid by non‐residential users for use of any of the facilities.
Response
Sales tax is not due on the portion of the annual dues assessment for non‐golf rights.
Sales tax must be collected on the amounts paid on the annual dues assessments to obtain golf
rights. Sales tax must be collected on all other optional charges.
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 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 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.
Respectfully,
Chuck Wallace
Chuck Wallace
Technical Assistance & Dispute Resolution
(850) 717‐7541
AMS #: XXXXXXX