Were post-merger homeowners-association assessments taxable admissions under Florida TAA 25A-004?

Plain-English summary

After the contemplated merger of a club into a homeowners association, the described owner assessments would not be subject to sales and use tax as admissions.

The result depended on four represented facts: the assessments were mandatory; they were paid to a homeowners association under section 720.301(9); payment was a condition of owning real property where the common areas were located; and the money covered common-area maintenance rather than entitlement to use club community property.

What this means for you

The label "assessment" was not enough by itself. The mandatory property-ownership connection, recipient association, use of funds, and lack of club-access entitlement drove the result.

Common questions

Were the post-merger assessments taxable? No under the four represented conditions.

Could the assessments buy club-access rights? No. The ruling stated they were not for entitlement to use club community property.

Did property ownership matter? Yes. Payment was required as a condition of ownership.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04(1), and 720.301(9) and Fla. Admin. Code r. 12A-1.005(4)(d)3., as cited or quoted in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 25A-004

Original ruling text

PARTMENT OF REVENUE

Florida Department of Revenue Jim Zingale
Office of Technical Assistance Executive Director
7
5050 West Tennessee Street Tallahassee FL 32399 floridarevenue.com

QUESTION: Club requests to obtain advisement as to the Department’s position on whether the
assessments (“Assessments”) payable by Owners would be subject to sales and use tax after the
contemplated merger of Club into Association, where the surviving entity is Association. More
specifically, whether Assessments, used for Association’s costs for Club common areas and club
facilities’ maintenance, which are payable by property owners, would be subject to Florida sales
and use tax after the merger.

ANSWER: Assessments would not be subject to tax due to the following assertions made by Club
regarding Assessments: 1) Assessments addressed in this advisement are mandatory; 2)
Assessments addressed in this advisement are paid to Association, which is a homeowner’s
association under s. 720.301(9), F.S!.; 3) Assessments addressed in this advisement are required
to be paid as a condition of ownership of real property where the common areas are located; and
4) Assessments addressed in this advisement are used for Association’s costs for common area
maintenance and are not for the entitlement to use Club Community Property.

July 31, 2025

|

Technical Assistance Advisement — TAA #: 25A-004
(“Club”)

Re:

(“Association”)

FEI#:

Sales and Use Tax — Admissions

Sections 212.02(1) and 212.04(1), Florida Statutes - (“F.S.”)

Rule 12A-1.005(4)(d)3., Florida Administrative Code - (“F.A.C.”)

! Section 720.301(9), F.S., provides, “Homeowners” associations” or “association” means a Florida corporation
responsible for the operation of a community or mobile home subdivision in which the voting membership is made
up of parcel owners or their agents, or a combination thereof, 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.
The term “homeowners’ association” does not include a community development district or other similar taxing
district created pursuant to statute.

Technical Assistance Advisement
July 31, 2025
Page 2

a

This is in response to your letter dated i. requesting this Department’s issuance of
a Technical Assistance Advisement (“TAA”) pursuant to Section(s.) 213.22, F.S., and Rule
Chapter 12-11 F.A.C, Florida Administrative Code, regarding the matter discussed below. Your
request has been carefully examined, and the Department finds it to be in compliance with the
requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes a
TAA and is issued to you under the authority of s. 213.22, F.S.

Requested Advisement

Club requests to obtain advisement as to the Department’s position on whether the assessments
(“Assessments”) payable by Owners in the Community would be subject to sales and use tax after
the contemplated merger of Club into Association, where the surviving entity is Association. More
specifically, whether Assessments, used for Association’s costs for Club common areas and club
facilities’ maintenance, which are payable by property owners, would be subject to Florida sales
and use tax after the merger.

Facts
In email correspondence date, PY Club asserted the following:

The Assessments addressed in this advisement are mandatory.
The Assessments addressed in this advisement are paid to Association, which is a
homeowner’s association under s. 720.301(9), F.S.

e The Assessments addressed in this advisement are required to be paid as a condition of
ownership of real property where the common areas are located.

e The Assessments addressed in this advisement are used for Association’s costs for common
area maintenance and aren’t for the entitlement to use the common areas.

Club is a member-owned not-for-profit Florida corporation governed by Chapter 617, F.S., and by
Club’s Articles of Incorporation and By-Laws. Club currently owns, operates, and maintains the
i olf course, a golf

studio with ” available for

Association is a homeowners’ association which is incorporated as a not-for-profit corporation
Association is governed by Chapters 617 and 720, F.S., and by recorded restrictive covenants
_— but not limited to, its Declaration of Covenants, Conditions and Restrictions for a

(“Declaration”), its Articles of Incorporation, and its Bylaws as each was
originally recorded and as each have been amended and restated from time to time.

Technical Assistance Advisement
July 31, 2025
Page 3

Each “Owner” is an Association member by virtue of ownership of real property in the
Community. The “Community” is the cumulative real property as described in Exhibits 1 through
4 of Declaration (which includes the Club Community Property).

Club is currently owned by il equity members, including || Owner equity members, who are
also members of Association, and J non-Owner equity members who do not own homes in the
Community and are not eligible for Association membership.

There is a contemplated merger of Club into Association whereby Association will be the
surviving entity. Membership in the Association has been and shall continue to be separate and
distinct from Club membership. The process of obtaining a Club membership is set forth in the
By-Laws and other recorded governing documents for the Community.

Following the effective date of the merger (“Effective Date”), the a non-Owner equity
memberships will be exchanged for a license agreement to authorize use of the Club Community
Property but shall not confer an Association membership. These non-Owners (the “Licensees”)
shall be permitted to have access to the Club Community Property but will not be members of
Club or members of Association.

In addition, Club previously entered into use agreements (“Club Use Agreements”) with the
owners of | | residential cottages (‘ ”). The are

members of Association but are not required to be members of Club. The Club Use Agreements

ant non-exclusive licenses to use Club Community Property. Each
may choose up to delegates annually who will be entitled to use Club
Community Property but are not equity members of Club. Currently, | | of the | | im
have exercised their right to name one or more delegates to use the Club
Community Property.

Following the Effective Date, Lr ET ENTETET will continue to be Association members and
will still have the ability to name delegates pursuant to the existing Club Use Agreements between
Association and , subject to payment of the applicable dues, assessments and
fees to the Foundation, but will not be required to be Club members.

Following the Effective Date, the Club Community Property will be part of the Community
Property. Further, every Owner will continue to be an Association member, and every Owner shall
also be a Club member, other than the “Grandfathered Owners.” A Grandfathered Owner is an
owner who is not required to be a Club member because such Owner (i) acquired Owner’s lot prior
to the Effective Date, and at the time of acquisition of such lot, was not subject to mandatory
membership in the Club; (ii) was not a member of the Club on the Effective Date; and (111) has not
become a Club member on or after the Effective Date. For clarity, Grandfathered Owners shall not
have any access to the Club Community Property whatsoever (including as a guest of a Club
member), except as expressly provided otherwise in the applicable Club Use Agreement.

2 “Community Property” refers generally to all real and personal property including improvements, amenities,
easements, fixtures and facilities owned, leased, or controlled by Association or to which Association accepts
maintenance responsibilities or to which Association has use rights.

Technical Assistance Advisement
July 31, 2025
Page 4

Following the Effective Date, all new Owners will be required to be both Association members
and Club members. In other words, no new Grandfathered Owners will be created after the
Effective Date. There are currently i Grandfathered Owners.

In summary, following the Effective Date, Association and Club will be comprised of substantially
the same members as follows:

(a) Owners who are members of both Association and Club.

(b) Grandfathered Owners who are Association members but are not required to be Club
members.

(c) | non-Owner Licensees who have rights and privileges to use the Club Community

Property but are not members of Association or Club.
ji who are Association members but not Club members, who have
the authority to assign rights to use the Club Community Property to up tofj designated

individuals.

It is important to note that from and after the Effective Date, all Owners must maintain one
Association membership for each lot owned in the Community and, other than Grandfathered
Owners, must also acquire and maintain a Club membership in good standing as a condition of
ownership of such lot. Ownership of a lot shall be the sole qualification for Association
membership. Neither Association memberships nor Club memberships are assignable or
transferrable, except to the successor-in-interest of the Owner’s lot and every Association
membership and Club membership shall be appurtenant to and inseparable from ownership of such
Owner’s lot. Membership shall continue until the member transfers or conveys record title to the
lot or until record title to the Owner’s lot is transferred by operation of law, at which time, the
transferee shall become an Association member and a Club member.

It is contemplated that the merger will be consummated substantially in accordance with a Plan of
Merger pursuant to which: (i) Club will be merged with and into the Association as authorized by
§617.0302(16), F.S.; (ii) the proposed effective date of the merger is a. and
Association, as the surviving corporation, will continue to be a Florida not-for-profit corporation
and a homeowners’ association pursuant to §720.301(9),F.S.;(ii1) all other matters pertaining to
the terms and conditions of the merger, including the manner and basis of converting the
memberships of each merging corporation into memberships of the surviving corporation;
recitation of the approval of the Plan of Merger by the Board of Directors of the Association and
by the Board of Governors of Club respectively, and recitation of the voting approvals required by
both Association members and Club members will be incorporated into the finalized merger
documents.

As stated above, each Owner shall become an Association member upon title to the lot bein

conveyed by deed and upon recording of said deed in the Public Records of ll
Florida. The record owners of lots shall be Association members and no other persons or entities
shall be Association members. An Association member shall have one vote for each lot owned.
Following the merger, it is anticipated that expenses related to the Community Property shall be
categorized so that each Owner pays a pro rata portion of expenses related to the Community

Technical Assistance Advisement
July 31, 2025
Page 5

Property based on the number of lots owned by such owner and each Club member shall pay a pro
rata portion of expenses related to the Club Community Property based on the number of Club
memberships held. Club members will be required to pay mandatory dues and fees to the
Association as a condition of ownership or occupancy of their lots in the Community and the Club
Community Property will be part of the Community Property.

Taxpayer’s Position

Club believes, based on the relevant Florida Statutes and Administrative Code, that the required
Assessments to be paid to Association, as the surviving entity of the merger in connection with
membership, will represent nontaxable admissions pursuant to Rule 12A-1.005(4)(d)3., F.A.C.
because, such amounts are: (i) mandatory fees payable by property owners in the Community; (ii)
paid to a homeowners association; (iii) required to be paid as a condition of ownership; and (iv)
the Club Community Property will be part of the common elements or common areas of the real
property constituting the Community.

Grandfathered Owners are not permitted to use the Club Community Property and will be replaced
when the lot is sold to a new Owner with full rights and privileges to use the Club Community
Property and who will pay full assessments and dues. Therefore, it is appropriate to disregard
Grandfathered Owners in determining that the assessments are exempt from sales tax.

Former Club members who are not residents of the Community (and therefore not members of
Association) will become Licensees that may continue to use the Club Community Property if they
pay the applicable fees. The appropriate sales tax will continue to be charged on these fees.

Club believes that the amount paid to join the merged entity should be exempt pursuant to Rule
12A-1.005(4)(a)1.a., F.A.C. as the initial capital contribution would be paid to join or obtain an
equitable ownership interest in the organization and may not be used for any operational purposes.
Finally, it is Club’s understanding that should Association establish capital assessments that would
be paid by members of the merged entity, then these assessments should be exempt pursuant to
Rule 12A-1.005(4)(a)2., F.A.C. because any such capital assessments will (i) be separately
accounted for and not recorded in an operating revenue account; (ii) not be paid for the right to use
the organization’s recreational, physical fitness, or other facilities without subsequent periodic
payments; (iii) not be used to decrease user fees or periodic membership dues; and (iv) not be used
to pay for the operating expenses of the organization.

** Please note that this TAA will only opine on Assessments used for Association’s costs for Club
common areas and Club facilities’ maintenance, which are payable by property owners, as was

discussed in our telephone conference on

Law and Applicable Rule

Section 212.04(1) and (2), F.S., provide that it is the legislative intent that every person is
exercising a taxable privilege who sells or receives anything of value by way of admissions and
such person must add 6% sales tax to each admission sold, unless a specific exemption applies.

Technical Assistance Advisement
July 31, 2025
Page 6

Section 212.02(1), F.S., defines the term, “admissions,” as “. . . 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 . . . and all dues and fees paid to private clubs and membership
clubs providing recreational or physical facilities, including, but not limited to, golf, tennis,
swimming, yachting, boating, athletic, exercise, and fitness facilities, ...”

Rule 12A-1.005(4)(d), F.A.C., provides in part as follows:

Fees paid to private clubs or membership clubs that do not entitle the payor to the use of
the club’s recreational or physical facilities are not subject to tax. Examples of such fees

are:
2K

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.

Accordingly, pursuant to the Rule non-taxable dues and fees must be:

" mandatory;

« paid to a condominium, homeowners, or cooperative association;

« required to be paid as a condition of ownership or occupancy of real property; and
= do not entitle the payor to use of the club’s recreational or physical facilities.

Conclusion

Assessments would not be subject to tax due to the following assertions made by Club regarding
Assessments: 1) Assessments addressed in this advisement are mandatory; 2) Assessments
addressed in this advisement are paid to Association, which is a homeowner’s association under s.
720.301(9), F.S.; 3) Assessments addressed in this advisement are required to be paid as a
condition of ownership of real property where the common areas are located; and 4) Assessments
addressed in this advisement are used for Association’s costs for common area maintenance and
are not for the entitlement to use Club Community Property.

This response constitutes a TAA under s. 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 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.

Technical Assistance Advisement
July 31, 2025
Page 7

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 TAA, 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 ten (10) days of the date of this letter.

If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850)717-6363.

Sincerely,
Leigh L. Ceci, MAcc
Tax Law Specialist

Office of Technical Assistance

Cc:

Record ID: 7001389589

Office of Technical Assistance Satisfaction Survey

Technical Assistance Advisement
July 31, 2025
Page 8

The Florida Department of Revenue invites you to complete the online Office of Technical Assistance
Satisfaction Survey to help us identify ways to improve our service to taxpayers. The survey is an

opportunity to provide feedback on your recent experience with the Department’s office of Office of
Technical Assistance. To access the survey, place the following address in your browser’s access bar:

https://tadr.questionpro.com

When you open the survey, you’ll be asked to enter the following information. This information will
enable you to complete and submit the survey.

Notification number: 7001389589
Respondent code: 44

Tax type: Sales and Use Tax
Correspondence type: Technical Assistance

If you need technical assistance accessing the survey, please email Douglas Charity at
[email protected].

Thank you.