Were a private club's optional locker, golf-club cleaning and storage charges, and mandatory capital-improvement fees subject to Louisiana sales tax?

Plain-English summary

Separately stated optional locker space and golf-club cleaning and storage charges were not taxable, but the mandatory capital-improvement fee was taxable.

The fixed locker transaction was treated as providing storage space rather than renting tangible personal property. Non-cold storage was not an enumerated taxable service.

Golf-club cleaning was outside the listed cleaning services, which the ruling and cited case read as covering fabric or fur items. Golf-club storage was also nontaxable storage space. Both conclusions depended on the charges being separately stated from taxable charges.

Mandatory capital-improvement fee

The club billed each member $75 twice yearly for facility improvements. Because the fee was not optional, the Department treated it as consideration necessary to obtain the privilege of club access, a taxable service under La. R.S. 47:301(14)(b)(i).

Refund treatment

If the nontaxable charges had been separately stated, tax collected and remitted on them was an overpayment eligible for refund. Because the members had actually paid the tax, the ruling required them to receive the refund.

Common questions

Q: Was optional locker space taxable?

A: No, when separately stated from taxable charges.

Q: Were golf-club cleaning and storage taxable?

A: No, when separately stated.

Q: Was the capital-improvement assessment taxable?

A: Yes. It was mandatory for club access.

Q: Could the club keep a refund of tax paid by members?

A: No. The members who paid the tax had to receive the refund.

Citations and references

• La. R.S. 47:301(14)(b)(i) and (e) — taxable club access and cleaning services
• La. R.S. 47:302(C) — sales tax on services
• La. R.S. 47:1621(A) and (B)(3) — overpayment and refund provisions
• Intracoastal Pipe Service Co. v. Assumption Parish Sales and Use Tax Department, 558 So. 2d 1296 (La. App. 1st Cir. 1990)
• LAC 61:III.101.C — Private Letter Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA PLR 03-007

Original ruling text

Private Letter Ruling 03-007
Redacted Version
Taxability of Storage and Cleaning Fees
And Annual Club Fees
April 24, 2003
A Private Letter Ruling based upon the following scenario was requested:
For an optional fee, members of a private club (the “Club”) can rent a locker in the locker
rooms of the clubhouse. The lockers are fixed to the walls of the locker rooms. Members
also have the option of paying a fee to have their golf clubs stored in the cart barn, and after
play the clubs are cleaned and put away.
Members are billed $75 twice a year for the Club’s capital improvement fund. This money
is used for improvements to the facility. This fee is not optional.
A ruling was requested to determine whether Louisiana sales tax is due on any of the transactions
listed above. If the conclusion is that no Louisiana sales tax is due on any transaction, a ruling was
also requested to determine whether the Club may receive a refund of the sales tax it has collected
and remitted on the transaction and reimburse its members.
The first transaction as stated in your request is the optional rental of a locker in the locker room of
the clubhouse. However, this is not a true rental. The object of the transaction is the actual space being provided for consideration. This is a service provided by the Club. La. R.S. 47:302(C) levies a
sales tax on the sales of services. However, the service of providing storage space is not a taxable
service enumerated in La. R.S. 47:301(14) unless it is the provision of cold storage space. Therefore,
no sales tax is due on this transaction as long as it is separately stated from other taxable charges.
The second transaction you inquire about has two components, the cleaning of the clubs and the storage of the clubs. La R.S. 47:302(C) levies a sales tax on the sales of services. Included in the list of
“sales of services” is the “furnishing of laundry, cleaning, pressing and dyeing services, including by
way of extension and not of limitation, the cleaning and renovation of clothing, furs, furniture, carpets and rugs, and the furnishing of storage space for clothing, furs and rugs.” (La. R.S.
47:301(14)(e)). The cleaning of golf clubs is not included in this list, and as the court in Intracoastal
Pipe stated, the apparent scope of the statute is that it will apply to items made of fabric or furs.” (Intracoastal Pipe Service, Co., Inc. v. Assumption Parish Sales and Use Tax Department, 558 So. 2d
1296 (La. App. 1 Cir. 2/21/90)). Therefore the charge for cleaning the golf clubs is not taxable as
long as it is separately stated from any taxable charges.
The storage of the clubs is not a taxable transaction either. The essence of the transaction is the provision of storage space just as in the first transaction, which is a service. Although sales of services
are taxable, the provision of storage space is not one of the enumerated services listed in La. R.S.
47:301(14) unless it is the provision of cold storage space. Therefore, this transaction is not taxable
as long as the charge is separately stated from any taxable charges.

Private Letter Ruling No. 03-007
Page 2 of 2

Finally, you inquire whether the $75 fee charged twice a year for the capital improvement fund,
which is not an optional fee, is subject to the sales tax. These fees are taxable. La. R.S.
47:301(14)(b)(i) provides that the term “sales of services” which are taxable include “the sale of admissions to places of amusement, to athletic entertainment other than that of schools, colleges, and
universities, and recreational events, and the furnishing, for dues, fees, or other consideration of the
privilege of access to clubs or the privilege of having access to or the use of amusement, entertainment, athletic, or recreational facilities…” Because these fees are not optional, they are fees necessary to obtain the privilege of access to the club. Therefore, these fees are taxable.
Because the provision of storage space and the cleaning of golf clubs are not taxable transactions as
long as the charges are separately stated from taxable charges, it must be determined whether a refund is due. La. R.S. 47:1621(B)(3) provides that “the secretary shall make a refund of each overpayment where it is determined that the overpayment was the result of an error, omission, or a mistake of fact of consequence to the determination of the tax liability, whether on the part of the taxpayer or the secretary.” Paragraph (A) of the same section defines an overpayment as “a payment of
tax, penalty, or interest when none was due; the excess of the amount of tax, penalty, or interest paid
over the amount due; or the payment of a penalty that is later waived or remitted by the secretary…”
Assuming the charges were separately stated, no tax was due on these transactions and an overpayment was made. This overpayment would fit within the parameters of La. R.S. 47:1621(B)(3) and
therefore would be eligible for a refund. However, because it is the members who actually paid the
tax, they must be the ones to receive the refund.
If you should have any questions or need additional information, please contact the Policy Services
Division at (225) 219-2780.
Sincerely,
Cynthia Bridges
Secretary
By:

Cynthia D. Pugh
Attorney
Policy Services Division

A Private Letter Ruling (PLR) is issued under the authority of LAC 61:III.101( C ). A PLR provides guidance to a specific taxpayer
at the taxpayer’s request. It is a written statement issued to apply principles of law to a specific set of facts or a particular tax situation
and is limited to the matters specifically addressed. A PLR does not have the force and effect of law and may not be used or cited as
precedent. A PLR is binding on the Department only as to the taxpayer making the request and only if the facts provided with the
request were truthful and complete and the transaction was carried out as proposed. The Department’s position concerning the particular tax situation addressed remains in effect for the requesting taxpayer until a subsequent declaratory ruling, rule, court case, or
statute supersedes it.