Were a nonprofit country club's membership dues, fundraising activities, and historic-building renovation materials exempt from Louisiana sales tax?

Plain-English summary

A nonprofit private country club owed sales tax on its membership dues and on materials used to renovate its historic building. The club was not a qualifying nonprofit civic organization merely because it sometimes let religious or community groups use its facilities, and its constitutional property-tax exemption did not become a sales-tax exemption.

Louisiana's special nonprofit-event provision was narrower: it covered qualifying event sales, outside-gate admissions, and parking only when the event proceeds, after necessary expenses, served the specified public purposes. It did not exempt ordinary country-club dues or events held for members' benefit.

Why the membership dues were taxable

La. R.S. 47:301(14)(b)(i) included dues, fees, and other consideration paid for access to clubs and recreational facilities within taxable sales of services.

The same provision excluded membership fees or dues of nonprofit civic organizations. The Department required both “nonprofit” and “civic” to apply. It described a civic organization's principal purpose as providing direct economic, educational, or health benefits and resources to the public through benevolent activities without regard to ability to pay.

The fictitious club offered golf, swimming, tennis, and workout facilities to paying members. Letting community and religious organizations use the property was secondary, not its principal purpose. The Department therefore distinguished it from the YMCA and YWCA, which it described as making resources broadly available to the community as a primary mission.

An old club was not automatically a historic organization

Operating for more than 100 years or occupying an old building did not make the club a historic organization. The ruling reserved that description for an organization principally devoted to preserving structures, artifacts, or information.

It compared a museum that merely displayed old art with one whose primary purpose also preserved the art in its historical context, and cited the Preservation Resource Center of New Orleans as an example focused on historic-property preservation.

Property-tax exemption did not control sales tax

La. Const. art. VII, section 21(B)(1)(a) exempted qualifying nonprofit property from ad valorem taxation. The club relied on Metairie Country Club v. Louisiana Tax Commission, which had recognized a property-tax exemption for a nonprofit country club.

The Department rejected extending that decision to sales tax. The constitutional text concerned ad valorem property tax, and the ruling found no authority to turn it into a sales-tax exemption for club dues.

The nonprofit fundraising-event exemption was limited

La. R.S. 47:305.14 exempted tangible-property sales, outside-gate admissions, and associated parking at events sponsored by qualifying nonprofit civic, educational, historical, charitable, fraternal, or religious organizations when the proceeds, after necessary expenses, were used for educational, charitable, religious, or historical-restoration purposes or furthered the listed organizational purposes.

The ruling read that provision as applying to events held for the specifically enumerated public purposes. It did not cover monthly or periodic private-club membership fees. It also did not exempt a country club's event held for its members' benefit merely because tickets were sold to the public.

Historic-building materials remained taxable

The ruling found no general sales-tax exemption for materials used to construct, repair, or renovate immovable property. Either the contractor or the owner paid tax as the end user.

It identified a limited exception for qualifying governmental-entity work meeting strict bidding and contractual requirements, plus any specific exemption enacted by law. A footnote gave La. R.S. 47:305.56, created by Act 430 of 2007 for certain Habitat for Humanity residential construction materials, as an example of a specific exemption.

The age or historic character of the club's structure did not by itself exempt renovation materials.

What this means for you

Private clubs

Nonprofit federal status does not by itself remove sales tax from dues for access to recreational facilities. The organization's primary civic purpose and public access matter under the exclusion analyzed here.

Nonprofit event organizers

Document the event's sponsor, purpose, permitted charges, expenses, and use of proceeds. Section 47:305.14 was not a blanket exemption for every nonprofit fundraiser.

Historic-property owners and contractors

Historic status alone did not exempt construction materials. Look for a specific statutory exemption and satisfy its requirements.

Common questions

Q: Were the country club's monthly dues exempt because it was a 501(c) nonprofit?

A: No. The ruling required a qualifying nonprofit civic organization, and the club's principal purpose was private recreation.

Q: Did occasional community use make the club civic?

A: No. Those activities were not its primary purpose.

Q: Did a property-tax exemption cover sales tax too?

A: No. The constitutional exemption and cited court decision concerned ad valorem property tax.

Q: Could a qualifying nonprofit event receive an exemption?

A: Potentially, but only within Section 47:305.14's event, charge, purpose, and proceeds requirements.

Q: Were materials for renovating the historic clubhouse exempt?

A: No, not merely because the property was historic.

Citations and references

• La. R.S. 47:301(14)(b)(i) — club-access dues and nonprofit civic-organization exclusion
• La. R.S. 47:305.14 — qualifying nonprofit-event sales, admissions, and parking exemption
• La. Const. art. VII, section 21(B)(1)(a) — ad valorem property-tax exemption
• Metairie Country Club v. Louisiana Tax Commission, 03-538 (La. App. 5th Cir. 10/28/03), 860 So. 2d 165, writ denied — property-tax case distinguished by the ruling
• La. R.S. 47:305.56 and Act 430 of the 2007 Regular Session — Habitat for Humanity construction-material example in the ruling's footnote
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 08-002

Original ruling text

RPage 1 of 4Revenue Revenue RevenueRRRRevenue Information Bulletin No 01-xxxx
Transactions by Roustabouts, “Work as Directed" Service ProvidersrrEVENUErRRR

Revenue Ruling
No. 08- 002
January 29, 2008
Sales and Use Tax
Sales Tax applicable to country club dues, limitations on the sales of tangible
personal property and other exemptions under R.S. 47:305.14 activities, and sales
tax applicable to the rehabilitation of historic properties
Purpose: The purpose of this Revenue Ruling is to address certain issues that may concern
country clubs for sales taxes, such as the taxability of the dues owed by members to the club, the
taxability of certain activities of the club, particularly non-profit fundraising activities, and
taxability of certain capital construction costs.
Background:
For the purposes of discussion of certain issues related to the operations of a country club and
ruling, “Country Club” (hereinafter “CLUB”) is a fictitious club that is located in the State of
Louisiana.
CLUB is a 501(C) non-profit organization which owns and operates out of a historic property.
Club believes that it is providing charitable, fraternal and civic activities to community, and
whether these activities may be exempt in whole or part from sales taxes. CLUB offers golf,
swimming, tennis and work out facilities to its members who pay a fee to join the organization
for membership and pay monthly fees to remain a member. Additionally, CLUB offers its
building as a meeting place for numerous religious organizations and the use of its facilities to
other community organizations for their projects. Additionally, CLUB needed renovations to its
structure and contracted with a party to make repairs and renovations to an immovable. Taxes
were paid on the materials.
Analysis / Discussion:
CLUB questions whether its member’s dues are exempt from sales taxes under either the
Louisiana Constitution or Louisiana Statute. In support of its contention that those dues are
exempt from sales taxes, it relies upon La. Const. art. VII Sec. 21(B)(1)(a), and LSA-R.S.
47:305.14. CLUB also questions whether the cost of materials for repairs and renovations to its
immovable property are subject to sales taxes, and contends that they are not because taxes are
not owed on constructions to real estate.
Issue 1: Exclusion from sales taxes for dues of club members under R.S. 47:301 et seq. and
exemption under La. Const. art. VII Sec. 21(B)(1)(a).
Louisiana law imposes a sales tax upon the dues required by a country club for membership. R.S.
47:301(14)(b)(i) states:
“Sales of services” means and includes the following: … (14)(b)(i) 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

A Revenue Ruling is issued under the authority of LAC 61III.101 (C ). A Revenue Ruling is written to provide
guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles
of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on
the public. It is a statement of the department's position and is binding on the department until superseded or
modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

Revenue Ruling No. 08-002
Page 2 of 4

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; …
An exclusion is offered to certain eleemosynary institutions from the dues associated with
benevolent purposes. The tax statute creates therein an exclusion from sales taxation, at R.S.
47:301(14)(b)(i) stating:
…but the term “sales of services” shall not include membership fees or dues of
nonprofit, civic organizations, including by way of illustration and not of
limitation the Young Men’s Christian Association, the Catholic Youth
Organization, and the Young Women’s Christian Association.
The Department’s interpretation of the above exclusion requires the words non-profit and civic
both apply to the organization. The Department would define a civic organization to include one
which principle purpose is directed toward the enhancement of and benefit of the citizenry at
large. By this it is meant that the organization offers direct economic, educational, or health
benefits and resources to the citizenry through benevolent activities without regard to ability to
pay. The principle purpose of CLUB is not that of a civic organization. The activities of CLUB
upon which it bases its purported public contributions, i.e. to allow organizations or religious
memberships to use its facilities, is not the primary purpose of the club; thus, it does not qualify
as a ‘civic’ organization. The YMCA’s primary purposes include that of development of
“character values” of the youth of the community, as well as the provision of education and
training to benefit the community at large.
CLUB states that because it offers its members swimming, tennis and work out facilities, and
because these same facilities are offered by the YMCA and the YWCA, that CLUB should
qualify for the exemption of R.S 47:301(14)(b)(i) accorded those organizations. This reasoning is
rejected by the Department. The YMCA and YWCA are organized to provide a place and means
of spiritual and physical development for those in the community who do not otherwise have
organized resources available to them. They provide their resources to anyone in the community,
not just those who qualify by ability to pay. By making the facilities available to all, the YMCA
and YWCA provide full community access to its facilities. Further, it is a primary purpose of
these organizations, not a secondary feature of its activities, to make their resources available to
the community at large.
CLUB suggests that because it is an old organization or operates out of an old property, that it is
a historic organization. The department qualifies ‘historic organization’ as one that would devote
its principal organizational purpose to the preservation of structures, artifacts, or information. To
illustrate by way of example, a museum operated through an organization merely showing old
works of art would not be classified as an historic organization, but as a cultural organization.
That classification could be expanded if, in addition to showing works of art, the principal
purpose of the museum organization was for the preservation of old works of art within the
context of their relationship to history. Similarly, the Preservation Resource Center of New
Orleans as a primary purpose is devoted to the preservation of historic properties of the City.
Contrarily, the fact that the country club or the country club’s buildings are over 100 years old
does not make the organization a historic one.

Revenue Ruling No. 08-002
Page 3 of 4

CLUB asserts that it is entitled to an exemption from sales taxation pursuant to the Louisiana
Constitution of 1974, Art. VII, Sec. 21(B)(1)(a) which provides in pertinent part as follows:
Section 21. In addition to the homestead exemption provided for in Section 20 of
this Article, the following property and no other shall be exempt from ad valorum
taxation. . .
(B)(1)(a) Property owned by a nonprofit corporation or association organized and
operated exclusively for religious, dedicated places of burial, charitable, health,
welfare, fraternal, or educational purposes, no part of the net earnings of which
inure to the benefit of any private shareholder or member thereof and which is
declared to be exempt from federal or state income tax…”.
CLUB avers that it is entitled to an exemption from sales taxes because the Louisiana Fifth
Circuit, in Metairie Country Club v. Louisiana Tax Com'n., 03-538 (La. App. 5th Cir. 10/28/03),
860 So.2d 165, writ denied, found that the non-profit country club was exempt from payment of
ad valorum taxes under La. Const. art. VII, Sec 21(B)(1)(a). The Department rejects this
contention. Art. VII, Section 21 confers an exemption specifically for ad valorum taxes. There
is no authority to extend this exemption to that of sales taxes. Art. VII, Section 21 was preceded
by Article 10 §4 of the Louisiana Constitution of 1921, and the language of both articles is
substantially similar. Sales tax statutes were not adopted in Louisiana until 1948. There was no
possible intent to include exemptions from sales taxes for the non-profit purposes included in the
earlier or later constitutions.
CLUB further avers that because the types of organizations exempted from sales taxes under
R.S. 47:305.14 are similar to those enumerated in Art. VII Section 21 of the 1974 Constitution,
that the Department is bound to grant CLUB an exemption pursuant to the court decision of
Metairie Country Club, supra. R.S. 47:305.14 states:
“The sales and use taxes imposed by taxing authorities shall not apply to sales of
tangible personal property at, or admission charges for, outside gate admissions
to, or parking fees associated with, events sponsored by domestic civic,
educational, historical, charitable, fraternal, or religious organizations, which are
nonprofit, when the entire proceeds, except for the necessary expense connected
therewith, are used for educational, charitable, religious, or historical restoration
purposes, including the furtherance of the civic, educational, historical, charitable,
fraternal, or religious purpose of the organization. . . .”.
Again, the Department must reject this reasoning. The statutory exemption is strictly
contemplating events held especially for the purpose of fundraising for “educational, charitable,
religious, or historic restoration purposes, including the furtherance of the civic, educational,
historical, charitable, fraternal, or religious purpose of the organization. . . .”. Under these terms,
the activity must be for one of the four enumerated purposes. Therefore, while the event held
may be in furtherance of civic or fraternal organizations, the event must be held for educational,
charitable, religious or historic restoration purposes. This statute does not contemplate
exemptions from taxation of sales taxes on fundraising efforts that are not dedicated to those
enumerated public interests. It most certainly does not contemplate an exemption from sales
taxes for monthly or periodic fees for club memberships in country clubs or other private clubs.

Revenue Ruling No. 08-002
Page 4 of 4

Nor does it contemplate excluding from taxation sales tax on the sales price for events held by a
country club for its own member’s benefit, even if ticket sales are open to the public at large.

Issue 2: Exclusion from sales taxes on construction materials used for repairs and renovations of
real (immovable) property.
There is no statutory exemption or exclusion from sales tax upon materials used in construction
or repair of immovable property. All materials used in the construction, renovation or repair of
immovables will have sales tax paid upon them, either by the contractor as the end user or the
owner as the end user. The only exemption from sales taxes on materials for construction occurs
when the contractor is constructing, renovating, or repairing structures for governmental entities,
and then only when strict bidding and contractual requirements are met. 1
Conclusion
CLUB is not entitled to a sales tax exemption for monthly or periodic fees associated with
private club membership. Non-profit, civic organizations may qualify for the exemption set forth
at 47:301(14)(b)(i) if the principle purpose of the organization is dedicated to civic activities as
defined above. Furthermore, La. Const. art. VII. sec. 21(B)(1)(a) is an exemption applicable
solely to ad valorum property taxes and inapplicable to sales tax. As such, the decision of
Metairie Country Club v. Louisiana Tax Com'n., 03-538 (La. App. 5th Cir. 10/28/03), 860 So.2d
165, writ denied, has no application to the collection of sales taxes on dues of country club
memberships.
Finally, sales taxes are paid on the materials of construction work without regard to whether or
not the structure is historic unless the construction qualifies under the law as work done for a
public entity or a specific exemption from sales and use taxes is authorized by law.
Cynthia Bridges
Secretary
By: Johnette L. Martin
Attorney
Policy Services Division

1

In the 2007 Regular Session of the State Legislature, the legislature created in Act 430 (HB 241) enactment R.S.
47:305.56, a sales and use tax exemption for the sale of construction materials to Habitat for Humanity affiliates
located in the state of Louisiana when the materials are intended for use in construction of new residential dwellings
in this state. Effective October 1, 2007.