Are membership and initiation fees at Chelsea Piers' Sports Center -- with its pool, rock-climbing wall, running track, and boxing ring -- subject to New York's social/athletic club dues tax or New York City's separate gym/health-salon tax?

Plain-English summary

The Sports Center at Chelsea Piers, on Pier 60 in Manhattan, offers an extensive range of participant sporting facilities: a six-lane indoor pool, a 10,000-square-foot rock-climbing wall, three basketball/volleyball courts plus an indoor sand volleyball court, a quarter-mile indoor track and a banked competition track, a boxing ring, and traditional training equipment, along with lessons, leagues, and organized trips. Members pay initiation and membership fees, plus extra for personal training, nutrition counseling, and private climbing/boxing lessons. Members hold no ownership interest in the facility, have no control over its management or activities, and the only membership cap is the facility's physical size.

Following its own recent precedent for New York Health and Racquet Club, the Department found the Sports Center's charges are exempt from the admission-charge tax as participant-sports admission. The state/local club-dues tax also didn't apply, since members lack any real governance role or ownership interest -- the touchstone of a taxable "social or athletic club." And because the facility offers a wide variety of genuine sporting activities rather than just gym-style equipment, it falls outside New York City's separate local tax on weight-control salons, health salons, and gymnasiums, following the same reasoning applied to Town Sports International and New York Health and Racquet Club.

What this means for you

Multi-sport athletic facilities and health clubs

A broad, genuine mix of participant sports (pools, courts, climbing walls, tracks) -- not just weight and cardio equipment -- helps clear New York City's narrower gym/health-salon tax, on top of the state club-dues analysis that turns on member governance rather than activity type.

Accountants and tax professionals

This ruling closely tracks the Department's contemporaneous rulings for other Sports Club Inc.-style and multi-sport facilities issued the same year (compare TSB-A-00(19)S, Reebok Sports Club/NY, and TSB-A-00(26)S, Pontius Realty) -- all three-part analyses (admission-charge exemption, state club-dues test, NYC gym-tax test) reach the same exempt result on similar facts.

Common questions

Q: Is every large sports facility's membership fee exempt from sales tax?
A: No. It depends on member governance (for the state club-dues tax) and the actual breadth of sporting activities offered (for NYC's separate gym/health-salon tax).

Q: Does charging extra for personal training or private lessons change the analysis?
A: Not under the facts of this ruling -- the core membership/initiation fee analysis focused on the overall facility and its dominant mix of participant sports activities.

Q: Can another sports facility rely on this ruling?
A: No. It binds the Department only for this petitioner on the facts described. A facility with different governance rules or a narrower activity mix (more gym-like) could come out differently.

Citations and references

Statutes and regulations:

• Tax Law § 1105(f)(1) (admission-charge exemption for participant sports facilities)
• Tax Law § 1105(f)(2) (tax on social or athletic club dues and initiation fees)
• Tax Law § 1107(a) (additional New York City sales tax)
• Tax Law § 1212-A(a)(2) (NYC local tax authorization on gyms, health salons, and similar facilities)
• NYC Administrative Code § 11-2002(h) (NYC tax on weight control salons, gymnasiums, and similar establishments)
• 20 NYCRR § 527.11(b)(5), (7) (definitions of "club or organization" and "athletic club")

Prior rulings referenced:

• New York Health and Racquet Club, Adv Op Comm T&F, May 19, 1999, TSB-A-99(26)S
• Town Sports International and Subsidiaries, Adv Op Comm T&F, July 1, 1998, TSB-A-98(42)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_22s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(22)S
Sales Tax
April 25, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000214A

On February 14, 2000, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Chelsea Piers, L.P. d/b/a The Sports Center at Chelsea Piers, c/o Chelsea
Piers Management Inc., Chelsea Piers-Pier 62, Suite 300, New York, New York 10011.
The issue raised by Petitioner, Chelsea Piers, L.P. d/b/a The Sports Center at Chelsea Piers,
is whether certain fees charged by Petitioner for the use of its facility are subject to New York State
and local sales taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner, a New York limited partnership, provides a variety of participant sporting and
fitness activities in New York City. Petitioner’s facility, located on Pier 60 at the Chelsea Piers, has
a six-lane, 25 yard, in-door swimming pool, a 10,000 square foot rock climbing wall, three
basketball/volleyball courts and an indoor sand volleyball court, a 1/4-mile indoor running track and
a 200 meter banked competition track, a boxing ring, and sauna and steam rooms. In addition,
Petitioner offers traditional fitness and training facilities such as weight lifting equipment, stepping
machines, running and cycling equipment, aerobics classes, along with personal training, nutritional
counseling, wellness seminars and sports specific programs. Petitioner also offers boxing and
swimming lessons, rock climbing lessons, yoga classes and dance instruction. It organizes member
guest basketball leagues, ski trips, and other activities for its members.
Petitioner charges an initiation and membership fees for use of its facility. Members must
pay extra fees for personal training services and nutritional counseling, as well as for private rock
climbing and boxing instruction. Petitioner’s members do not control any social or athletic
activities, selection of members or Petitioner’s management. Members do not possess any
proprietary interest in Petitioner. The number of members is restricted solely because of the physical
size of the facility.
Applicable Law and Regulations
Section 1105(f) of the Tax Law imposes sales tax, in part, on:
(1) Any admission charge ... except charges to a patron for admission to, or
use of, facilities for sporting activities in which such patron is to be a participant,
such as bowling alleys and swimming pools....

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April 25, 2000

(2)(i) The dues paid to any social or athletic club in this state if the dues ... are
in excess of ten dollars per year, and on the initiation fee alone, regardless of the
amount of dues, if such initiation fee is in excess of ten dollars....
Section 1107(a) of the Tax Law provides:
General. On the first day of the first month following the month in which a
municipal assistance corporation is created under article ten of the public authorities
law for a city of one million or more, in addition to the taxes imposed by sections
eleven hundred five and eleven hundred ten, there is hereby imposed on such date,
within the territorial limits of such city, and there shall be paid, additional taxes, at
the rate of four percent, which except as provided in subdivisions (b) and (d) of this
section, shall be identical to the taxes imposed by sections eleven hundred five and
eleven hundred ten. Such sections and the other sections of this article, including the
definition and exemption provisions, shall apply for purposes of the taxes imposed
by this section in the same manner and with the same force and effect as if the
language of those sections had been incorporated in full into this section and had
expressly referred to the taxes imposed by this section.
Section 1212-A(a)(2) of the Tax Law authorizes the City of New York to impose a local sales
tax on “beauty, barbering, hair restoring, manicuring, pedicuring, electrolysis, massage services and
similar services, and every sale of services by weight control salons, health salons, gymnasiums,
turkish and sauna bath and similar establishments and every charge for the use of such facilities;”
such tax to be administered and collected by the Commissioner of Taxation and Finance.
Section 11-2002(h) of the Administrative Code of the City of New York imposes sales tax,
in part, on:
Receipts from ... every sale of services by weight control salons, gymnasiums,
turkish and sauna bath and similar establishments and every charge for the use of
such facilities....
Section 527.11(b) of the Sales and Use Tax Regulations provides, in part:
(5) Club or organization. (i) The phrase club or organization means any entity
which is composed of persons associated for a common objective or common
activities. Whether the organization is a membership corporation or association or
business corporation or other legal type of organization is not relevant. Significant
factors, any one of which may indicate that an entity is a club or organization, are:
an organizational structure under which the membership controls social or athletic
activities, tournaments, dances, elections, committees, participation in the selection

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of members and management of the club or organization, or possession by the
members of a proprietary interest in the organization. The organizational structure
may be formal or informal.
(ii) A club or organization does not exist merely because a business entity:
(a) charges for the use of facilities on an annual or seasonal basis, even if an
annual or season pass is the only method of sale and provided such passes are sold
on a first-come, first-served basis;
(b) restricts the size of the membership solely because of the physical size of
the facility. Any other type of restriction may be viewed as an attempt at exclusivity;
(c) uses the word club or member as a marketing device;
(d) offers tournaments, leagues and social activities which are controlled
solely by the management.
*

*

*

(7) Athletic club. (i) An athletic club is any club or organization which has
as a material purpose or activity the practice, participation in or promotion of any
sports or athletics.
*

*

*

(ii) Athletic activities does not include exercising or calisthenics solely for
health or weight reduction purposes, as contrasted to sports. An establishment that
merely provides steam baths, saunas, rowing machines, shaking machines and other
exercise equipment shall not be considered an athletic club. However, there is a four­
percent local sales tax in the city of New York on every sale of services by weight
control salons, health salons, gymnasiums, Turkish baths, sauna baths and similar
establishments, and on every charge for the use of such facilities.
Opinion
Similar to the facts in New York Health and Racquet Club, Adv Op Comm T&F, May
19,1999, TSB-A-99(26)S, Petitioner’s charges to its patrons entitle them to use facilities for sporting
activities in which the patron is to be a participant. Petitioner’s charges, therefore, are not subject
to the tax on admission charges under Section 1105(f)(1) of the Tax Law. Petitioner’s charges would

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be subject to sales tax under Section 1105(f)(2) of the Tax Law if Petitioner operated an athletic club
as defined in paragraphs (5) and (7) of Section 527.11 of the Sales and Use Tax Regulations.
Petitioner’s members do not control any social or athletic activities, selection of members
or club management, or possess any proprietary interest in Petitioner. The number of members is
restricted solely because of the physical size of the individual facilities. Therefore, Petitioner is not
operating an athletic club as defined in paragraphs (5) and (7) of Section 527.11 of the Sales and Use
Tax Regulations. Accordingly, Petitioner’s charges to its members are not subject to tax as dues to
an athletic club under Section 1105(f)(2) of the Tax Law.

Since Petitioner provides a variety of sporting activities and facilities to its members,
Petitioner’s facilities are not weight control salons, gymnasiums or other establishments described
in Section 11-2002(h) of the Administrative Code of the City of New York. Petitioner’s charges,
therefore, are not for services provided by, or use of facilities in, weight control salons, gymnasiums
or other establishments described in such Section 11-2002(h) and are thus not subject to that tax.
See Town Sports International and Subsidiaries, Adv Op Comm T&F, July 1,1998, TSB-A-98(42)S
and New York Health and Racquet Club, supra.
Membership charges for the use of Petitioner’s facilities are therefore not subject to any of
the taxes imposed under Sections 1105(f) and 1107 of the Tax Law or Section 11-2002(h) of the
New York City Administrative Code.

DATED: April 25, 2000

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.