Are a swim-and-health club's membership fees subject to New York State or New York City sales tax?

Plain-English summary

Waterside Plaza LLC operates the Waterside Swim and Health Club in New York City, offering a glass-enclosed pool with a sundeck, sauna and locker rooms, traditional gym equipment, aerobics classes, and additional paid options like personal training and swimming lessons. Members pay a membership fee for facility access; extra fees apply for personal training and swim instruction. Members have no ownership stake in the club, no control over its social or athletic activities, no role in selecting new members or management, and membership is capped only by the physical size of the facility.

The Department's opinion in this ruling addresses the membership fee itself (not the separate personal-training or swim-instruction charges). Two independent grounds keep the membership fee untaxed:

Participant sporting-facility exclusion. New York's admission-charge tax specifically excludes charges to a patron for use of facilities for sporting activities in which the patron is a participant — like bowling alleys and swimming pools. Waterside's membership fee for pool and fitness-facility access fits squarely within that exclusion.

No taxable "social or athletic club." New York separately taxes dues paid to a genuine "social or athletic club," but only where members have real governance control (over activities, elections, member/management selection) or hold a proprietary interest. Waterside's members have none of that, so the club isn't a taxable "club or organization" at all, and the dues tax under § 1105(f)(2) doesn't apply either.

No New York City local tax. New York City separately taxes services by narrow categories — weight-control salons, health salons, gymnasiums, Turkish/sauna baths — and charges for using those facilities. Because Waterside offers a full range of participant sporting activities (pool, fitness equipment, classes) rather than functioning as one of those narrower categories, its membership fees fall outside the City's local tax too.

What this means for you

Swim clubs, health clubs, and multi-activity fitness facilities

A membership fee covering broad access to genuine participant sporting facilities (pools, courts, gyms) can escape tax on two independent grounds: the participant-sporting-facility exclusion from the admission tax, and failing the "social or athletic club" definition when members lack real governance control. Either one alone defeats taxability.

Facilities structured narrowly as a "health salon" or "gym" only

The broader your facility's mix of genuine sporting activities, the more clearly you avoid New York City's narrower local tax on weight-control salons, health salons, and gymnasiums — that City tax targets a specific, narrower category of establishment.

Accountants and tax professionals

This is a close companion to the Manhattan Athletic Club opinion issued around the same time (TSB-A-02(43)S) — same two-layer analysis on membership dues, though this ruling doesn't separately address the taxability of the club's personal-training or swim-instruction add-on fees the way the companion ruling analyzed personal training and massage.

Common questions

Q: Do all gym or swim club memberships escape New York sales tax?
A: Only when members lack real governance control (no ownership stake, no say in activities/management/new-member selection) and the fee is for genuine participant sporting-facility use — not automatically for every fitness business.

Q: Does this ruling say whether the personal-training or swimming-lesson fees are taxable?
A: The Department's analysis in this opinion focuses on the membership fee itself; it doesn't separately resolve the tax treatment of the extra personal-training or swim-instruction charges.

Q: Why doesn't New York City's gym/salon tax apply here?
A: Because Waterside offers a broad range of genuine participant sporting facilities rather than functioning narrowly as a weight-control salon, health salon, or gymnasium in the sense the City tax targets.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c) (enumerated services tax); § 1105(f)(1) (admission charge tax; sporting-participant exclusion); § 1105(f)(2) (social/athletic club dues tax)
• Tax Law § 1107(a) (additional NYC sales tax); § 1212-A(a)(2) (NYC local tax on beauty/massage/gym services)
• Administrative Code of the City of New York § 11-2002(h)
• 20 NYCRR § 527.11(b) (club/organization and athletic club definitions)

Prior rulings referenced:

• New York Health and Racquet Club, TSB-A-99(26)S
• Matter of Prospect Park Health and Racquet Associates, TSB-D-97(30)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_32s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(32)S
Sales Tax
July 24, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S011218A

On December 18, 2001, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Waterside Plaza LLC, 30 Waterside Plaza, New York, NY 10010.
The issue raised by Petitioner, Waterside Plaza LLC, is whether fees charged by Petitioner
for the use of its facilities 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 liability company doing business as Waterside Swim and
Health Club, provides a variety of participant sporting and fitness activities in New York City.
Petitioner’s facility has a glass enclosed swimming pool and lounge area that opens onto a sundeck.
It also has sauna and locker 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. It also offers swimming lessons, yoga and kickboxing
classes.
Petitioner charges membership fees for use of its facility. Members pay extra fees for
personal training services and swimming instruction. Petitioner’s members do not control any social
or athletic activities. Petitioner’s members do not participate in the selection of members or the
club’s management. The 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(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services.
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. . . .
(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....

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TSB-A-02(32)S
Sales Tax
July 24, 2002

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 subdivision (b) 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 at the same uniform rate, but at a rate not to exceed four per centum, 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:
(h) Receipts from . . . 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. . . .
Section 527.11(b) of the Sales and Use Tax Regulations provides, in part, the following
definitions of terms that are contained in section 1105(f)(2) of the Tax Law:
(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
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. (Emphasis supplied)

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TSB-A-02(32)S
Sales Tax
July 24, 2002

(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
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 membership fees for use of its facility, therefore, are
not subject to the tax on admission charges under Section 1105(f)(1) of the Tax Law. Petitioner’s
membership fees would 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, do not participate in the
selection of members or club management, or possess any proprietary interest in Petitioner.

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TSB-A-02(32)S
Sales Tax
July 24, 2002

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 for
initiation fees and monthly membership dues are not subject to tax as dues paid 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 to
its members for membership fees, 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 New York Health and Racquet Club, Adv Op Comm T &
F, May 19, 1999 TSB-A-99(26)S; Matter of Prospect Park Health and Racquet Associates, Dec Tax
App Trib, July 22, 1997, TSB-D-97(30)S.
Accordingly, the membership fees are not subject to any of the taxes imposed under Sections
1105(c), 1105(f) and 1107 of the Tax Law or Section 11-2002(h) of the New York City
Administrative Code.

DATED: July 24, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

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