Does a merged homeowners-association-and-golf-club corporation owe sales tax on its 72 homeowner-members' monthly maintenance charges, on nonresident golfers' membership-style fees for playing the club's golf course, or on occasional guest and golf-league fees?

Plain-English summary

Pleasantville Country Club, Inc. was formed by merging what were originally two separate corporations — a homeowners organization and a golf club — into one entity. Membership (72 shares of common stock, one per dwelling unit) is limited exclusively to the 72 homeowners in a defined subdivision; only they can vote, elect the Board, and use common facilities like the tennis courts and pool. All 72 homeowners pay the same monthly maintenance charge regardless of whether they personally use the club's golf course (only about a third do), and that charge covers everything from home exterior painting to common-area and golf-course upkeep. Separately, the club sells "membership" fees to nonresident golfers — priced from $600 (child) to $3,550 (couple) per season, called a "membership application" and referring to the buyer as a "prospective member" — that entitle the buyer to play golf for the season and nothing else: no vote, no board seat, no use of the tennis courts or pool. Nonresident-golfer fee income has grown far more slowly than homeowner maintenance costs, reflecting that homeowners (not golfers) bear the club's real financial risk. The club had been charging sales tax on nonresident golfer fees but not on homeowner dues, and asked the Department to confirm the right treatment for both, plus for occasional guest and golf-league/tournament fees.

The Department confirmed the club's dues income is untaxed, using two different legal routes for two different groups of payers:

• Homeowners' monthly maintenance charges: New York specifically excludes dues and initiation fees paid to a genuine "homeowners association" from the social/athletic-club dues tax (§ 1105(f)(2)(ii)(C)), as long as membership is exclusively owners/residents of dwelling units in a defined geographic area whose social/athletic facilities serve that membership. Every element matched here (72 dwelling-unit owners only, one defined subdivision, club-owned tennis/pool/golf facilities), so the maintenance charges — even the portion functionally covering athletic facilities — are fully excluded from the dues tax, following the same logic as an earlier ruling on homeowners-association property maintenance charges.
• Nonresident golfers' fees: Even though their contract is labeled a "membership application," the Department looked past the label to substance: nonresident golfers get none of the actual attributes of membership (no vote, no board seat, no shared financial responsibility, no use of the club's other common facilities) — they're only buying the right to play golf for a season, on a first-come, first-served basis limited by facility capacity. The Department treated "member" here as pure marketing language and instead classified the fee as a participant-sports admission charge (§ 1105(f)(1)), which is specifically excluded from tax when the payer is themselves going to play. Since the club had actually been collecting tax on these fees in error, that tax still has to be remitted to the Department by the club (a vendor can't simply keep erroneously collected "tax" money), while affected golfers can separately seek a refund within three years.
• Guest fees and golf-league/tournament fees: Because these too are charges for a single round of golf paid by the person who will actually play, they fall under the same participant-sports exclusion and are untaxed as well.

What this means for you

Homeowners associations that also operate golf, tennis, or pool facilities

The homeowners-association dues exclusion is a real, well-defined safe harbor — confirm your membership is exclusively residential dwelling-unit owners in one defined geographic area, and that your athletic/social facilities are located within that area, to lock in the exclusion for your entire maintenance-charge structure (not just a "non-athletic" portion of it).

Golf clubs and country clubs selling non-owner golf access

Don't assume calling a buyer a "member" makes their fee taxable club dues — the Department looks at the real bundle of rights conveyed. If a nonresident payer gets no governance rights, no shared financial exposure, and simply pays to play a participant sport, that fee can qualify as an exempt admission charge instead of taxable dues, regardless of the marketing language in your contract.

Clubs that discover they've been over-collecting tax

If the Department determines a fee you've been taxing wasn't actually taxable, you must still remit whatever you already collected as "tax" — you can't unilaterally stop; the fix runs through the club (or its members) filing refund claims within three years.

Common questions

Q: Are country club membership dues generally taxable in New York?
A: Dues paid to a genuine "social or athletic club" generally are, but two separate carve-outs can remove that tax: the homeowners-association exclusion (for member-owned residential communities) and the participant-sports admission exclusion (for fees where the payer is a sports participant, not a club "member" in substance).

Q: Does calling someone a "member" on a contract make their fee taxable club dues?
A: Not necessarily — the Department looks past labels to the actual rights conveyed (voting, governance, shared financial responsibility, use of other facilities). A payer with none of those, buying only the right to play a sport, is treated as paying an admission charge, not dues.

Q: What if we've been charging sales tax on a fee that turns out not to be taxable?
A: You must still remit the tax you already collected to the Department (per Tax Law § 1137), and the customer who paid it can file for a refund directly, within three years of when the tax was payable.

Q: Does the homeowners-association exclusion cover the athletic-facility portion of dues too?
A: Yes — as long as the association meets the exclusion's conditions (exclusively residential dwelling-unit members in a defined area, facilities within that area), the full dues/maintenance charge is excluded, including any portion attributable to athletic facilities.

Citations and references

Statutes and regulations:

• Tax Law § 1101(d)(6) (dues definition), § 1101(d)(13) (social or athletic club definition)
• Tax Law § 1105(f)(1) (admission charge tax; participant-sports exclusion), § 1105(f)(2)(ii)(C) (homeowners association exclusion)
• Tax Law § 1137(a) (remittance of erroneously collected amounts)
• Tax Law § 1139(a) (refund/credit procedure)
• 20 NYCRR § 527.10(d)(4) (participant sporting-facility exclusion)
• 20 NYCRR § 527.11(b) (dues, club/organization, social club, athletic club definitions)
• TSB-M-95(12)S (homeowners association dues exclusion conditions)
• TSB-M-83(19)S (dues for membership in social or athletic clubs)

Prior rulings referenced:

• Matter of Locy Development, Inc., TSB-D-91(40)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2003.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a03_36s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(36)S
Sales Tax
September 3, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S021003B

On October 3, 2002, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Pleasantville Country Club, Inc., 110 Nannahagen Road, Pleasantville, NY
10570.
The issues raised by Petitioner, Pleasantville Country Club, Inc., are:
1) Whether the monthly maintenance charges and assessments paid by
Petitioner’s members are subject to sales tax.
2) Whether Petitioner is obligated to collect sales tax on the annual/monthly
fees collected from nonresident golfers.
3) Whether Petitioner is obligated to collect sales tax on guest fees and fees paid
by golf leagues.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is located in Pleasantville, New York within the Town of Mt. Pleasant. It is
governed by its Declaration of Covenants and Restrictions (the “Declaration”) which was approved
by the Village of Pleasantville, was filed with Westchester County and governs the legal rights of
Petitioner’s homeowner members vis a vis each other and the Village of Pleasantville. Petitioner
is also governed by its Articles of Incorporation (“Articles”) and its By-Laws.
The Declaration provides, in part:
Article I.(h) “Member” shall mean and refer to each holder of a membership
interest in the Association, as such interest is set forth in Article III.
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Article II. Section 1. Property. The real property which is and shall be held, transferred,
sold, conveyed and occupied subject to this Declaration is all that certain plot, piece or
parcel of land situate, lying and being south of the intersection of Nannahagen Road and
Ashland Avenue, Pleasantville, New York, being more particularly bounded and described
in Schedule A annexed hereto, including, without limitation, all of the Lots and the Golf
Club Lot.

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Article III. The Association shall have one class of membership interest. The
owner of each dwelling unit on the Property subject to this Declaration shall be a
Member. . . .
Article II, Section 1 of the By-Laws provides, in part:
Memberships shall consist of the 72 Home Owners (such 72 memberships being
referred to herein as “Memberships” . . . There shall be no Members other than
Home Owners. . . .
There are 72 shares of common stock of Petitioner outstanding. Each share is owned by an
owner of one of the 72 dwelling units. There are no other shares of stock or ownership interests
outstanding. Shares cannot be transferred separately from home ownership. Homeowners
(members) pay monthly maintenance charges that cover all expenses, such as exterior painting of
their homes, roof maintenance and replacements, gardening of private lawns, and maintenance
(including gardening) of common grounds (e.g., roads, individual driveways, tennis court and
swimming pool).
Petitioner owns a golf course. Homeowners do not pay greens fees and do not pay annual
fees for playing golf. Only approximately one-third of the homeowners use the golf course. The
non-golfing homeowners pay the same charges as golfing homeowners. Petitioner permits
nonresident golfers to play golf. For the privilege of playing golf and in lieu of paying greens fees,
each nonresident golfer pays either a monthly or an annual fee ranging from $600 for a child to
$3,550 for a husband and wife. The right of a nonresident golfer, which is established by contract
between Petitioner and the nonresident golfer, is solely to play golf for one golf season, provided
he or she follows the rules established by Petitioner. The contract is in the form of a membership
application and refers to the applicant as a prospective member. Having paid his or her annual fee,
in addition to a one time initiation fee, the nonresident golfer does not pay greens fees to play golf.
The nonresident golfers are accepted on a first-come, first-served basis and the number accepted is
limited only by the size of Petitioner’s facilities. Petitioner currently collects sales tax on the annual
fee charged to nonresident golfers. The Declaration does not make any reference to nonresident
golfers.
The financial burdens carried by homeowners are quite different in nature from those carried
by nonresident golfers. Nonresident golfers, unlike homeowners, are not responsible for the
financial viability of Petitioner as they are not financially responsible for any of the expenses
incurred. Nonresident golfers only pay the fee specified by the Board of Directors. This difference
in the nature and also in the amount of the financial burden is attested to, among other things, by the
distribution of the increases in the financial burden over the years. While the average annual
maintenance cost of a homeowner rose by 58.8% between 1998 and 2002 (from $3,800 to $6,035),
the annual fee for a nonresident individual golfer rose only by 14.3% (from $2,188 to $2,500), and
for a husband and wife by only 12.7% (from $3,150 to $3,550). Also, while Petitioner’s total
amount of nonresident golfing fee income rose by only a negligible 1.5% in the four-year period

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between 1998 and 2002, total homeowners maintenance income rose by 58.8%. The annual fiscal
short fall is made up by the homeowners while nonresident golfers only pay their annual fees
regardless of the overall financial needs of the enterprise.
A restaurant is located in the clubhouse on the property of Petitioner. Petitioner has elected
to lease this restaurant to an unrelated entity. There are no requirements for the members or the
nonresident golfers to spend a minimum monetary amount at the restaurant. The restaurant is open
to the general public for lunch and is also used for catered events.
As members of Petitioner, homeowners have significant rights such as the right to vote at
meetings and to elect the Board of Directors, and the right to use the common areas owned by
Petitioner, such as its tennis courts and pool. The nonresident golfers have none of these rights.
Nonresident golfers do not serve on the Board of Directors.
The only persons who have the rights granted to members by the Declaration are the 72
homeowners. The only persons who are subject to the obligations imposed upon members by the
Declaration are the 72 homeowners.
Petitioner occasionally charges guest fees for a single round of golf for both guests of
homeowners and for guests of nonresident golfers. Guests of homeowners include members of their
families who do not reside at the dwelling unit of the homeowner.
Initially the homeowners organization and the golf club were established as two separate
corporations. Subsequently it was decided that the two corporations should be merged into one
entity (Petitioner). The corporation merger did not give the nonresident golfers any interest in
Petitioner.
Applicable Law and Regulations
Section 1101(d) of the Tax Law provides, in part:
When used in this article for purposes of the tax imposed under subdivision (f)
of section eleven hundred five, the following terms shall mean:
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*

(6) Dues. Any dues or membership fee including any assessment, irrespective
of the purpose for which made, and any charges for social or sports privileges or
facilities, except charges for sports privileges or facilities offered to members’ guests
which would otherwise be exempt if paid directly by such guests.
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(13) Social or athletic club. Any club or organization of which a material
purpose or activity is social or athletic.
Section 1105(f) of the Tax Law imposes sales tax, in part, on:
(1) Any admission charge where such admission charge is in excess of ten cents
to or for the use of any place of amusement in the state . . . except charges to a patron
for admission to, or use of, facilities for sporting activities in which such patron is
to be a participant. . . .(Emphasis added)
(2)(i) The dues paid to any social or athletic club in this state if the dues of an
active annual member, exclusive of the initiation fee, 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. Where the tax on dues applies to any such
social or athletic club, the tax shall be paid by all members, other than honorary
members, thereof regardless of the amount of their dues, and shall be paid on all dues
or initiation fees for a period commencing on or after August first, nineteen hundred
sixty-five. . . .
(ii) Dues and initiation fees paid to the following shall not be subject to the tax
imposed by this paragraph:
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(C) A homeowners association. For purposes of this subparagraph, a
homeowners association is an association (including a cooperative housing or
apartment corporation) (I) the membership of which is comprised exclusively of
owners or residents of residential dwelling units, including owners of units in a
condominium, and including shareholders in a cooperative housing or apartment
corporation, where such units are located in a defined geographical area such as a
housing development or subdivision and (II) which operates social or athletic
facilities located in such area for use (whether or not exclusive) by such owners or
residents.
Section 1137(a) of the Tax Law provides, in part:
Every person required to file a return under the preceding section whose total
taxable receipts, amusement charges and rents are subject to the tax imposed
pursuant to subdivisions (a), (c), (d), (e) and (f) of section eleven hundred five of this
article shall, at the time of filing such return, pay to the tax commission the total of
the following:
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*

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(iii) All moneys collected by such person, purportedly as tax imposed by this
article or pursuant to article twenty-nine, with respect to any receipt, amusement
charge or rent not subject to tax, and all moneys collected with respect to any receipt,
amusement charge or rent subject to tax, purportedly in accordance with a schedule
prescribed by the tax commission but actually in excess of the amount stated in such
schedule as the amount to be collected.
Section 1139(a) of the Tax Law provides, in part:
In the manner provided in this section the tax commission shall refund or credit
any tax, penalty or interest erroneously, illegally or unconstitutionally collected or
paid if application therefor shall be filed with the tax commission (i) in the case of
tax paid by the applicant to a person required to collect tax, within three years after
the date when the tax was payable by such person to the tax commission as provided
in section eleven hundred thirty-seven, or (ii) in the case of a tax, penalty or interest
paid by the applicant to the tax commission, within three years after the date when
such amount was payable under this article . . . Such application shall be in such
form as the tax commission shall prescribe. No refund or credit shall be made to any
person of tax which he collected from a customer until he shall first establish to the
satisfaction of the tax commission, under such regulations as it may prescribe, that
he has repaid such tax to the customer. . . . (Emphasis added)
Section 527.10(d)(4) of the Sales and Use Tax Regulations provides, in part:
Charges to a patron to or for the use of sporting facilities or activities in which
the patron is to be a participant are excluded from tax.
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:
Definitions. As used in this section, the following terms shall mean:
(1) Active annual member. A member who is not a life member but who enjoys
full club privileges, as distinguished from the privileges enjoyed by a person holding
a nonresident membership, an associate membership, or other partial or restricted
membership.
(2) Dues. (i) The term dues includes:
(a) any dues or membership fee;
(b) any assessment, irrespective of the purpose for which made; and
(c) any charge for social or sports privileges or facilities.
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(ii) Dues do not include any charge for sports privileges or facilities paid by a
member for his guest when such charge if paid directly by the guest would be
exempt.
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(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)
(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.
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(6) Social club. A social club is any club or organization which has a material
purpose or activity of arranging periodic dances, dinners, meetings or other functions
affording its members an opportunity of congregating for social interrelationship.
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(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.
Technical Services Bureau Memorandum entitled Dues Paid to Homeowners Associations
and Certain Other Organizations, November 30, 1995, TSB-M-95(12)S provides, in part:
Effective December 1, 1995, an amendment to the Tax Law provides an
exclusion from sales tax, under certain conditions, for dues and initiation fees paid
to homeowners associations that provide social or athletic facilities to members. The
exclusion from tax also applies to dues and initiation fees paid to cooperative
housing corporations, condominium associations and cooperative apartment
corporations.
For ease of reference, where the term "homeowners associations" appears in this
memorandum, it also includes cooperative housing corporations, condominium
associations and cooperative apartment corporations.
To qualify for the exclusion, the homeowners associations must meet the
following conditions:
•

The membership of the homeowners associations must consist
exclusively of owners or residents of residential dwelling units. For
condominium associations, this means that all the members must be
owners of condominium units. In instances involving cooperative
housing corporations and cooperative apartment corporations, the
members must all be shareholders.

•

The residential dwelling units must all be within a defined
geographical area such as a building, a group of buildings, a housing
development or subdivision.

•

The social or athletic facilities must be within the defined
geographical area of the residential units.

•

The social or athletic facilities must be for use by the members of the
homeowners associations. However, use of the facilities does not
have to be limited to only members of the associations.

Opinion
Petitioner is a corporation established to own, operate and maintain common facilities for
the benefit of its members and to establish, maintain and conduct a golf club. Initially two separate

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corporations were established; one for the homeowners organization and one for the golf club. The
two were subsequently merged into one corporation (Petitioner). This Advisory Opinion only
addresses Petitioner’s operations after the merger. Petitioner is governed by its Declaration of
Covenants and Restrictions (the “Declaration”) which defines a member as the owner of a dwelling
unit on the property subject to the Declaration. There are 72 shares of common stock of Petitioner
outstanding. Each share is owned by an owner of one of the 72 dwelling units. There are no other
shares of stock or ownership interests outstanding. Shares cannot be transferred separately from
home ownership. The Declaration does not refer to nonresident golfers in any form.
Petitioner generates income from two main sources. The majority of its income is from the
monthly maintenance charges paid by the 72 homeowners (members). The second main source of
income is from the fees collected from the nonresident golfers. Petitioner also receives less
substantial income from several other sources: the lease of the restaurant; guest fees; golf leagues
and tournaments. Homeowners pay monthly maintenance charges (assessments) that cover all
expenses to maintain homes, common areas and the golf course. Homeowners do not pay a fee to
use the golf course. Not all the homeowners use the golf course. The members who use the golf
course pay the same monthly maintenance fee as the members who do not use the golf course.
Petitioner permits nonresident golfers to play golf.
Section 1105(f)(2)(ii)(C) of the Tax Law provides an exclusion from sales tax, under certain
conditions, for dues and initiation fees paid to homeowners associations that provide social or
athletic facilities to members. To qualify for the exclusion, the membership of the association must
consist exclusively of owners or residents of residential dwelling units, the residential dwelling units
must all be within a defined geographical area such as a building, a group of buildings, a housing
development or subdivision, the social or athletic facilities must be within the defined geographical
area of the residential units and the social or athletic facilities must be for use by the members of
the homeowners association. However, use of the facilities does not have to be limited to only
members of the association. See TSB-M-95(12)S, supra.
Petitioner is a member owned corporation which operates for the benefit of the 72
homeowners. Petitioner also owns and operates a golf course. The Declaration provides that only
homeowners may be members. Homeowners have significant rights as members of Petitioner, such
as the right to vote at meetings and to elect the Board of Directors, and the right to use the common
areas owned by Petitioner, such as its tennis courts and pool. The nonresident golfers have none of
these rights. A nonresident golfer for either a monthly or an annual fee is provided the right solely
to play golf for one golf season provided he or she follows the rules established by Petitioner. The
nonresident golfers are accepted on a first-come, first-served basis and the number accepted is
limited only by the size of Petitioner’s facilities. The nonresident golfers enter into a contract with
Petitioner annually and pay a one time new member fee with the amount of the annual fee
established at various levels; for a single adult, husband/wife, child, etc. The contract is called a
membership application and refers to the applicant as a prospective member. However, based on
the fact that a nonresident golfer is only entitled to play golf for this fee and does not acquire any
of the rights of homeowners or the ability to serve on the Board of Directors, the nonresident golfers

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in fact have not become members of Petitioner’s association. Under these circumstances the term
“member” has been used only as a marketing device. The nonresident golfer is paying a fee to play
golf, only receiving in effect a season pass to play golf. See Technical Services Bureau
Memorandum entitled Dues For Membership in Social or Athletic Clubs, July 15, 1983,
TSB-M-83(19)S.
Since the members of Petitioner are exclusively the 72 homeowners who own residential
units, and have use of the social and athletic facilities, in a defined geographic area, Petitioner
qualifies for the exclusion provided for homeowners associations in section 1105(f)(2) of the Tax
Law. See TSB-M-95(12)S, supra. Dues or fees paid by homeowners to a homeowners association
for maintenance and upkeep of the association’s property (e.g., common areas) are also not subject
to the tax imposed under section 1105(c)(5) of the Tax Law on the services of maintaining,
servicing or repairing real property. See Matter of Locy Development, Inc., Dec Tx App Trib,
May 14, 1991, TSB-D-91(40)S. Therefore, dues, fees and monthly maintenance charges and
assessments paid to Petitioner by the homeowners, including any portion of fees paid for the use of
athletic facilities, are not subject to sales tax.
Since nonresident golfers do not become members of Petitioner’s golf club, the monthly or
annual fees paid by them are for admission to, or use of, facilities for sporting activities in which
such nonresident is to be a participant. Such fees paid for participating sporting activities are not
subject to sales tax. See section 1105(f)(1) of the Tax Law and section 527.10(d)(4) of the Sales and
Use Tax Regulations.
Petitioner charges a guest fee for both guests of homeowners and for guests of nonresident
golfers. Guests of homeowners include members of their families who do not reside at the dwelling
unit of the homeowner. Petitioner also charges fees to golf leagues and fees for golf tournaments.
These are occasional fees and cover greens fees for a single round of golf. These fees are paid for
admission to, or use of, facilities for sporting activities in which such guest, league or tournament
player is to be a participant, and are not subject to sales tax. See section 1105(f)(1) of the Tax Law
and section 527.11(b)(2)(ii) of the Sales and Use Tax Regulations.
Though Petitioner has been collecting sales tax on the amount charged to nonresident golfers,
these charges are for admission to or for the use of, facilities for sporting activities in which such
nonresident is to be a participant and are not subject to sales tax. However, section 1137 of the Tax
Law requires that a registered vendor pay to the Department of Taxation and Finance all moneys
collected by such person, purportedly as tax imposed by article 28 of the Tax Law, with respect to
any receipts, amusement charges, etc. not subject to tax. Accordingly, any moneys collected by
Petitioner, purportedly as sales tax, are required to be remitted to the Department of Taxation and
Finance at the time of filing Petitioner’s sales and use tax returns. However, a customer who has
paid sales tax which was collected by Petitioner in error may file a claim for refund within three
years after the date when the tax was payable by Petitioner to the Department of Taxation and
Finance if he or she can substantiate the payment of the tax. A refund or credit may be claimed by
Petitioner of tax which it collected from a customer if Petitioner can establish that it has repaid such

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tax to the customer. Petitioner’s refund must be claimed within three years after the date when the
tax was payable by Petitioner to the Department of Taxation and Finance. See section 1139(a) of
the Tax Law.

DATED: September 3, 2003

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.