Are membership dues at a golf-and-pool facility owned and run by one individual, where members have no say in management or membership, subject to New York sales tax on club dues?

Plain-English summary

Wallace Watson, a member of EverGreen Country Club, Inc., asked whether EverGreen is a "social or athletic club" whose dues are taxable — and, if not, whether he could get his dues tax back. EverGreen gives members a golf course and swimming pool (also available to non-members for a fee). It is owned and operated by one individual, Paul J. Roth; members don't select members, don't manage the club, and have no ownership interest in it.

The Department held EverGreen is not a "social or athletic club," so its dues aren't taxable — and the member can seek a refund.

• The tax and the test. Tax Law § 1105(f)(2) taxes dues over $10/year paid to a social or athletic club. 20 NYCRR § 527.11(b)(5) says the hallmark of a real club is that members control the activities — running tournaments, dances, elections, and committees, participating in member selection and management, or holding a proprietary interest.
• What does NOT make something a club. Merely charging for use on a seasonal basis, limiting size to the facility, using "club" or "member" as a marketing device, or offering management-controlled leagues/tournaments does not create a club.
• EverGreen fails the test. Members can't manage it, can't pick future members, have no proprietary interest, get no member-run tournaments/dances/elections/committees, and membership isn't limited for exclusivity. So it's not a club, and its dues are not subject to sales tax. This mirrors Example 14 in the regulation: an individually owned tennis "club" that just sells seasonal playing time is charging for season tickets, not dues.
• Refund. Under Tax Law § 1139, the petitioner may claim a refund of sales tax paid in 1987 and 1988 by filing Form AU-11 within three years of when the tax was payable.

What this means for you

Calling a business a "club" doesn't make its dues taxable. New York's dues tax targets true member-controlled clubs. If a golf, swim, tennis, or fitness operation is owned and run by an individual or company, and members are just paying for access — with no vote in management, no role in choosing members, and no ownership stake — the charges are effectively season tickets or use fees, not taxable club dues.

Look at control and ownership, not the label or the amenities. The presence of a golf course, pool, or "membership" tiers doesn't decide it. What matters is whether members run the place or hold a proprietary interest. Management-controlled leagues and marketing use of the word "club" don't count.

If you overpaid dues tax, you generally have three years to claim it back. Tax Law § 1139 allows a refund of erroneously paid sales tax within three years of when it was payable, filed on Form AU-11.

Common questions

Q: My gym/pool/golf operation is member-based. Do I have to charge sales tax on membership fees?
A: Only if it's a genuine social or athletic club — meaning members control activities, help select members, run committees/elections, or hold a proprietary interest. If you (an individual or company) own and run it and members just pay for access, the fees aren't taxable dues.

Q: We call it a "club" and cap membership at our facility's capacity. Does that make it a taxable club?
A: No. Using "club" as marketing and limiting size to the physical facility don't create a club, and neither do management-run leagues or tournaments.

Q: I've been paying sales tax on dues that weren't taxable. Can I get it back?
A: Yes — file Form AU-11 under Tax Law § 1139 within three years of when the tax was payable.

Citations and references

Statute and regulation:

• Tax Law § 1105(f)(2) — imposes sales tax on dues (over $10/year, excluding initiation fees) paid to any social or athletic club in the state
• 20 NYCRR § 527.11(b)(5) — defines "club"; a club typically features member control of activities, tournaments, elections, committees, member selection, or a proprietary interest, and is not created merely by seasonal use charges, facility-based size limits, marketing use of "club," or management-controlled leagues (Example 14: an individually owned tennis "club" selling seasonal playing time charges for season tickets, not dues)
• Tax Law § 1139 — allows a refund or credit of erroneously paid tax if applied for within three years after the tax was payable; claimed on Form AU-11

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88(31)S
Sales Tax
June 8, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S880226A

On February 26, 1988, a Petition for Advisory Opinion was received from Wallace Watson,
Rd. #5, Box 23, Valatie, New York 12184.
The issues raised are (1) whether the EverGreen Country Club, Inc. is a social or athletic club
within the meaning of § 1105(f)(2) of the Tax Law, (2) whether membership dues charged by
EverGreen Country Club, Inc. are subject to sales tax, and, if not (3) whether Petitioner is entitled
to a refund of sales taxes paid in 1987 and 1988.
Petitioner is a member of the EverGreen Country Club. EverGreen provides its members with
the use of a golf course and swimming pool. These facilities are also available to non-members who
pay a fee.
EverGreen Country Club, Inc. is owned and operated by Paul J. Roth. Members of the club
do not participate in membership selection or management of the club, nor do they have a proprietary
interest in the club.
Section 1105(f)(2) of the Tax Law imposes a tax on "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 " The term "club" as defined in 20 NYCRR 527.11(b) (5) is as follows:
...any entity which is composed of persons associated for a common objective
or common activities .... 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 ....
(ii)
A club ... does not exist merely because a business entity:
(a)
charges for the use of facilities on an annual or seasonal basis ...;
(b)
restricts the size of the membership solely because of the physical size
of the facility ...;
(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.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-88(31)S
Sales Tax
June 8, 1988
Example 14 therein states:
A tennis "club" which is owned by an individual provides tennis courts,
showers, sauna and lockers. Members pay a seasonal fee to play tennis, any time
during the season, without limitation. The club provides no other services and has a
daily rate for nonmembers. Since the "club" does not restrict playing to members only
and the "club" provides nothing but playing time for its members, charges are for
season tickets to play tennis and not for the payment of dues. Therefore, this is not
a club or organization. 20 NYCRR 527.11
Accordingly, since EverGreen Country Club, Inc. (1) does not allow member to participate
in the operation or management of the club, (2) does not allow members to participate in the
selection of future members, (3) does not offer its members a proprietary interest in the club, (4) does
not provide tournaments, dances, elections, or committees, and (5) does not limit its membership as
an attempt at exclusivity, it does not constitute a "social or athletic club" under section 1105(f)(2)
of the Tax Law and, thus, membership dues are not subject to sales tax.
Pursuant to section 1139 of the Tax Law, "... the tax commission shall refund or credit any
tax, penalty or interest erroneously ... paid if application therefor shall be filed ... within three years
after the date when the tax was payable ... to the tax commission .... " Petitioner may claim a refund
of sales tax paid in 1987 and 1988 pursuant to section 1139 of the Tax Law by filing a Form AU-11,
Application for Credit or Refund of State and Local Sales and Use Tax.

DATED: June 8, 1988

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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