Which of a dog club's charges — show admissions, dog-entry fees, cage rentals, and baked-goods sales — are subject to sales tax, and does 501(c)(7) status exempt them?

Plain-English summary

A dog club organized under IRC § 501(c)(7) (a social/recreational club) holds dog shows to raise money for administrative costs, giving any surplus to animal-welfare charities. Members are unpaid volunteers. The club asked whether four kinds of charges are subject to New York sales tax: (a) admission to view the show, (b) fees to enter a dog in the show, (c) cage rentals, and (d) baked-goods sales.

The Department first held that being a 501(c)(7) club does not make the dog club a sales-tax-exempt organization. Exemption under Tax Law § 1116(a)(4) requires being organized and operated exclusively for religious, charitable, scientific, literary, educational, or similar purposes; a dog club running shows is not, and giving surplus to charity or operating not-for-profit does not earn the exemption. So the club must collect tax where the law imposes it:

• (a) Show admissions — TAXABLE. Admission charges over ten cents to a "place of amusement" are taxed under § 1105(f)(1). The show facility is a place of amusement under 20 NYCRR § 527.10(b)(3), and dog-show admissions don't fall within the race-track/boxing/wrestling exception. So admission charges are taxable.
• (b) Dog-entry fees — NOT TAXABLE. Section 1105 imposes no tax on fees paid to enter animals to be judged. The club's charges to contestants for entering their dogs are not subject to tax.
• (c) Cage rentals — TAXABLE. Renting dog cages to owners is a rental of tangible personal property — a "sale" under § 1101(b)(5) and 20 NYCRR §§ 526.7(a)(2), 527.7(c)(1) — taxable under § 1105(a).
• (d) Baked goods — DEPENDS ON WHERE EATEN. Sales of baked goods for on-premises consumption at the show are taxable under § 1105(d)(i) (see Little Ozzie's Inc., TSB-A-90(6)S). But baked goods sold for off-premises consumption, in the same form sold by food stores or bakeries, are not taxable under § 1105(d)(3).

What this means for you

A federal 501(c) letter is not a New York sales-tax exemption

This is the trap. IRC § 501(c)(7) (or any 501(c) status) tells you about federal income tax — it does not automatically make you exempt from collecting New York sales tax. New York's exemption in § 1116(a)(4) is narrower: you must be organized and operated exclusively for charitable, educational, and similar purposes. A recreational club that donates its profits to charity still doesn't qualify.

Sort each revenue stream separately

Even one small event can mix taxable and non-taxable receipts. Here, admissions and cage rentals are taxable, entry fees are not, and baked goods depend on whether the buyer eats them there. Charge and document each stream on its own footing rather than treating "our fundraiser" as all-or-nothing.

Food sold to eat there vs. to take home

Food and drink for consumption on the premises (tables, benches, the event grounds) is taxable. The same baked goods sold to take home, in the same form a bakery would sell them, are exempt. Point-of-sale practice should capture that distinction.

Common questions

Q: We're a 501(c)(7) club that donates our profits — do we collect sales tax?
A: Yes, where the law imposes it. A 501(c)(7) is not exempt under § 1116(a)(4), and donating surplus to charity doesn't create the exemption.

Q: Are our dog-show admission charges taxable?
A: Yes. The show is at a "place of amusement," so admissions over ten cents are taxable under § 1105(f)(1).

Q: What about the fees owners pay to enter their dogs?
A: Those are not taxable — § 1105 imposes no tax on animal-entry fees.

Q: Do we tax the cage rentals and the bake sale?
A: Cage rentals are taxable rentals of tangible personal property. Baked goods are taxable if eaten on premises, but not if sold to take home in the same form as a bakery.

Citations and references

Statutes and regulations:

• Tax Law § 1116(a)(4) — exemption for organizations operated exclusively for charitable, educational, and similar purposes
• Tax Law § 1105(f)(1) — tax on admission charges (over ten cents) to a place of amusement
• Tax Law § 1105(a) and § 1101(b)(5) — retail sale, including rentals/licenses to use tangible personal property
• Tax Law § 1105(d)(i) and § 1105(d)(3) — tax on food and drink; exclusion for off-premises food sold as by a food store/bakery
• 20 NYCRR § 527.10(b)(3) — definition of "place of amusement"
• 20 NYCRR §§ 526.7(a)(2), 527.7(c)(1), 527.8 — rentals of tangible personal property; "premises" and "consumption on premises"
• IRC § 501(a), (c)(7) — federal exemption for social/recreational clubs

Cited authority:

• Little Ozzie's Inc., Adv Op Comm T & F, February 8, 1990, TSB-A-90(6)S — food for on-premises consumption taxable

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1990.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a90_18s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-90 (18) S
Sales Tax
April 16, 1990

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S900202B

On February 2, 1990 a Petition for Advisory Opinion was received from Chris Pratt, 34
Country Corner Lane, Fairport, New York 14450.
The issue raised by Petitioner, Chris Pratt, is whether charges for the following items by a
dog club are subject to sales tax under Article 28 of the Tax Law.
a)

Admission charges for viewing a dog show.

b)

Fees paid by people for entering their dogs in a dog show.

c)

Cage rentals.

d)

Baked goods sales.

A dog club organized under IRC 501(c)(7), holds dog shows for the purpose of raising money
to cover administrative costs, with all excesses being contributed to other tax exempt organizations
whose aim is the prevention of cruelty to animals. The shows are attended by the general public who
pay admission charges. Additionally, people who enter their dogs in the show are charged fees to
cover judging fees, awards and to raise money for other charities. The club rents out dog cages for
use by dog owners at the shows. Baked goods are also sold. Finally, advertisers buy space in a
brochure which is handed out at the shows at no charge. No members are paid salaries and all their
time is donated without cost.
Section 1116(a)(4) of the Tax Law provides:
Except as otherwise provided in this section, any sale or
amusement charge by or to any of the following or any use or
occupancy by any of the following shall not be subject to the sales
and compensating use taxes imposed under this article:

(4) Any corporation, association, trust, or community chest, fund or
foundation, organized and operated exclusively for religious,
charitable, scientific, testing for public safety, literary or educational
purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision
of athletic facilities or equipment), or for the prevention of cruelty to
children or animals, no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no substantial part of
the activities of which is carrying on propaganda, or otherwise

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TSB-A-90 (18) S
Sales Tax
April 16, 1990
attempting to influence legislation, (except as otherwise provided in
subsection (h) of section five hundred one of the United States
internal revenue code of nineteen hundred fifty-four, as amended),
and which does not participate in, or intervene in (including the
publishing or distributing of statements), any political campaign on
behalf of any candidate for public office;...
Section 501(a) of the Internal Revenue Code of 1986 provides:
EXEMPTION FROM TAXATION. -- An organization
described in subsection (c) or (d) or section 401(a) shall be exempt
from taxation under this subtitle unless such exemption is denied
under section 502 or 503.
Section 501(c)(7) of the Internal Revenue Code of 1986 provides:
LIST OF EXEMPT ORGANIZATIONS. -- The following
organizations are referred to in subsection (a):

(7) Clubs organized for pleasure, recreation, and other
nonprofitable purposes, substantially all of the activities of which are
for such purposes and no part of the net earnings of which inures to
the benefit of any private shareholder.
Although a dog club may qualify as an exempt organization under Section 501(c)(7) of the
Internal Revenue Code, this does not mean that it automatically qualifies as an exempt organization
as defined in Section 1116(a)(4) of the Tax Law. A dog club that conducts dog shows is not
organized and operated exclusively for any of the purposes enumerated in Section 1116(a)(4) and
thus is not exempt from collecting sales tax on admission charges or sales or rentals of tangible
personal property. The fact that the dog club may make contributions to other charities or the fact
that it may be operated on a not-for-profit basis does not entitle it to the exemption provided by said
section.
Pursuant to Section 1105(f)(1) of the Tax Law a sales tax is imposed on:
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 for admission to race tracks, boxing, sparring or
wrestling matches or exhibitions which charges are taxed under any
other law of this state, or dramatic or musical arts performances, or
motion picture theaters, and 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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TSB-A-90 (18) S
Sales Tax
April 16, 1990
Section 527.10(b)(3) of the Sales and Use Tax Regulations defines a place of amusement as:
Any place where any facilities for entertainment, amusement,
or sports are provided. Such places include without limitation (i) a
theatre of any kind, concert hall, opera house, or other place where a
performance is given; (ii) fairground or exhibition hall or grounds (iii)
golf course, athletic field, sporting arena, gymnasium, bowling alley,
shooting gallery, swimming pool, bathing beach, skating rink, tennis
court, handball court, billiard hall or other place for athletic exhibits;
(iv) "penny arcades"; any room which includes ping pong tables and
amusement devices, and any amusement device, carousel, miniature
fair, ferris wheel and other amusement rides, whether or not contained
in an enclosure.
The dog show is held in a facility, which qualifies as a place of amusement pursuant to
Section 527.10(b)(3) of the Sales and Use Tax Regulations. Charges for admission to dog shows do
not qualify as charges for admission to race tracks, boxing, sparring or wrestling matches or
exhibitions which charges are taxed by any other law of this state. Accordingly, the charges for
admission to dog shows held by the dog club are subject to sales tax.
Section 1105 of the Tax Law does not impose sales tax on fees paid by people to enter their
animals to be judged in shows. Accordingly the dog club's charges to contestants for entering their
dogs in its dog shows are not subject to sales tax.
Section 1101(b)(5) of the Tax Law defines a sale for the purposes of the tax imposed by
Section 1105(a) of the Tax Law as:
Any...rental, lease or license to use or consume, conditional
or otherwise, in any manner or by any means whatsoever for a
consideration, or any agreement therefor, including the rendering of
any service, taxable under this article, for a consideration or any
agreement therefor.
Section 526.7(a)(2) of the Sales and Use Tax Regulations provides that:
Among the transactions included in the words sale, selling or
purchase are...rentals, leases or licenses to use or consume tangible
personal property.
Section 527.7(c)(1) of the Sales and Use Tax Regulations provides that:
The terms rental, lease, license to use refer to all transactions
in which there is a transfer of possession of tangible personal property
without a transfer of title to the property...

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TSB-A-90 (18) S
Sales Tax
April 16, 1990
Therefore the charges for cage rentals made by the dog club for the use of dog cages by
owners at its shows constitute rentals of tangible personal property in accordance with Section
1101(b)(5) of the Tax Law and Sections 526.7(a)(2) and 527.7(c)(1) of the Sales and Use Tax
Regulations and thus such charges are subject to sales tax pursuant to Section 1105(a) of the Tax
Law.
Section 1105(d)(i) of the Tax Law imposes a sales tax on the receipts from the sale of ". . .
every sale of food and drink of any nature or of food alone. . .."
Section 1105(d)(i)(1) imposes the tax "in all instances where the sale is for consumption on
the premises where sold."
Section 527.8 of the Sales and Use Tax Regulations define the terms "premises" and
"consumption on premises" as follows:
(c) Premises. The term premises shall mean the total space and facilities in or on which the
vendor conducts his business, including but not limited to parking areas for the convenience of in-car
consumption, counter space, indoor or outdoor tables, chairs, benches and similar conveniences.
(d) Consumption on premises. The phrase for consumption on the premises shall mean that
the food or drink sold may be consumed on the premises where the vendor conducts his business.
Accordingly, the sale by the dog club of baked goods for on premises consumption, at its
show facility is subject to sales tax. Little Ozzie's Inc., Adv Op Comm T & F, February 8, 1990,
TSB-A-90(6)S. However if the sale of baked goods is for consumption off the premises and is in the
same form as sold by food stores or bakeries, then the sale of such baked goods would not be subject
to sales tax in accordance with Section 1105(d)(3) of the Tax Law.

DATED: April 16, 1990

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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