Does a New York social/athletic club have to collect sales tax on dues paid by members who live outside New York?

Plain-English summary

The Varsity Club of Syracuse University has about 1,542 members: 632 who live in New York and 910 who live in other states. The club's business address and its club functions are both in New York State. The club already assumed its New York-resident members' dues were taxable and asked only about the 910 out-of-state members: does it also have to collect sales tax on their dues?

Tax Law § 1105(f)(2)(i) taxes dues paid to a social or athletic club in New York once an active annual member's dues (not counting the initiation fee) exceed $10 per year, and taxes the initiation fee alone once it exceeds $10. The Department explained that the statute's tax incident and tax rate turn on the location of the club, not on where any individual member happens to live. Because the Varsity Club is located in New York, all of its dues -- from New York residents and out-of-state residents alike -- are subject to sales tax.

What this means for you

Clubs and membership organizations based in New York

If your organization is a "social or athletic club" for sales tax purposes and it's located in New York, you generally need to collect sales tax on dues from every member above the statutory threshold, regardless of where that member personally lives. Don't assume an out-of-state mailing address exempts a member's dues.

Out-of-state members of a New York club

Living outside New York doesn't exempt you from the club dues tax if the club itself is based here -- the tax follows the club's location, not your own residence.

Accountants and tax professionals

This is a short but useful precedent for the "which location controls" question under § 1105(f)(2) -- the club's location, not any individual member's residence, is dispositive.

Common questions

Q: Does it matter that most of this club's members don't live in New York?
A: No -- the Department held that the location of the club controls, not the residence mix of its membership.

Q: Would the answer change if the club itself were located outside New York?
A: This opinion doesn't address that scenario; it addresses only a club whose business address and club functions are both in New York.

Q: Can another club rely on this ruling?
A: No. This advisory opinion binds the Department only with respect to the Varsity Club of Syracuse University and the specific facts it described.

Citations and references

Statutes and regulations:

• Tax Law § 1105(f)(2)(i) (tax on dues paid to a social or athletic club)

Prior rulings and cases referenced:

• None cited in this opinion.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a96_89s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-96 (89) S
Sales Tax
December 30, 1996

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S960423A

On April 23, 1996, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Varsity Club of Syracuse University, Manley Field House, Syracuse, NY 13244.
The issue raised by Petitioner, Varsity Club of Syracuse University, is whether membership
dues paid by members who reside outside of New York are subject to sales tax.
Petitioner submits the following facts as the basis for this Advisory Opinion. Petitioner has
approximately 1,542 members. The membership consists of 632 residents of New York and 910
members who reside in other states. Petitioner's business address is in New York State, and club
functions for members are held in New York State. The Petition presumes that membership dues
paid by members who reside in New York are taxable.
Section 1105(f)(2)(i) of the Tax Law imposes sales tax on:
(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. In the
case of a life membership, the tax shall be upon the amount paid as life membership
dues, however, a life member, other than an honorary member, paying an annual
sales tax, based on the dues of an active annual member, shall continue such
payments until the total amount of such tax paid is equal to the amount of tax that
would have otherwise been due had the tax been imposed at the time such paid life
membership has been purchased and at the then applicable rate. (emphasis added)
In accordance with Section 1105 (f)(2) of the Tax Law, it is the location of Petitioner which
controls both the tax incident and the tax rate for the dues collected from members. Petitioner is
located in New York.

-2­
TSB-A-96 (89) S
Sales Tax
December 30, 1996

Therefore, Petitioner must collect applicable sales tax on its membership dues, regardless of whether
Petitioner's members are residents or nonresidents of New York.

DATED: December 30, 1996

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

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