Does a Tennessee country club have to charge sales tax on the separate fees it bills members for locker rentals and golf bag storage?

Plain-English summary

A private Tennessee country club offers its members a golf course, tennis courts, a health club, a swimming pool, and food service. It also charges members separately, as their own line items on the monthly bill, for locker rentals and golf bag storage (a service where staff retrieve a member's clubs from a storage room, load them on a cart, and put them back after play). The club asked the Department whether either of those two separately billed charges owed Tennessee sales tax.

The Department said both are taxable. Tennessee taxes "dues or fees to membership sports and recreation clubs ... including any fees paid for the use of facilities or services rendered at a health spa or club or any similar facility or business" under Tenn. Code Ann. § 67-6-212(a)(1). Because the club offers a golf course, tennis, a health club, a pool, and food service to its members, it is squarely a "membership sports and recreation club." Locker rental fees are a fee for the "use of facilities." Golf bag storage is both a fee for the "use of facilities" (the storage room) and a fee for "services rendered" (staff retrieving and replacing the bags) — so it's taxable on two independent grounds. It didn't matter that the club billed these as separate line items apart from its base dues; the statute reaches any fee paid for club facilities or services, however itemized.

What this means for you

Country clubs, golf clubs, and similar membership recreation clubs

If your club is a "membership sports and recreation club" — offering things like a golf course, tennis, a health club, a pool, or similar recreational amenities — Tennessee sales tax applies broadly to fees tied to using your facilities or receiving services there, not just to your base membership dues. Ancillary charges like locker rentals and equipment storage fall within that reach even when billed as separate, itemized charges on a member's statement.

Accountants and tax professionals advising clubs

Tenn. Code Ann. § 67-6-212(a)(1) is written broadly ("dues or fees ... including any fees paid for the use of facilities or services rendered"), and this ruling shows the Department reading it to sweep in ancillary, facility-based charges beyond core dues — treat any new member-billed line item at a recreation club as a candidate for taxability unless it clearly falls outside "use of facilities" or "services rendered" at the club.

Common questions

Q: Are locker rental fees taxable at a Tennessee country club?
A: Yes, when charged by a membership sports and recreation club, because they are a fee for the use of the club's facilities under Tenn. Code Ann. § 67-6-212(a)(1).

Q: Is golf bag storage taxable too?
A: Yes. It's taxable on two grounds: it's a fee for use of the club's storage facilities, and it's a fee for the staff service of retrieving and replacing the member's bag.

Q: Does itemizing these as separate charges (apart from dues) change the answer?
A: No. The statute taxes any fee paid for the use of facilities or services rendered at the club, regardless of how the club labels or itemizes the charge on the bill.

Q: Can other clubs rely on this ruling?
A: No. A Tennessee letter ruling binds the Department only as to the specific taxpayer and facts it was issued to, and it can be revoked or modified by the Commissioner. It shows how the Department reasons about similar facts, but a different club's arrangement should be confirmed independently.

Citations and references

Tennessee statutes (Tenn. Code Ann.):

• § 67-6-212(a)(1) (Supp. 2010) (sales tax on dues or fees to membership sports and recreation clubs, including fees for use of facilities or services rendered at a health spa or club or similar facility)
• § 67-6-101 et seq. (Retailers' Sales Tax Act; general sales and use tax on retail sales of tangible personal property and enumerated services)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/11-24.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 11-24
WARNING
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This presentation of the ruling in a redacted form is
informational only. Rulings are made in response to particular facts presented and are not
intended necessarily as statements of Department policy.

SUBJECT
Application of the Tennessee sales and use tax to charges for locker rentals and golf bag storage.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department and are applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation
or modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling; and a retroactive revocation of the ruling must inure to the taxpayer’s
detriment.
FACTS
The [TAXPAYER] is a private country club located in [CITY], Tennessee, that provides a
variety of services and amenities to its members. The Taxpayer offers a golf course, tennis
courts, a health club, a swimming pool, and food service, among other amenities, to its members.

The Taxpayer also provides locker rentals and golf bag storage to its members for additional
fees.
The Taxpayer sends a monthly billing statement to its members in which each item is billed as a
separate line item. For example, there is a separate line item for dues, assessments, food service,
golf carts, health club services, locker rentals, and golf bag storage.
For an additional fee, the Taxpayer provides storage of golf bags to its members, allowing the
members to keep their golf clubs at the Taxpayer’s facility year-round. The golf bags are stored
on shelves located in a storage room. At the member’s request, the Taxpayer’s employee will
retrieve the member’s golf bag and place the golf clubs on a golf cart for the member’s use.
After the member is finished playing golf, the Taxpayer’s employee will replace the member’s
golf bag in the storage room.
QUESTIONS

1. Are charges for locker rentals to the Taxpayer’s members subject to the Tennessee sales
   and use tax?
2. Are golf bag storage fees charged to the Taxpayer’s members subject to the Tennessee
   sales and use tax?
   RULING
   Both charges are subject to sales tax in Tennessee pursuant to TENN. CODE ANN. § 67-6212(a)(1) (Supp. 2010).
   ANALYSIS
   The Tennessee Retailers’ Sales Tax Act, TENN. CODE ANN. § 67-6-101, et seq., generally
   imposes the sales and use tax on retail sales of tangible personal property and certain enumerated
   services. In addition, TENN. CODE ANN. § 67-6-212 (Supp. 2010) generally imposes the sales tax
   on retail sales of admission, dues, and fees to various recreational activities and events.
   Specifically, TENN. CODE ANN. § 67-6-212(a)(1) levies the sales tax on the sales price of “[d]ues
   or fees to membership sports and recreation clubs … including any fees paid for the use of
   facilities or services rendered at a health spa or club or any similar facility or business.”
   Accordingly, the Taxpayer’s charges for locker rentals and golf bag storage fees will be subject
   to the Tennessee sales tax if the Taxpayer is considered a “membership sports and recreation
   club” and the charges constitute “dues or fees” to such clubs. In this case, the Taxpayer is a
   private country club that offers a golf course, tennis courts, a health club, a swimming pool, and
   food service, among other amenities, to its members; the Taxpayer is clearly a “membership
   sports and recreation club” within the meaning of TENN. CODE ANN. § 67-6-212(a)(1).
   Locker Rentals
   Because the Taxpayer is a membership sports and recreation club that charges its members fees
   to use the lockers, the Taxpayer’s locker rentals are subject to the Tennessee sales tax pursuant to

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TENN. CODE ANN. § 67-6-212(a)(1). Such charges constitute “fees paid for the use of facilities,”
thereby rendering the charges for locker rentals subject to the sales and use tax.
Golf Bag Storage
Because the Taxpayer is a membership sports and recreation club, the Taxpayer’s furnishing of
golf bag storage to its members for a fee is also subject to the Tennessee sales and use tax
pursuant to TENN. CODE ANN. § 67-6-212(a)(1). The golf bags are held in a storage room on the
country club’s premises. At the member’s request, the Taxpayer’s employee will retrieve the
member’s golf bag and place the golf clubs on a golf cart for the member’s use. After the
member is finished playing golf, the Taxpayer’s employee will replace the member’s golf bag in
the storage room. The fee for this service accordingly constitutes both a fee “paid for the use of
facilities” and a fee for “services rendered,” making the charge subject to the sales and use tax.

Kristin Husat
Senior Tax Counsel

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

06/14/11

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