How did Texas's October 2, 1984 amusement tax apply to private health-club memberships, dues, initiation fees, and existing contracts?

Plain-English summary

The Texas Comptroller said membership fees and monthly dues to privately owned health clubs became taxable amusement-service charges on October 2, 1984, at the stated historical 4.125% state rate plus applicable city and Metropolitan Transit Authority taxes.

Initiation fees and monthly dues under membership contracts entered before October 2 remained nontaxable for the contract's entire term.

Payments made before October 2 on contracts beginning on or after that date were also nontaxable, but payments made on or after October 2 under the same contracts were taxable.

What this means for you

Private health clubs

The historical transition treatment depended on both contract date and payment date.

Accountants and tax professionals

The 4.125% state rate is historical. Verify current club, initiation-fee, local-tax, and contract-transition rules.

Common questions

Q: When did health-club fees become taxable?
A: October 2, 1984.

Q: Were pre-October 2 contracts taxed during their term?
A: No, according to the letter.

Q: What if a later-starting contract was paid before October 2?
A: The pre-October 2 payment was nontaxable; later payments were taxable.

Citations and references

• The letter cites no statute or administrative rule.
• The stated 4.125% rate is historical.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8409L0590A13

Original ruling text

September 17, 1984

Dear **:

Thank you for your letter of September 5, 1984 regarding the taxation
of health club memberships.

As of October 2, 1984, membership fees and monthly dues to privately
owned health clubs are subject to state sales tax (4.125%) as well as
applicable city and Metropolitan Transit Authority taxes, as a taxable
amusement service. The initiation fees and monthly dues that go with
membership contracts entered into prior to October 2, 1984 will not be
subject to state sales tax for the entire term of the contract. Also,
payments made prior to October 2, 1984, on membership contracts that
begin on or after October 2, 1984 are also not subject to sales tax,
however, payments made on or after October 2, 1984 in relation to
the same contract will be subject to sales tax.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You
may write me, or call toll free 1-800-252-5555 from anywhere in Texas
or phone 512/475-1931.

Sincerely,

Jeannon Kralj
Tax Policy Section
Tax Administration Division