Which of a country club's various member charges -- handicap fees, golf association dues, driving range fees, private lessons, club repairs/rentals, and homeowners assessments -- are subject to Texas sales tax?

Plain-English summary

A country club asked for a comprehensive taxability rundown of seven distinct member charges, and got a genuinely mixed, item-by-item answer -- a useful checklist for the whole industry:

1. Handicap fees -- taxable only if calculated on a computer (a data-processing-flavored distinction: manual handicap calculation isn't taxed the same way).
2. Men's golf association dues (collected by the club and passed through to the association) -- not taxable, as long as association membership isn't a mandatory condition of club membership.
3. Range ball/driving range charges (hitting balls on the driving range) -- taxable.
4. Private golf and tennis lessons -- not taxable.
5. Golf club repairs -- taxable.
6. Golf club rentals -- taxable.
7. Homeowners assessments -- even though the club itself isn't a homeowners' association, these assessments (used to maintain common areas around the club and the adjoining residential area) are taxable, characterized as a fee/assessment for a special privilege, status, or membership classification in a private club or organization under Rule 3.298(b).

What this means for you

Country clubs and private golf/tennis clubs billing members

Sort your various fee types individually rather than assuming a blanket taxable-or-exempt status for "club charges" generally -- this letter shows genuinely different outcomes across seven distinct charge types at the same club, several of which might not be obvious (e.g., handicap fees turning on computer calculation, homeowners assessments being taxable via the special-privilege/membership-classification theory rather than a homeowners-association analysis).

Clubs collecting dues on behalf of affiliated associations (golf associations, etc.)

Whether dues you collect and pass through to an affiliated association are taxable depends on whether membership in that association is mandatory as a condition of club membership -- optional add-on association dues stay untaxed.

Accountants and tax professionals

A rare comprehensive multi-item country-club fee schedule -- useful as a direct checklist template when auditing or advising any private club with a similar mix of golf, membership, and assessment charges.

Common questions

Q: Are country club handicap fees taxable?
A: Only if calculated on a computer.

Q: Are driving range fees taxable?
A: Yes.

Q: Are private golf or tennis lessons taxable?
A: No.

Q: Are homeowners-style assessments charged by a country club (not itself a homeowners' association) taxable?
A: Yes, as a fee for a special privilege/status/membership classification under Rule 3.298(b).

Q: Can I rely on this letter for my own club's fee schedule?
A: No. It is based on the specific facts presented and can only be relied on by the taxpayer to whom it was issued.

Citations and references

Statutes and rules:

• 34 Tex. Admin. Code Rule 3.298(b) (amusement services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9904312L

Original ruling text

April 7, 1999

Dear Ms. **:

This is in response to your request for a ruling on the taxability of the
following charges by a Country Club (Club). I have restated the different
charges to members and indicated the taxability of each charge below:

1. Handicap fees - Taxable if calculated on a computer.

2. Men's golf association dues (collected by the Club and distributed to the
   association) - Not taxable if membership in the golf association is not
   mandatory as a condition of membership in the Country Club.

3. Charge for range ball club - (hitting balls on driving range) - Taxable

4. Private lessons - golf and tennis - Not taxable

5. Golf club repairs - Taxable

6. Golf club rentals - Taxable

7. Homeowners assessments (the Club is not a homeowners' association, but the
   assessments are used to upkeep the common areas around the Club and adjoining
   residential area) - Taxable, as a fee or other assessments and fees charged for
   a special privilege, status, or membership classification in a private club or
   organization. See Rule 3.298 (b).

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at:

Sincerely,

Gilbert Zamora
Tax Policy Division