Florida Country Club's Membership Fees Subject to Sales Tax

On January 20, 2012, the Florida Department of Revenue, in Technical Assistance Advisement – 12A-003 ruled that a country club's membership fees, paid by homeowners in the communities surrounding the club, are subject to sales tax pursuant to Section 212.04(1)(a). FactsA country club requested a Technical Assistance Advisement on whether membership fees that homeowners in the surrounding communities pay to it, is subject to sales tax.   Membership in the club is required for homeowners in the surrounding communities.  The homeowners pay their homeowner association dues, a portion of which is then forwarded to the club as membership fees and club assessments. Club's PositionBecause the fees are mandatory, paid to an association (the club argued that pursuant to case law, the club is a "de facto" association), required to be paid as a condition of ownership, and that the club facilities are part of the common elements or common areas of real property,  the fees should be exempt from sales tax pursuant to Rule 12A-1.005(4)(d)3. of the Florida Administrative Code. Department of Revenue's AnalysisPursuant to Section 212.04(1)(a), "selling or receiving . . . by way of admissions," is taxable.  "Admissions," pursuant to Section 212.02(1), include fees paid to membership clubs that provide recreational facilities.Rule 12A-1.005(4)(d)3. provides "mandatory dues and fees paid to a condominium association, homeowners' association, or cooperative association when they are required to be paid as a condition of ownership or occupancy of real property and the club facilities are part of the common elements or common areas of the real property" as an example of "fees paid to private clubs or membership clubs that do not entitle the payor to the use of the club’s recreational or physical fitness facilities," which Rule 12A-1.005(4)(d) provides are not subject to sales tax.  The Department of Revenue held that that rule 12A-1.005(4)(d)3. does not exempt the club from sales tax because the club is neither an "association" or a homeowners' association.  In addition, it held that the club is not a common element or common area of condominium or homeowners' association property.Finally, the Department of Revenue held that the case law on which the club relied to assert that the club was a "de facto" association is not applicable with regard to tax assessments.