ST 2002-03 - Recreation and Sports Club Service - July
UPDATED Supersedes Information Release Dated April 1993
The purpose of this information release is to describe the
policy the Department of Taxation will use in applying sales
tax to memberships in recreation and sports clubs.
[See Paragraph Q for Policy Change]
Effective January 1, 1993, the Ohio General Assembly enacted
R.C. 5739.01(B)(3)(o), which added "recreation and sports
club service" to the definition of "sale" and "selling." This
made the provision of this service a sale subject to the Ohio
sales and use tax. R.C. 5739.01(NN) defines "recreation and
sports club service" as:
" ...all transactions by which a membership is granted,
maintained, or renewed, including initiation fees, membership
dues, renewal fees, monthly minimum fees, and other similar
fees and dues, by a recreation and sports club, which
entitles the member to use the facilities of the
organization. "Recreation and sports club" means an
organization that has ownership of, or controls or leases on
a continuing, long-term basis, the facilities used by its
members and includes an aviation club, gun or shooting club,
yacht club, card club, swimming club, tennis club, golf club,
country club, riding club, amateur sports club, or similar
A "membership" is the privilege, right, or entitlement,
including the privilege to use club facilities or the right
to purchase the use of club facilities, to those who have met
the criteria necessary for membership, including the mere
payment of a fee, dues, renewal or other similar fee. It is
only a membership if the privileges, rights, or entitlements
granted by the club are not available to the non-member and
include more than the economic benefit of volume purchase
(season pass) or discounts on purchases.
A "club" is an organization, association, corporation, or
other entity which promotes or fosters participation in
common objectives or common activities, a membership in which
grants privileges over and above privileges available to non-
members who are not guests of the club or guests of a member.
An organization is a club if:
1. One must be a member to use the facility (or be a guest of
the club or guest of a member) regardless of whether there is
an additional user fee to participate or whether the use of
the facility is included in the membership, or
2. The organization allows limited or occasional use of
facilities by non-members but the members are entitled to
privileges not available to casual or one-time non-member
users (excluding mere economic benefit). An organization is
not a club if the annual or seasonal membership (fee) does
not entitle a member to any privileges in excess of those
available to the general public on a non-membership,
non-guest basis (except not having to pay each time or
discounts on purchases). An example of this would be the
purchase of an amusement park season pass that grants
admission to the park and/or discounts on purchases. The only
advantage over a daily ticket purchase is economic benefit.
Only memberships in clubs that have a facility available for
use by its members are potentially subject to the tax. The
tax is levied only on memberships to recreation and sports
clubs that own or control a facility available for use by its
members. The purpose and/or mission promoted and fostered by
a club determine whether or not it is a recreation and sports
A club is not a "recreation and sports club" if it is
organized and operated with an exclusive purpose and/or
mission other than fostering and promoting member
participation in recreation and sports activity. This is true
even though the club incidentally owns or controls some
recreation and sports facility that is available for the
occasional use and enjoyment by its membership and that is
incidental to the purpose and/or mission of the club. For
example, a club organized exclusively for social purposes,
which has a pool table that its members occasionally use, is
not a "recreation and sports club."
A club is a "recreation and sports club" if it owns or
controls a facility and its purpose is to foster and promote
membership participation in recreation and sports activity.
The sale of any level of membership as described above is the
sale of a recreation and sports club service and is subject
to the tax. Such memberships are taxable in their entirety
even though levels of membership restrict or exclude
If a club is organized and operated with an exclusive purpose
other than fostering and promoting recreation and sports
activity and, as a part of the club's operation, it maintains
a recreation and sports facility promoting member
participation at this facility through the sale of an
additional or supplemental membership, the additional or
supplemental membership fee is the sale of a "recreation and
sports club service" and is subject to the tax. This
additional or supplemental fee must be separated from the
general club membership fee or the entire membership fee is
subject to the tax. The separation of fees must be clearly
stated in the initial billing or in the contract and must be
reasonably allocated between the services provided to allow
an exclusion of the general fee from the tax base.
All payments that are required as a condition precedent to
membership in a sports and recreation club are taxable.
Initiation, registration and sign-up fees are payments
required for membership and are taxable. Other specific
examples of payments included in the membership fee are
discussed below. However, a one-time user fee, guest fee, or
one-time pay-for-play fee (greens fee for a round of golf) to
use a facility at a recreation and sports club is not a
membership fee and is not subject to the tax. Although a
one-time pay-for-play charge is not a membership, a season
pass or multiple-play pass paid by a member of a recreation
and sports club is taxable as an additional membership or
similar fee if this privilege is restricted to members only.
A clubhouse owned or controlled by an organization that is
organized and operated with a purpose and/or mission of
fostering and promoting member participation in recreation
and sports activity is considered a facility even though the
recreation and sports activity may be conducted on public
lands or waters or at a site that is not owned or controlled
by the club. A membership to such an organization is a
membership to a recreation and sports club subject to the tax
if it entitles the member to any use of the clubhouse
The following is a summary of frequently asked questions
along with the Department's responses.
A) IF I AM PROVIDING THIS SERVICE, WHAT TYPE OF
LICENSE MUST I HAVE AND HOW DO I OBTAIN THIS
You must obtain a regular county vendor's license (if you
do not already have one) from the county auditor's office
in the county where your facility is located. You must file
sales tax returns (form UST-1) on either a monthly or
semiannual basis. The Department of Taxation will send you
instructions for filing returns and remitting tax
collected. If you already have a regular county vendor's
license for your facility location, you should report the
sales of this taxable service on that license.
B) AS A "RECREATION AND SPORTS CLUB," CAN I CLAIM
EXEMPTION ON PURCHASES OF EQUIPMENT AND/OR SUPPLIES USED AT
MY FACILITY TO PROVIDE THIS SERVICE?
No. There is no provision in the law for exemption on the
purchase of equipment or supplies used in providing this
service. However, you may claim the "resale" exemption on
the purchase of any items that will be resold, such as
clothing, sporting equipment, etc.
C) WHEN IS THE TAX TO BE COLLECTED ON THE SALE OF A
YEARLY MEMBERSHIP TO MY FACILITY?
If the yearly membership fee is a legal charge against, and
payable in full by, the purchaser, the tax on the full
yearly fee is due in the month the sale is made even if you
elect to collect the fee on an installment (monthly) basis.
If the yearly membership is conditioned on the payment of a
monthly fee and the total fee for the year does not become
a legal charge against the purchaser at the time the
membership contract is initiated, the membership is
considered to be a monthly membership and the club should
collect the tax due when the monthly fee is paid.
D) ARE SINGLE DAY GUEST FEES FOR USE OF A FACILITY
SUBJECT TO THE TAX?
No. Only membership fees are subject to the tax and
one-time user fees are not considered to be membership
E) ARE THE SALES OF MEMBERSHIPS TO "RECREATION AND
SPORTS CLUBS" SOLD BY THE STATE OF OHIO, COUNTIES, CITIES,
MUNICIPALITIES, OR ANY OTHER POLITICAL SUBDIVISION OF THE
STATE SUBJECT TO THE TAX?
No. R.C.5739.02(B)(22) exempts from tax the sale of
services by the State of Ohio or any of its political
F) IF A COUNTRY CLUB SELLS MEMBERSHIPS TO THE CLUB
AND ALSO SELLS A SEASON PASS OR AN EQUIVALENT TO MEMBERS
ONLY FOR USAGE OF THE GOLF COURSE, ARE BOTH FEES SUBJECT TO
Yes. The membership to the club and the golf membership
(season pass) are both subject to the tax as they extend
privileges only to the members for the use of the
facilities. The fee for the season pass is a membership as
it extends privileges to the members that are not available
to the non-member public.
G) IS A SAILING CLUB, WHICH PROMOTES AND FOSTERS
PARTICIPATION IN THE SPORT OF SAILING, THAT OWNS OR LEASES
A BUILDING THAT IS USED BY ITS MEMBERS FOR MEETINGS,
PLANNING CLUB OUTINGS, SOCIALIZING, AND ENTERTAINMENT, OR
OTHER MEMBER ACTIVITIES, A "RECREATION AND SPORTS
Yes. The building is a facility of the club that is used by
its members and the organization is a club as described in
this release. Its membership charges would be subject to
the tax if participation with the club were limited to
members or guests or if members enjoy any privileges not
available to non-members. The same result occurs when a Rod
and Gun Club which promotes and fosters participation in
fishing, shooting, and hunting activities owns or leases a
building that is used by its members for meetings, planning
club outings, socializing, entertainment and other members
H) A ROD AND GUN OR SAILING CLUB WHICH PROMOTES AND
FOSTERS PARTICIPATION IN RECREATIONAL ACTIVITIES OWNS OR
LEASES A BUILDING THAT IS USED BY ITS MEMBERS FOR MEETINGS,
PLANNING CLUB OUTINGS, SOCIALIZING, AND ENTERTAINMENT. ALL
REGULAR FISHING, SHOOTING, AND HUNTING OUTINGS ARE
CONDUCTED ON EITHER PUBLIC LANDS AND WATERS OR PRIVATE
PROPERTIES THAT ARE NOT OWNED OR CONTROLLED BY THE CLUB.
THE CLUB ALSO SPONSORS OTHER SPECIAL EVENTS, SEMINARS,
CAMPS, AND TOURNAMENTS IN WHICH MEMBERS MAY PARTICIPATE FOR
AN ADDITIONAL FEE. SHOULD THE CLUB BE CHARGING TAX ON ITS
MEMBERSHIP DUES OR ANY OF THE SPECIAL EVENT FEES THAT ARE
PAID BY THE MEMBERS?
The membership dues are subject to the tax as a sale of
recreation and sports club service because they entitle the
member to use the clubhouse facility, which is owned or
controlled by the club. The fees charged to members to
participate in special events or camps are not considered
to be membership dues but are "pay-for-play" fees paid for
the right to participate in the special event. These
"pay-for-play" fees are not subject to the tax as they are
for the one-time event and not part of the fees paid for
the membership to the club.
I) A BOWLING LEAGUE THAT BOWLS EVERY TUESDAY NIGHT
AT THE SAME BOWLING ALLEY NOT OWNED OR CONTROLLED BY THE
LEAGUE. THE LEAGUE HAS ITS OWN OFFICERS WHO CONTRACT WITH
THE BOWLING ALLEY TO USE THE FACILITIES FOR LEAGUE PLAY.
ARE THE FEES PAID TO THE BOWLING LEAGUE SUBJECT TO THE
No. The bowling league does not own or control the
facilities used by its members. Therefore, the fees paid to
the league are not subject to the tax.
J) A SWIM CLUB HAS INDOOR AND OUTDOOR POOLS FOR THE
EXCLUSIVE USE OF ITS MEMBERS AND THEIR GUESTS. MEMBERS PAY
A ONE-TIME INITIATION FEE AND AN ANNUAL MEMBERSHIP FEE.
EACH TIME THE MEMBER USES THE FACILITY, HE OR SHE PAYS AN
ADMISSION FEE, BUT ONE MUST BE A MEMBER OR A GUEST OF A
MEMBER TO GAIN ADMISSION. THE FEE FOR A GUEST OF A MEMBER
IS SIGNIFICANTLY HIGHER THAN THE FEE PAID BY THE MEMBER.
WHICH, IF ANY, OF THESE FEES ARE SUBJECT TO THE TAX UNDER
THE NEW LAW?
The initiation fee and the annual membership fee are
subject to the tax as they entitle the member to use the
facility. The admission fee, including the guest fee, is
considered a user fee and not a fee for membership to the
club. This admission fee is not subject to the tax.
K) A SKY DIVING CLUB CHARGES ITS MEMBERS ANNUAL
MEMBERSHIP DUES TO BELONG. THE MEMBERS MEET ONCE A MONTH AT
A LOCAL RESTAURANT TO CONDUCT THEIR MEETINGS AND PLAN THEIR
ACTIVITIES. THE CLUB LEASES A SPACE IN A BUILDING AT A
LOCAL AIRFIELD WHERE MEMBERS CAN STORE THEIR EQUIPMENT,
CHANGE CLOTHES, AND GATHER FOR PREPARATION TO EMBARK ON A
"JUMP." ARE THE DUES FOR THIS ORGANIZATION SUBJECT TO THE
Yes. The space leased at the airport constitutes a facility
for use by the members of the club. The organization
qualifies as a "club" and the dues paid entitle the members
to the use of club facilities.
L) A PRIVATE COUNTRY CLUB SELLS A SHARE OF STOCK IN
THE CORPORA TION AS A MEMBERSHIP INITIATON FEE. THE CLUB
CHARGES ANNUAL DUES OR ASSESSMENTS TO EACH MEMBER WHICH
ENTITLE THE MEMBER TO USE OF THE FACILITIES AT THE CLUB.
THE CLUB ALSO REQUIRES A MINIMUM MONTHLY EXPENDITURE BY
EACH MEMBER. THE MEMBER MUST PAY ANY PORTION OF REQUIRED
EXPENDITURE TO THE EXTENT THE MEMBER HAS NOT MET THE
REQUIRED MINIMUM MONTHLY EXPENDITURE DURING THE MONTH.
WHAT, IF ANY, ARE THE SALES TAX RAMIFICATIONS FOR THESE
The stock purchase, the annual dues and/or special
assessments, and the minimum monthly charges by a country
club are subject to the tax. These are all membership fees
that entitle the member to the use of the facilities of the
M) A CONDOMINIUM ASSOCIATION LEVIES AN ASSOCIATION
FEE ON ALL OWNERS OF PROPERTY IN THE COMPLEX FOR THE UPKEEP
OF THE GROUNDS OF THE COMPLEX, WHICH INCLUDE A SWIMMING
POOL AND CLUBHOUSE WITH EXERCISE AND SPA FACILITIES. ALL
OWNERS (MEMBERS) OF THE ASSOCIATION ARE REQUIRED TO PAY THE
FEES AS A CONDITION OF OWNERSHIP OF THE PROPERTY. OWNERS
ARE ENTITLED TO THE OPEN USE OF THE POOL AND ALL OTHER
FACILITIES WITH CERTAIN RESTRICTIONS FOR PRIVATE PARTIES
AND SPECIAL EVENTS. DOES THIS ASSOCIATION FEE CONSTITUTE A
TAXABLE MEMBERSHIP TO A CLUB?
No. This fee is a condition of ownership (deed restriction)
and is for the upkeep of the property and facilities of the
complex. It is not a fee that merely entitles the member to
the use the facilities of a club. The association does not
meet the requirements to be considered a "club" as
However, if the association was to operate a recreation and
sports club facility for which a separate membership was
sold and use of the facility was limited to only those
residents who purchased this additional membership, the
additional membership dues would be subject to the tax.
N) A SOCIAL ORGANIZATION, ORGANIZED TO FOSTER AND
PROMOTE SOCIAL INTERACTION AND TO RAISE FUNDS FOR
CHARITABLE CAUSES, CHARGES AN ANNUAL MEMBERSHIP FEE TO ALL
MEMBERS. THE PROPERTY OWNED BY THIS ORGANIZATION INCLUDES A
SWIMMING POOL WHICH IS INCIDENTALLY AVAILABLE TO THE
MEMBERS AND THEIR FAMILIES DURING THE SWIMMING SEASON AT NO
EXTRA CHARGE. ARE THE MEMBERSHIP FEES PAID TO THIS
ORGANIZATION SUBJECT TO THE TAX AS THE SALE OF A RECREATION
AND SPORTS CLUB SERVICE?
No. The organization is organized and operated exclusively
for purposes other than fostering and promoting the
recreation and sports activity. The incidental availability
of the recreation and sports facilities for the occasional
free use by members does not constitute the sale of a
recreation and sports club service.
WHAT IF THE SOCIAL ORGANIZATION CHARGED BY THE DAY
FOR THE USE OF THE POOL?
A per-day charge for the use of a facility is a user fee
and not a membership fee. The per-day fee charged is not
the sale of a recreation and sports club service and not
subject to the tax.
O) A SOCIAL ORGANIZATION, ORGANIZED TO FOSTER AND
PROMOTE SOCIAL INTERACTION AND FINE DINING AT ITS FACILITY.
THE ORGANIZATION SELLS MEMBERSHIPS WHICH ENTITLE MEMBERS TO
ENGAGE IN DINING AND SOCIAL ACTIVITIES AVAILABLE AT THE
CLUB. THE ORGANIZATION ALSO MAINTAINS A RECREATION CENTER
WITH AN INDOOR POOL THAT IS AVAILABLE TO MEMBERS OF THE
ORGANIZATION FOR AN ADDITIONAL MEMBERSHIP FEE. WHAT IF ANY
OF THE MEMBERSHIP FEES TO THIS ORGANIZATION ARE SUBJECT TO
The membership fee is not the sale of a recreation and
sports club service subject to the tax if separately
However, the additional membership fee that is charged for
the swim club membership is the sale of a recreation and
sports club service and is subject to the tax. Both fees
are subject to the tax if the organization does not
reasonably separate the charges for the social/dining
membership fee and the additional swimming membership fee.
P) ARE FEES, WHICH ARE STRUCTURED AS LOANS OR
EQUITY CONTRIBUTIONS THAT ARE A CONDITION OF MEMBERSHIP IN
A RECREATION AND SPORT CLUB SUBJECT TO THE TAX?
Yes. The Ohio Supreme Court considered this issue in
Akron Mgt. Corp. v. Zaino (2002), 94 Ohio St.3d
101. The Supreme Court held that initiation fees that were
structured as loans or equity contributions are subject to
Q) ARE SPECIAL ASSESSMENTS THAT ARE A CONDITION OF
MEMBERSHIP IN A RECREATION AND SPORT CLUB, IN ADDITION TO
REGULAR DUES AND FEES, SUBJECT TO THE TAX?
Yes. The decision in Akron Mgmt. undercut the
rationale of an earlier decision of the Board of Tax
Appeals (BTA) in Findlay Country Club v. Tracy
(Feb. 23, 1996), BTA No. 94-H-1307, unreported. In that
case, the BTA held that a one-time special assessment for
the construction of a new clubhouse was not a taxable
transaction under R.C. 5739.01(NN). The Department will no
longer follow the decision of the BTA in the
Findlay case after December 31, 2002.
If you have questions about the sales tax on memberships in
sports and recreation clubs, please call (888) 405-4039.
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