BILL NUMBER: S8507

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the tax law, in relation to exempting athletic club
membership dues from a sales tax where such clubs utilize a municipal
parkland

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would exempt membership dues paid to athletic clubs which
spend the substantial amount of such dues to the improvement, operation
and maintenance of athletic facilities located in and part of a munici-
pal park. Members of the Albany Tennis Club, a 501 (c) (7) not-for-pro-
fit corporation currently pay sales tax on membership dues. This bill
would exempt membership dues paid to the Albany Tennis Club from sales
tax.

 
SUMMARY OF PROVISIONS:

Section 1105 (f) (2) requires members of athletic and social clubs to
              

pay sales on membership dues if the dues exceed ten dollars ($10) per
year. This bill would exempt membership dues from sales tax if the
membership dues are primarily spent on the improvement, operation and
maintenance of athletic facilities in a municipal park. The ATC would
fall within this proposed exemption.

 
JUSTIFICATION:

Membership dues paid to a wide variety of athletic and social clubs are
subject to sales tax where the membership dues exceed ten dollars per
year. Pursuant to NYS Tax Law 1101 (d)(13), athletic and social clubs
are defined as any club or organization of which a material purpose or
activity is social or athletic. A common factor regarding the clubs
whose membership dues are subject to sales tax is the private benefit
conferred by such clubs on its members. According to the regulations of
the NYS Department of Tax and Finance ("NYSDTF"), sales tax applies to
dues paid to clubs whose benefits inure to members who also have the
authority to select members, control all of the club's activities and
have a proprietary interest in the club. 20 NYCRR 527.11 (b) (5).
Members of the Albany Tennis Club ("ATC"), a 501 (c) (7) not-for-profit
corporation paid nearly five thousand dollars ($5000) in sales tax on
membership dues in calendar year 2023. The ATC relies on membership dues
to achieve its primary purpose; i.e. maintenance, repair and operation
of the tennis facility. Sales tax directly impacts the amount of member-
ship dues that can be reasonably charged to its members. In order to
maintain and expand the use of the facility, the ATC at tempts to keep
membership dues as low as possible to meet its obligations.  The circum-
stances that distinguish the ATC from other social and athletic clubs
should result in an exemption for its members from sales tax on member-
ship dues. This would enable the ATC to keep its dues low enough to
encourage continued use of the facility and help ensure that it can
properly maintain, repair and operate the facility. The ATC operates the
tennis facility under a license agreement with the City of Albany which
requires the ATC to maintain and repair the tennis courts. The tennis
facility is located in and it part of an Albany municipal park. This
agreement relieves the City of Albany of the time, expense and staff

resources to perform.  these activities. Nearly all of the membership
dues are dedicated to this purpose.

Any improvements at the facility become the property of the City of
Albany. The license agreement provides a non-exclusive license to use
the facility. Members of the public are welcome to use the facility
subject to user fees which are also dedicated to maintenance, repair and
operation of the tennis facility. These factors should exempt the ATC
membership from paying sales tax on membership dues.  While the NYS
Department of Tax and Finance (NYS DTF) retains discretion to determine
whether an organization is an athletic or social club for which member-
ship dues are subject to sales tax, the application of such discretion
does not directly exempt the ATC without an explicit finding. ATC has
petitioned the NYS DTF for an exemption. The petition is pending.

 
LEGISLATIVE HISTORY:

None

 
FISCAL IMPLICATIONS:

Minimal.

 
EFFECTIVE DATE:
Effective immediately.