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Sales and Use Tax TAA 18A-016 - Admissions

October 2, 2018

TAX: Sales and Use Tax
TAA NUMBER: 18A‐016
ISSUE: Admissions
STATUTE CITE(S): Section(s) 212.02(1) and 212.04, F.S.
RULE CITE(S): Rule 12A‐1.005(4)(d)3., F.A.C.

QUESTION: Are certain assessments paid by members of a homeowners’ association to the homeowners’ association subject to sales tax?

ANSWER: No, the payments meet the criteria of the Rule. The payments will be mandatory, the payments will be made to a homeowners’ association, the payments will be made as a condition of ownership of a home in the association area, and the recreational facilities are for common areas used by the members who will be paying the assessment. All optional payments
will be subject to sales tax.

Subject: Technical Assistance Advisement (“TAA”)
TAA 18AAMS#:
XXXXXXXXX
Sales and Use Tax‐Admissions

Section(s) 212.02(1) and 212.04, Florida Statutes (“F.S.”)
Rule(s) 12A‐1.005(4), Florida Administrative Code (“F.A.C.”)

XXXXXXXXX (“Petitioner”)(“Club”)
Business Partner Number: XXXXXXX
FEIN: XX‐XXXXXXX

XXXXXXXXXXXXX (“Homeowners’ Association”)
Business Partner Number: XXXXX
FEIN: XX‐XXXXXX

XXXXXXXXX (“Homeowners’ Association II)

Dear XX XXXXXXXXXX:

This letter is a response to your petition dated June 13, 2018, for the Department’s issuance of a Technical Assistance Advisement (“TAA”) to Petitioner, regarding member assessments. Your petition has been carefully examined, and the Department finds it to be in compliance with the requisite criteria set forth in Rule Chapter 12‐11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S.

Facts

Club is a XXXXXXXXX that owns a XXXXXXXX and other recreational facilities in a community of which the homeowners are members of Homeowners’ Association. The website for the Florida Department of Business and Professional Regulations (“DBPR”) identifies Homeowners’ Association as a reporting Homeowners’ Association. Most members of Homeowners’ Association are members of Club. Four members of Club are not members of Homeowners’ Association.

Club will be merged into Homeowners’ Association, and Homeowners’ Association will be the surviving entity. All of Club’s property will be owned by Homeowners’ Association. After the merger, Homeowners’ Association will change its name to Homeowners’ Association II. Homeowners’ Association will keep the homeowners’ association license issued by DBPR.

Homeowners’ Association will own the property previously owned by Club. All members, except for the Association members who were not Club members, will continue to have access to all Club property as common area use, without payment of additional fees, except for the golf course and golf driving range. XXX members of Homeowner’s Association may obtain full golf use rights without payment of additional green fees by making a payment of an increased annual dues assessment. XXX members of Homeowners’ Association may obtain limited golf use rights. These members also pay a higher annual dues assessment, but the amount is lower than the members with full golf rights.

The other members who were previously Club members may use the golf course and facilities upon payment of green fees or user fees with special permission. The members pay a lower amount for the annual assessment amounts. That amount is a mandatory minimum payment amount for all Homeowners’ Association members, except for the members who were not Club members. Homeowner’s Association members who were not Club members may upgrade use rights by paying the annual dues assessment.

The articles of incorporation will be amended to provide that the property owners have easement use rights in the common areas, except for the golf use rights, which will be characterized as a license to use the golf course. When a Homeowners’ Association member who was not a Club member sells his property, the new owner will be required to pay the mandatory annual dues assessment.

In addition to the annual dues assessment, Homeowners’ Association may levy capital assessments as a required capital contribution and special assessments if the annual dues assessment is insufficient to meet operating expenses. A lien will be placed on the member’s residential property if the assessments are not paid.

Issue

What portion of the annual dues assessment is subject to sales tax?

Law and Discussion

Section 212.04, F.S., provides that sales tax must be collected by a person on the amount received from the sale of admissions. Section 212.02(1), F.S., provides, in part, the following: dues and fees payments to a private club or membership club are admissions. Rule 12A‐ 1.005(4)(d)3., F.A.C., provides the following:

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 are not subject to tax. Examples of such fees are:

3. 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 arepart of the common elements or common areas of the real property.

As provided by Rule 12A‐1.005(4)(d)3., F.A.C., Homeowners’ Association will not be required to collect sales tax on the portion of the annual dues assessment for non‐golf rights. The amounts paid are mandatory payments, they are paid to a homeowners’ association, and are required as a condition of property ownership. The amended articles will require the non‐golf areas to be
common areas.
***
Sales tax must be collected on the additional amount collected from the members making the optional payment as to increased amount of annual dues assessment for golf use rights. Salestax must be collected on green fees, and on other optional dues and fees. Sales tax must be collected on the amounts paid by non‐residential users for use of any of the facilities.

Response

Sales tax is not due on the portion of the annual dues assessment for non‐golf rights. Sales tax must be collected on the amounts paid on the annual dues assessments to obtain golf rights. Sales tax must be collected on all other optional charges. This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice, as specified in section 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based, may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of section 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 10
days of the date of this letter.

Respectfully,
Chuck Wallace
Chuck Wallace
Technical Assistance & Dispute Resolution
(850) 717‐7541
AMS #: XXXXXXX

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