Are Yacht Membership Fees Taxable Nys?

A social club in New York collects no regular dues or membership fees but charges its members for operating expenses. These assessments constitute taxable dues or membership fees. The Tax Appeals Tribunal has held that the laws regarding tax on shipping and handling costs are relatively simple in New York. If the item being shipped is taxable, and if you charge for the shipping, the charges constitute taxable dues or membership fees.

The Tax Appeals Tribunal can be most beneficial to yacht owners if the owner of the yacht uses the vessel for legitimate business purposes and is registered as an entity (e.g., a corporation, partnership, or New subdivision (JJ) of Section 1115 of the New York Tax Law, to be effective June 1, 2015). Many boat-related expenses can be deducted on your federal income tax return, which helps offset the costs of ownership. Some of these deductions may include mortgage.

The club makes a charge to each member using its facilities, which the amount depends upon the size of the members boat and the location of the docking and mooring facilities used. The charges made by the club for these facilities constitute taxable dues or membership fees.

Dues paid to any social or athletic club in New York State are subject to sales tax if the dues of an active annual member, exclusive of the boat club dues, are over 10 per year. However, dues or membership fees paid to health and fitness facilities are not subject to New York State sales tax.

New York State and local sales taxes are imposed on dues and membership fees paid to any athletic club in the state. Membership fees are taxable under New York Tax Law § 1105(f) because members purchase ownership of the club, not directly for activities.