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Taxes in New York (TiNY) is a blog by the Hodgson Russ LLP State and Local Tax Practice Group. The weekly reports are intended to go out within 24 hours of the Division of Tax Appeals’ (DTA) publication of new ALJ Determinations and Tribunal Decisions. In addition to the weekly reports TiNY may provide analysis of and commentary on other developments in the world of New York tax law.  

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In other news…

Are you on the Board of Directors of a country club or yacht club?  If so, you may be interested in TSB-A-17(5)S, which discusses whether certain charges a club makes to non-members are subject to sales tax. 

After stating the general rule that all charges by a club to its members are taxable, the TSB-A went on to look at certain transactions between a club and non-members.  According to the TSB-A, being a club is not relevant except with respect to dealings with club members.  So charges to non-members for things like tennis lessons and mini-camps for children would not be subject to sales tax.  However, the rental of a club’s real property facilities for events would be taxable if any catering services are provided.  The TSB-A’s discussion—in the context of the mini-camps—regarding  when food is incidental to an activity, is enlightening and worthy reading.  Ultimately the TSB-A holds that as long as the food provided to the children attending the mini-camps is “incidental”, the camp fees are not subject to sales tax.  The juxtaposition of the “incidental provision of food” discussion and the “rental of real property is taxable if any catering services are provided”  discussion in the TSB-A evidences the tension in this area.  What happens if the facility is rented for $5000 and the club also provides a $10 bowl of Chex-mix, does the provision of the Chex-mix catering that makes the whole charge taxable?  Or does a bowl of Chex-mix fall into the “incidental provision of food” safe harbor?  Where is the line dividing the incidental provision of food and catering?

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