Arkansas Sales Taxes Initiation Fees And Membership Dues For Recreational Facilities

Overview

A sales tax assessment issued against the taxpayer for initiation fees and membership dues charged to customers for use of the taxpayer’s recreational facilities, including access to hunting lands, was upheld.

Legal Basis for Taxability

The membership dues and initiation fees qualified as fees for access to amusement, entertainment, athletic, or recreational facilities within the meaning of:

  • Ark. Code Ann. §26-52-301(5)
  • Ark. Regs. §GR-11(A)

Therefore, these charges were deemed taxable.

Findings Supporting Taxability

  • The record did not support a finding that the facilities failed to provide refreshment, pleasure, or amusement to members.
  • The taxpayer’s advertisements on social media clearly attributed such benefits, despite later attempts to disown those statements.
  • There was no sufficient evidence to conclude that the assessed charges were solely for the privilege of membership.

Conclusion

Consequently, the initiation and membership charges were subject to Arkansas sales tax.

(Arkansas Administrative Hearing Decision, Dkt. Nos. 22-342, 22-343, 22-344, 05/17/2022.)

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