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COLUMBUS Supreme Court rules fees must be paid by country clubs



Published: Mon, January 21, 2002 @ 12:00 a.m.



Firestone Country Club in Akron is one of the four clubs involved in the case.

By MICHELE C. HLADIK

VINDICATOR CORRESPONDENT

COLUMBUS -- Membership initiation deposits or contributions to a country club are subject to state sales tax, according to a recent unanimous Ohio Supreme Court decision.

The court has ordered four northeast Ohio country clubs to make good on past due sales taxes for "initiation deposits" or "membership contributions." The four are Firestone Country Club in Akron, Quail Hollow Country Club in Painesville, Barrington Country Club of Aurora and Glenmoor Country Club in Canton.

The cases revolve around whether those fees or deposits for new members are considered loans or equity contributions that are not taxable under Ohio law.

"These labels serve only to disguise their true nature as fees or dues that are similar to an initiation fee," wrote Justice Francis Sweeney in the high court's official decision. After audits by the Ohio tax commissioner, the clubs were assessed for failing to collect and remit state sales tax on initiation deposits and membership contributions during these time periods. The audits focused on time between 1993 and 1997.

Overturned by board: The clubs appealed the assessment to the Ohio Board of Tax Appeals, which found the initiation deposits and membership contributions were not subject to state sales tax and overturned the tax commissioner's decision.

According to Justice Sweeney, the clubs argue the transactions are loans or equity contributions that are not taxable under provisions governing "recreation and sports club services" under Ohio law.

"We reject this argument," Justice Sweeney wrote.

He said the law includes country clubs in the definition of a "recreation and sports club" and that taxable services include "all transactions by which a membership is granted, maintained or renewed."




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