Clubs and dues have been around for decades, but the rise of certain memberships – and the ability to sell them over the Internet – have also raised the question of whether there's a sales tax on memberships and dues.

Ecommerce can involve many different types of memberships, often offering access to discounts or other benefits perceived as exclusive. Gym and fitness chains and warehouse retailers, for example, use the internet to sell memberships to their franchised businesses all over the country.

Here’s how complicated even just two types of the most popular memberships that are sold online can get.

Health and fitness club

In some states membership in one of these creates a sales tax obligation; in others it doesn’t. Nuances abound nationwide:

  • In Texas, memberships in health and fitness clubs are taxable as amusement services unless the membership is purchased under a written prescription for health maintenance; a new prescription is required for each membership renewal. 
  • In Missouri, sales tax on club memberships depends on what members get for their money. One club claimed that membership sales tax didn’t apply because members got, in addition to access to equipment for “recreation” or “amusement,” voting rights to help run the club. The state disagreed, claiming that the voting rights that would not incur sales tax were tied to the club’s initiation fee, not to the membership fee.
  • New York State and local sales taxes in the state are imposed on dues and membership fees paid to any athletic club in the state. “To be considered an athletic club, the club must be organized such that its members have an extensive role in the operation of the club,” the state statute reads, and can comprise such sports as tennis, golf, boating and skating.” Health and fitness facilities’ memberships do not incur NYS sales tax; these facilities provide customers or members with access to exercise equipment such as Pilates, aerobics and fitness studios, weight-reducing salons, spas, gyms, saunas, Turkish baths, tanning salons and similar businesses.
  • In South Carolina, membership fees to for-profit gyms can be exempt if the gym has aerobics/calisthenics, weightlifting or exercise, running tracks, racquetball and swimming pools. Throw in basketball courts, though, and there's a sales tax on gym memberships.
  • Ongoing discussions in Alaska to start a state-wide sales tax have pointed to taxing gym memberships as a service, not as goods.

IHRSA, the Global Health & Fitness Association, continues to contest sales tax on fitness and health club memberships.

“It’s pretty obvious that taxing health club memberships discourages people from exercising. What do lawmakers do when they want to discourage smoking or drinking too much sugar? They tax those products. So, why would lawmakers do the same to healthy lifestyles? Instead, policymakers should be actively encouraging physical activity,” the organization contends.

In recent years IHRSA lent its voice to prevent imposition of sales taxes on health club memberships in Maine, Pennsylvania, West Virginia, Wyoming, Georgia and Arizona.


Again, this sales tax on this kind of membership varies greatly by state. Membership fees paid solely in consideration for admission to “discount” department stores, retail outlets and wholesale clubs are not subject to Massachusetts sales tax, for instance. But in California, membership fees related to the anticipated retail sale of tangible personal property are includible in taxable gross receipts when either the retailer sells its products only to members and the membership fee exceeds a nominal amount or, regardless of the amount of the membership fee, the retailer sells its products for a lower price to a person who has paid the membership fee than to a person who has not paid the fee.

States don’t take sales tax on membership or dues lightly. South Carolina recently audited three years of retail bookstore Books-A-Million’s records and discovered that no sales tax was charged on Millionaire’s Club $25 memberships.

The state socked Books-A-Million with a $242,076.97 assessment for unpaid sales tax and the retailer lost appeals because under South Carolina law the sales of intangible memberships can be taxable if their value originates from the sale of taxable goods.

These are just examples of the array of sales tax laws on various kinds of memberships. It’s always safest to rely on sales tax experts to maintain your compliance. Contact TaxConnex to learn what it means when sales tax is all on us.

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.