70 HASKINS & SELLS September
Taxable or Not Taxable
MANY discussions have arisen concerning
the liabilities and exemptions
of clubs under the admissions and
dues section of the Revenue Act of 1926.
There seems to be a general misunderstanding
as to the reason for the extra
10 per cent. charge on club dues and initiation
fees. Much of this discussion has
been caused by a pure lack of familiarity
with this section of the Act, since it states
very definitely the requirements and exemptions.
In the first place, part 2 of Regulations
43 relating to the taxes on dues and initiation
fees, provides that there shall be
levied a tax equivalent to 10 per cent. of
any amount paid as dues or membership
fees to any social, athletic, or sporting club
or organization, where the dues or fees of
an active resident annual member are in
excess of $10 a year. This tax is to be
paid by each member at the time of paying
his dues or membership fees.
Suppose Smith is an active resident
annual member of Evergreen Country
Club, and he pays dues of $15 a year. He
would have to pay a tax of $1.50 at the
time of paying such dues. Jones is an
associate member of the same club paying
$7.50 a year dues. Even though his dues
are under $10 a year, he nevertheless must
pay a tax of $0.75 at the time of paying the
