SN 92(22)

Charges for Participation in Athletic or
Sporting Activities Provided by Exempt Entities

This publication has been obsoleted by AN 95(3)

BACKGROUND: 1991 Pub. Acts. 3, §103 (June Spec. Sess.) imposed sales and use taxes on charges for amusement and recreation services included in Major Group 79 of the Standard Industrial Classification Manual, but excluded such services from taxation when provided by an exempt entity (see "DEFINITIONS"). Subsequently, in its May 1992 Special Session, the General Assembly removed a portion of this exclusion accorded to exempt entities by imposing sales and use taxes on their charges or fees for participation in an athletic or sporting activity, other than an activity organized exclusively for persons under the age of nineteen.

PURPOSE: This Special Notice describes when sales and use taxes apply to charges made by exempt entities for participation in athletic or sporting activities.

DEFINITIONS: The statutory language "persons exempt from taxation under Conn. Gen. Stat. §12-412 (1), (5) or (8)" refers to the State of Connecticut and its municipalities and its or their respective agencies; nonprofit charitable hospitals; and nonprofit charitable, religious or educational organizations which hold a Connecticut Charitable and Religious Organizations Exemption Permit (E-Number). As used in this Special Notice, the term "exempt entity" or "exempt entities" will be used to describe such organizations.

EFFECTIVE DATE (S): July 1, 1992, except as otherwise noted.

STATUTORY AUTHORITY: 1992 Conn. Pub. Acts 17, §§18, 19 and 55 (May Spec. Sess.).

CHANGES TO THE TAXABILITY OF AMUSEMENT AND RECREATION SERVICES: Effective July 1, 1992, sales and use taxes are imposed on charges made by an exempt entity which entitle a person to participate in an athletic or sporting activity that is not organized exclusively for patrons under the age of nineteen. Charges to play golf on municipally owned and operated golf courses do not become taxable until January 1, 1993, and charges to participate in swimming activities offered by exempt entities do not become taxable until July 1, 1993.

Charges for participation in an athletic or sporting activity organized exclusively for persons under the age of nineteen are not subject to sales and use taxes. For example, if an athletic or sporting activity is not organized exclusively for persons under the age of nineteen (such as a track meet for all age groups), then charges for participation to persons under the age of nineteen are taxable because the activity is not organized exclusively for persons under the age of nineteen. On the other hand, charges for participation in a youth sports league are not taxable.

In order for the charge or fee for participation to be taxable, such charge or fee must be directly related to a person's participation in a specific athletic or sporting activity which is organized by an exempt entity. Examples of such specific athletic or sporting activities, whether organized on a group or individual ("walk-in" or "drop-in") basis, include basketball, badminton, baseball, field hockey, floor hockey, football, gymnastics, handball, ice hockey, ice skating, lacrosse, martial arts, paddle tennis, racquetball, road running, roller skating, sailing, scuba, soccer, softball, squash, tennis, track and field activities, volleyball, golf (on and after January 1, 1993) and swimming (on and after July 1, 1993).

Charges for participation in an athletic or sporting activity made by an exempt entity do not include charges for:

• membership that allows the unlimited use of the entity's recreation facility or facilities and that is not directly related to participation in a specific athletic or sporting activity. For example, if a Connecticut municipality operates a swimming pool and charges a fee (whether daily or seasonal) for the use thereof, the fee is taxable because it is directly related to a specific athletic or sporting activity (swimming). On the other hand, if an exempt organization charges a fee (whether daily, seasonal or annual) that allows its members to use all its facilities; for example, one fee to use its swimming pool, gymnasium, weight room and racquetball courts; the fee is not taxable because it is not directly related to a specific athletic or sporting activity.
• instruction in a particular athletic or sporting activity; or
• classes involving general fitness or physical wellness activities including, but not limited to, aerobics-type classes, exercise and fitness classes, yoga, etc.

Accordingly, such charges, when made by an exempt entity, are not subject to tax.

EDUCATIONAL INSTITUTIONS: Charges for participation in athletic or sporting activities made by public and private educational institutions to their students, faculty and staff are considered to be part of the educational purpose of the institutions and are not subject to tax, even if a separate fee is charged for such participation. However, when educational institutions charge members of the general public, including alumni or alumnae, to participate in a specific athletic or sporting activity, charges made by the educational institutions are treated as charges for participation in athletic or sporting activities and are subject to sales and use taxes.

LEASE OR RENTAL OF FACILITIES: When an exempt entity leases its athletic or recreational facilities, including fields, to an outside group that provides amusement or recreation services, the leasing charges made by the exempt entity are not subject to sales and use taxes; however, the outside group is considered to be a retailer of amusement and recreation services and must register for purposes of the Sales and Use Taxes Act by completing Form REG-1 (Application for Tax Registration Number). The outside group's charges for those services are subject to sales and use taxes. For example, a municipal recreation department leases its softball fields to a softball league. The leasing charges made by the recreation department to the softball league are not taxable. The softball league must register for purposes of the Sales and Use Taxes Act. The softball league's charges to teams or players for participation in a specific athletic or sporting activity (softball) are taxable.

MUNICIPALLY OWNED AND OPERATED GOLF COURSES: Daily and seasonal charges for playing golf at a municipally owned and operated golf course will become subject to sales and use taxes on or after January 1, 1993. Daily and seasonal charges for playing golf at a municipally owned and operated golf course are, and remain on and after January 1, 1993, exempt from the admissions tax.

MUNICIPALLY OWNED BUT PRIVATELY OPERATED GOLF COURSES: Daily charges for playing golf at a municipally owned but privately operated golf course are and will remain subject to sales and use taxes. Seasonal charges for playing golf at a municipally owned but privately operated golf course are and will remain subject to the admissions tax.

REGISTRATION: Exempt organizations making charges for participation in athletic or sporting activities must register for purposes of the Sales and Use Taxes Act by completing Form REG-1 (Application for Tax Registration Number). 

SN 92(22)
Sales and use taxes
Amusement and recreation services
Issued 10/30/92