Sponsored by:
Assemblywoman ALISON LITTELL MCHOSE
District 24 (Sussex, Hunterdon and Morris)
Co-Sponsored by:
Assemblyman Chiusano
SYNOPSIS
Exempts certain lake association membership fees and dues from imposition of sales and use tax.
CURRENT VERSION OF TEXT
As introduced.
An Act exempting certain lake association membership fees and dues from the imposition of the sales and use tax, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Charges in the nature of initiation fees, membership fees or dues for access to or use of the property or facilities of a private lake association are exempt from the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).
b. The director, in consultation with the Commissioner of the Department of Environmental Protection, may promulgate, in accordance with the "Administrative Procedure Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.), rules and regulations necessary to effectuate the purposes of subsection a. of this section.
2. This act shall take effect immediately and apply to membership periods beginning on or after the first day of the fourth month next following the date of enactment.
STATEMENT
This bill provides a sales and use tax exemption for initiation and membership fees or dues charged for access to or use of the property or facilities of a private lake association.
Initiation and membership fees or dues are charges for the right, privilege, or entitlement to the use of a club or organization's property or facilities, and are typically paid by those who have met the requirements for membership. Examples include monthly membership dues charged by health and fitness facilities, one-time initiation fees charged by country clubs, and the registration or enrollment fees or dues charged by county or municipal swim or golf clubs or organizations.
Since 2006, theses fees or dues charged for access to or use of the property or facilities of a health and fitness, athletic, sporting, or shopping club or organization in this State have been subject to the sales and use tax, unless the club or organization's members are predominately age 18 or younger. In 2007, the law was amended and the under-18 exclusion expanded to eliminate from tax the fees or dues charged by governmental and charitable non-profit clubs or organizations that have applied for, and have been granted, sales tax exempt status by the Division of Taxation.
Under current law, initiation and membership fees or dues charged by private lake associations are generally subject to tax if the fees or dues are not required as a condition of ownership in the community. Lake associations are formed and organized, in part, to promote and facilitate athletic or sporting activities, and the fees and dues charged for membership entitle or otherwise convey rights and privileges to property and facilities which are unavailable to non-members.
However, the promotion of athletic and sporting activities is an ancillary part of the overall purpose and function of many private lake associations. In addition to recreational opportunities they provide, lake associations serve to strengthen communities, promote cultural and civic events, and preserve and protect the inland waterways, and the ecosystems of the inland waterways, their communities are centered upon. Their efforts to improve water quality, strengthen infrastructure, and protect woodlands and open space for current and future generations far outweigh their athletic or sporting nature.
The exemption provided by the bill will ensure a small, ancillary part of a lake association's overall purpose and mission is not used to characterize private lakes associations as athletic or sporting clubs or organizations for purposes of taxation. Additionally, the exemption will remove a disincentive for membership and reduce the total costs associated with their annual or monthly fees or dues.