Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 216 - Events, Amusements, and Other Related Activities › Rule 701-216.3 - Golf and Country Clubs and All Commercial Recreation

Current through Register Vol. 47, No. 3, July 24, 2024
All fees, dues or charges paid to golf and country clubs are
				  subject to tax. "Country clubs" include all clubs or clubhouses providing golf
				  and other athletic sports for members. Persons providing facilities for
				  recreation for a charge are rendering, furnishing or performing a service, the
				  sales price of which is subject to tax. "Recreation" includes all activities
				  pursued for pleasure, including sports, games and activities that promote
				  physical fitness, but does not include admissions otherwise taxed under Iowa
				  Code section 423.2.
(1) Dance schools are the only schools the
				services of which are taxable under Iowa Code section
				423.2(6). Rule
				701-216.2 (423) contains
				information on dance schools and dance studios. The sales price from any school
				providing training services in any activity pursued for pleasure or recreation
				shall not be subject to tax, unless the school is a dance school.
(2) If a person provides both facilities for
				recreation and instruction in recreational activities, charges for instruction
				in the recreational activities shall not be subject to tax if all of the
				following circumstances exist:
a. The
				instruction charges are contracted for separately, separately billed, and
				reasonable in amount when compared to the taxable charges of providing
				facilities for recreation.
EXAMPLE: An ice skating rink offers three membership plans.
				  The first membership plan provides only instruction in the activity of ice
				  skating. The second plan allows for the use of the rink's facilities, but
				  provides for no instruction in ice skating. The third plan allows the customer
				  to participate in a certain number of ice skating classes and also allows use
				  of the rink's facilities without instruction. Customer charges for the first
				  plan would not be subject to tax. Customer charges for the second plan would be
				  subject to tax. Charges for the third plan would be subject to tax if billed in
				  one lump sum. If, under the third plan, charges to the customer for instruction
				  and use are separately stated, and the charges for instruction are not
				  unreasonable, the charges for instruction shall be exempt from tax. If it is
				  necessary to pay for instruction to secure use of the facilities for
				  recreation, charges for the instruction are a part of the gross receipts from
				  commercial recreation and shall be subject to tax.
b. The persons receiving the instruction must
				be under the guidance and direction of a person training them in how to perform
				the recreational activity. If the persons receiving what purports to be
				"instruction" are allowed any substantial amount of time to pursue recreational
				activities, no instruction is taking place. The instruction should be received
				in what would ordinarily be thought of as a "class" with a fixed time and place
				for meeting. The instruction need not be received in what would ordinarily be
				thought of as a "classroom," but the instructor and the persons receiving
				instruction should be segregated from persons engaging in recreational activity
				insofar as this is possible. Instruction may still occur if complete or partial
				segregation is impossible.
EXAMPLE 1: A golf pro offers instruction to students on a
				  golf course. The students cannot circulate around the golf course in a group
				  with the golf pro because this would slow the play of golfers following such a
				  group and lead to complaints. The students circulate on the course
				  individually, and the golf pro observes the play of each student and comments
				  upon it. Even though no segregation of the individual students into any sort of
				  a class is possible, the students are receiving instruction from the golf pro
				  and, therefore, no taxable event occurs.
EXAMPLE 2: A retailer maintains a golf driving range. There
				  are separate tee-off positions for each customer to practice driving golf
				  balls. There is also an instructor in driving present. The instructor cannot
				  reserve individual tee-off positions for instruction of students because the
				  positions are filled on a first-come, first-served basis. When students come
				  for instruction, the instructor must make use of whatever tee-off positions are
				  available. Even though segregation of students from other customers is
				  impossible, instruction exists and, therefore, no taxable event
				  occurs.
c. The "instruction"
				must impart to the learner a level of knowledge or skill in the recreational
				activity that would not be known to the ordinary person engaging in the
				recreational activity without instruction. Also, the person providing the
				instruction must have received some special training in the recreational
				activity taught if charges for that person's instruction are to be exempt from
				tax.
This rule is intended to implement Iowa Code section
				  423.2(6)
"v."