Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 295.1384


295.1384 Membership Fees. A taxpayer operated a service whereby it sold memberships which permitted the purchaser thereof to purchase goods at reduced prices. The lifetime membership fee was $399.90 and there was a charge for the first and second annual account maintenance at $12.00 per year for a total of $24.00.

For sales and use tax purposes, amounts charged and received for such services constitute taxable gross receipts when such services are in connection with sales of tangible personal property and relate to anticipated retail sales. Thus, such membership fees and account maintenance charges are subject to tax. However, if a purchaser never purchased any goods, the fees and charges would not be subject to the tax. The burden of proving that some purchasers never purchased any goods is upon the taxpayer. 4/12/73.