Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 515.1182


515.1182 Membership Fees. A taxpayer, for an annual membership fee of $500 plus a one-time administrative fee of $150, provides member access to a wide range of nontaxable services and the member is entitled to "specially priced products" from business consultants who are unrelated to the taxpayer (i.e., the taxpayer does not receive commission or other compensation with respect to sales made by the business consultants). The taxpayer also provides its members canned software which has a retail value of $179, but cost the taxpayer $49.

The software is not provided to each member because it is only beneficial to some of the members. No adjustment in fees is made if the software is not provided. Members also receive the following items which are tangible personal property: 1) a Business Health Index Survey, 2) a Solution Report, 3) a Business Expense Audit, and 4) a quarterly Newsletter.

The value of the tangible personal property provided the members, including the canned software, appears to be minimal in relation to the services provided. It also appears that members join for access to professional services. Based on the facts, the membership fees are not considered taxable and the taxpayer is the consumer of all of the tangible personal property provided to the members. Accordingly, the firm is the consumer of property which it furnishes. 1/27/94.