Cal. Code Regs. Tit. 18, § 1584 - Membership Fees
(a)
Application of Tax.
(1) In General. Membership
fees related to the anticipated retail sale of tangible personal property are
includible in taxable gross receipts when either
(A) the retailer sells its products only to
members and the membership fee exceeds a nominal amount,
or
(B) regardless
of the amount of the membership fee, the retailer sells its products for a
lower price to a person who has paid the membership fee than to a person who
has not paid the fee.
(2)
The membership fees described in subdivision (a)(1)(A) or (a)(1)(B) are part of
the gross receipts of the person selling tangible personal property to a
member. It is immaterial that the person who sold the membership is not the
person who sells the tangible personal property to a member. Any sale of a
membership described in subdivision (a)(1)(A) or (a)(1)(B) is regarded as
related to the retail sale by the retailer selling tangible personal property
to a member, not by the person selling the membership, measured by the amounts
received by the person selling the membership.
(3) Incidental Sales. Charges for memberships
not related to anticipated retail transactions are not subject to tax. For
example, when a country club or similar organization charges fees (dues) to
members and provides substantial service benefits, e.g., the use of golfing,
tennis and swimming facilities, the membership fees are not related to sales
even though the organization may establish minimum meal and drink purchase
requirements for its members.
(4)
Consumer Cooperatives. Initial or periodic membership fees received by consumer
cooperatives, as defined in section
6011.1
and
6012.1
of the Revenue and Taxation Code, are not subject to tax.
(b) Nominal Amount.
(1) For purposes of this regulation,
beginning January 1, 2021, the term "nominal amount" means an amount totaling
$70 or less per year subject to increase as provided in subdivision (b)(2). For
periods from January 1, 2016, through December 31, 2020, the term "nominal
amount" for purposes of this regulation means an amount totaling $60 or less
per year. For periods from January 1, 2011, through December 31, 2015, the term
"nominal amount" for purposes of this regulation means an amount totaling $55
or less per year. For periods from January 1, 2006, through December 31, 2010,
the term "nominal amount" for purposes of this regulation means an amount
totaling $50 or less per year. For periods from January 1, 2001, through
December 31, 2005, the term "nominal amount" for purposes of this regulation
means an amount totaling $45 or less per year. For periods prior to January 1,
2001, the term "nominal amount" for purposes of this regulation meant an amount
totaling $40 or less per year. Amounts received for memberships which are in
conjunction with a basic membership (add-ons) are not considered a part of the
basic membership fee in determining the nominal amount of the basic membership.
Additional cards issued under the same membership number are sales of separate
memberships.
(2) During September
in the year 2000, and every five years thereafter, the threshold for the
nominal amount will be adjusted effective the following January 1, rounded to
the nearest $5, to reflect changes in the California Consumer Price Index
(CCPI) whenever that change is more than 5 percent higher than any previous
adjustment. For purposes of computing the CCPI increase, the June 30 CCPI index
of the computation year will be compared with the June 30 CCPI index of the
computation year which resulted in an adjusted nominal amount. For example, for
the January 1, 2026, adjustment computation, the CCPI index on June 30, 2025,
will be compared with the CCPI index on June 30, 2020. If no adjustment is made
at that time, the next comparison will be of the CCPI index on June 30, 2030,
with the CCPI index on June 30, 2020.
Notes
2. Change without regulatory effect amending subsections (b)(1) and (b)(2) filed 1-5-2001 pursuant to section 100, title 1, California Code of Regulations (Register 2001, No. 1).
3. New subsection (a)(2), subsection renumbering and amendment of newly designated subsection (a)(3) filed 7-27-2004; operative 8-26-2004 (Register 2004, No. 31).
4. Change without regulatory effect amending subsections (b)(1) and (b)(2) filed 1-10-2006 pursuant to section 100, title 1, California Code of Regulations (Register 2006, No. 2).
5. Change without regulatory effect repealing subsection (c) filed 5-13-2010 pursuant to section 100, title 1, California Code of Regulations (Register 2010, No. 20).
6. Change without regulatory effect amending subsections (b)(1)-(2) filed 1-12-2011 pursuant to section 100, title 1, California Code of Regulations (Register 2011, No. 2).
7. Change without regulatory effect amending subsections (b)(1)-(2) filed 12-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 50).
8. Amendment of subsections (b)(1)-(2) filed 5-25-2021; operative 5-25-2021. Submitted to OAL for filing and printing only. Exempt from the APA pursuant to Government Code section 15570.40(b) (Register 2021, No. 22).
Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6011.1, 6012 and 6012.1, Revenue and Taxation Code.
2. Change without regulatory effect amending subsections (b)(1) and (b)(2) filed 1-5-2001 pursuant to section 100, title 1, California Code of Regulations (Register 2001, No. 1).
3. New subsection (a)(2), subsection renumbering and amendment of newly designated subsection (a)(3) filed 7-27-2004; operative 8-26-2004 (Register 2004, No. 31).
4. Change without regulatory effect amending subsections (b)(1) and (b)(2) filed 1-10-2006 pursuant to section 100, title 1, California Code of Regulations (Register 2006, No. 2).
5. Change without regulatory effect repealing subsection (c) filed 5-13-2010 pursuant to section 100, title 1, California Code of Regulations (Register 2010, No. 20).
6. Change without regulatory effect amending subsections (b)(1)-(2) filed 1-12-2011 pursuant to section 100, title 1, California Code of Regulations (Register 2011, No. 2).
7. Change without regulatory effect amending subsections (b)(1)-(2) filed 12-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 50).
8. Amendment of subsections (b)(1)-(2) filed 5-25-2021; operative
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