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Finding The Fair Way

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As states look to balance budgets, greens and membership fees become tax targets

With most state budgets in tatters, nothing is off limits for politicians when it comes to finding new or enhanced sources of revenue. 

In 2006, when New Jersey’s budget wasn’t in anywhere near as bad a shape as it is today, the government came a knockin’ on clubhouse doors for taxes on greens and membership fees.  Then, golf course owners were successful in preventing their imposition. 

One year later, with the state’s budget in worse condition and the government in greater earnest in finding additional revenue, the state again came after golf courses.  Several New Jersey chapter board members hired a lobbyist to stop the effort. 

While successful “in taking the tax on greens fees off the table,” according to Matt Galvin, president of the New Jersey Golf Course Owners Association (NJGCOA) and executive vice president & principal of the Monroe Township, New Jersey-based RDC Golf Group, course owners are still negotiating with the state on the tax on membership fees.

“Because greens fees are part of public and semi-private courses, legislators look at them as being associated with the common man,” Galvin says.  Membership fees, however, are a different case because they provide a primary source of revenue for private clubs.  “So much for the common man when you talk to legislators about country clubs,” he says.  

“The current administration has implemented the rule that all eliminated revenue sources must be replaced, and golf course fees are seemingly easy targets,” says Joel Moore, NJGCOA vice president and owner of The Ridge at Back Brook, a private club in Ringoes, New Jersey.

The rub is that the state wants to tax initiation deposits that course owners contend are refundable and thus not liable to taxation.  “These deposits are carried on a club’s books as a liability, not as sales revenue so why should they be taxed,” Moore asks? 

The group of course owners has taken the fight to the state’s Division of Taxation. 

“The nonrefundable portion of a private-club initiation fee could be considered as revenue from a sale and thus taxable, but we also are arguing that part of the nonrefundable portion should be designated as being similar to a greens fee and thus not taxable – a kind of prepaid greens fee,” he says.  “The book is by no means closed on this issue, but we feel strongly that our position will prevail.”


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