Twinbrook Swimming Pool Corp. v. Comptroller of the Treasury

Singley, J., delivered the opinion of the Court. This is an appeal from an order of the Maryland Tax Court, which affirmed the Comptroller of the Treasury’s disallowance of a claim for the refund of admissions taxes in the amount of $6,263.01 collected for the tax years 1970,1971 and 1972, from Twinbrook Swimming Pool Corporation (Twinbrook). We propose to reverse the order of the Tax Court and remand the case for the entry of an order directing that the refund claimed be made by the Comptroller. There was testimony that Twinbrook was organized in 1955 for the purpose of constructing a community swimming pool near Rockville, Maryland.

The bylaws provided for a maximum of 600 life memberships to be held by families living in certain residential areas. Each family which holds a life membership made an initial contribution of $200.00, and currently pays annual dues of $55.00. For the first time in the 1970 tax year, annual memberships were offered to other families at a charge of $125.00. In both categories, members of each household are entitled to use the pool without additional charge, except for tne fees which are exacted for guests.

Twinbrook is located on a fenced site of about five acres, which is lighted. The pool is of Olympic size with a well and two diving boards. In addition to the pool, there is a two-story building which houses a snack bar and dressing rooms, and a hard surfaced parking lot. The facility opens on Memorial Day and closes on Labor Day.

Twinbrook is not authorized to issue stock and is not operated for profit. It would seem that the Comptroller imposed a tax on the dues paid for both life memberships and annual ⁹⁰ memberships. Twenty-five percent was deducted from the dues paid for life memberships prior to the computation of this tax on the theory that this amount was expended for the maintenance of Twinbrook’s property. 1 Our present statute, Maryland Code (1957,1969 Repl. Vol., 1974 Cum.

Supp.) Art. 81, § 402 (a) provides for the levy of an admissions and amusement tax by the counties. It is quoted in part: “Effective July 1, 1972, any county by resolution may levy a tax on the gross receipts of every person, firm or corporation obtained from sources within the county derived from the amounts charged for (1) admission to any place, whether the admission be by single ticket, season ticket or subscription, including a cover charge for seats or tables at any roof garden, cabaret or other similar place where there is furnished a performance, if payment of the amounts entitles the patron thereof to be present during any portion of the performance; (2) admission within an enclosure in addition to the initial charge for admission to the enclosure; (3) the use of sporting or recreational facilities or equipment, including the rental of sporting or recreational equipment; and (4) refreshment, service or merchandise at any roof garden, cabaret or similar place where there is furnished a performance.” “. . . The tax levied by this subsection shall be collected by the Comptroller.” Montgomery County has been authorized to impose an admissions tax since 1 July 1969, when Code (1957, 1969 ⁹¹ Repl. Vol.) Art. 81, § 403 was amended by chapter 755 of the Laws of 1969.

Although Art. 81, § 403 (later § 402) was amended at each session of the General Assembly in the years 1969-1973, except for adjustments made to the State tax rate, 2 the amendments are of no significance here. For a discussion of the transfer of the power to levy an admissions tax from the State to the political subdivisions see 57 Op. Att’y Gen. 680, 681 (1972). By resolution 7-207, adopted 21 May 1971, Laws of Montgomery County (19711 at 448, the Montgomery County Council imposed a tax of 9V2% effective 1 July 1971.

The County Council reduced the tax rate effective 1 July 1972 to 4V2% by resolution 7-538 adopted 14 December 1971. In response to Laws of 1972, ch. 689, § 2 which continued the State tax of V2% from 1 July 1972 to 2 January 1973, the County, by resolution 7-832 adopted 15 August 1972, lowered its admissions tax from 4V2% to 4% for this six-month period. The resolution also reinstated the 4V2% tax rate as of 3 January 1973 when the State totally eliminated its tax. The present County ordinance, with changes which are of no consequence here, is found at § 52-16A of the Montgomery County Code (1972, 1973 Cum.

Supp.): “The county council, pursuant to the authority granted in section 402, article 81, Annotated Code of Maryland, 1957, as amended, hereby levies a tax at the rate of four and one-half per centum of the gross receipts of every person, firm or corporation derived from the amounts charged in Montgomery County for (1) admission to any place, whether such admission be by single ticket, season ticket or subscription, including a cover charge for seats or tables at any roof garden, cabaret or other similar ⁹² place where there is furnished a performance when payment of such amounts entitles the patron thereof to be present during any portion of such performance, (2) admission within an enclosure in addition to the initial charge for admission to such enclosure, (3) the use of sporting or recreational facilities or equipment, including the rental of sporting or recreational equipment, and (4) refreshment, service or merchandise at any roof garden, cabaret or other similar place where there is furnished a performance.” For cases considering the admissions tax see Scoville Service, Inc. v. Comptroller, 269 Md. 390 , 306 A. 2d 534 (1973); Villa Nova Night Club, Inc. v. Comptroller, 256 Md. 381 , 260 A. 2d 307 (1970); Fair Lanes, Inc. v. Comptroller, 239 Md. 157 , 210 A. 2d 821 (1965). Attorney General Hall Hammond (later a member of this Court), on two occasions considered the question whether club dues were subject to the admissions tax. In 33 Op. Att’y Gen. 373. 374-75 (1948), he said: “From studying the wording of this Section of the Act and the entire Act itself, it seems to us that it was the intention of the Legislature to place the tax on admissions and not on membership dues.

From the practical standpoint, it is well known that membership dues in a country club are spent, in the majority, for other than recreational or sports facilities. From the proceeds of the membership dues, taxes are paid, interest on outstanding indebtedness and capital indebtedness, costs of food over and above the cost paid by members at the time the meal is served, salaries of officers and employees are paid, and actually all of the operating expenses of the club are paid from membership dues. In fact, many members of country clubs retain their membership and pay membership