The Pennsylvania Department of Revenue (DOR) issued a sales and use tax ruling Jan. 31 clarifying that membership fees to join a professional association are taxable if the member receives tangible personal property in addition to non-taxable services in exchange for their dues payment.

While the ruling acknowledges that a membership fee in and of itself is not taxable, it states that “if the membership fee includes the transfer of taxable tangible personal property, in addition to nontaxable services, the entire charge for the membership is subject to tax.” Tangible personal property could include things like videos, books or other publications, apps and webinars or other goods digitally delivered, streamed or accessed.

The ruling has drawn the attention of membership associations in Pennsylvania and at least one organization – the Pennsylvania Institute of Certified Public Accountants – has reached out to the Pennsylvania Department of Revenue for a meeting. Since issuing the ruling, the DOR has pulled the ruling off the department’s website, but it’s unclear if the department is rethinking the ruling. Letter rulings from the DOR are not subject to a public review process before publication, and are intended as clarifying interpretations of existing tax law in the state.

This ruling is also concerning for national 501(c)(6) associations that may have members in Pennsylvania as it’s unclear if these groups would have to pay state sales tax on tangible property received by members in the state. ASAE is also concerned about the precedent this ruling would set for other states.