IRS Finalizes Tanning Tax Regulations (for Now)

[kcjenkins]

The Internal Revenue Service has finalized the regulations for the 10 percent excise tax on indoor tanning services that was included as part of the health care reform law. The IRS originally issued regulations in 2010 on the tax (see IRS Publishes Regulations on Tanning Tax), but finalized them on Monday, with some changes, and removed their status as temporary regulations. The tax originally went into effect on July 1, 2010, but they are superseded by the latest version, which applies on or after June 11, 2013. [Don't you just love those odd dates?]

However, there may be further revisions in the future. Public comments on the 2010 regulations identified two issues that the IRS and the Treasury Department said they would study further and on which the IRS and the Treasury Department request additional comments. Those issues involve the treatment of bundled services and undesignated payment cards.

Physical Fitness Facilities Exception

Among the issues dealt with in the latest regulations, commenters questioned the exception for Qualified Physical Fitness Facilities in the 2010 regulations. The 2010 regulations exempt from the tax any membership fee paid to a QPFF that includes access to indoor tanning services. In a QPFF, taking into consideration all of the facts and circumstances, the predominant business or activity of the facility is to serve as a physical fitness facility. The 2010 regulations limit the definition of a QPFF to a business that does not charge separately for indoor tanning services, offer such services to the general public, or offer different membership fee rates based on access to indoor tanning services.

Commenters stated that an exception for QPFFs does not appear in the law and suggested that there is no compelling reason to differentiate these facilities from other indoor tanning service facilities. The commenters argued that while other providers of bundled services must use a complicated method of determining the amount attributable to indoor tanning services, QPFFs are exempt from the tax even though they provide the same indoor tanning services. Thus, these commenters suggested, the exception for QPFFs creates an unfair competitive advantage for some providers of indoor tanning services over others, and should not be included in the final regulations.

The final regulations do not adopt this suggestion. “Access to indoor tanning services is incidental to a QPFF’s predominant business or activity,” said the IRS. “Customers of a QPFF typically pay a monthly fee in exchange for access to all equipment in the QPFF, including any indoor tanning equipment. Requiring a QPFF to allocate its customers’ monthly membership fees among tanning and non-tanning services under such an arrangement would be burdensome and difficult to administer.”

In contrast, the IRS pointed out, non-QPFF providers of bundled goods and services typically offer indoor tanning services to customers as part of the purchase of a package of specific goods or services. This generally allows the provider to determine the portion of the purchase price that relates to the use of indoor tanning services by the customer and allocate the appropriate portion of the purchase price to those services.

Free and Discounted Tanning Services

Commenters also requested guidance on the application of the tax to free indoor tanning services and indoor tanning services that are sold at reduced rates. The final regulations provide that the tax only applies if an amount is paid for indoor tanning services. If services are provided at a reduced rate, the tax applies to the amount actually paid for the services.

http://www.accountingtoday.com/news/IRS-Finalizes-Tanning-Tax-Regulations-67101-1.html?ET=webcpa:e7241:61496a:&st=email

[jainen]

>>The Internal Revenue Service has finalized the regulations for the 10 percent excise tax on indoor tanning services<<

See, now, the government IS making great progress on the most pressing issues in tax reform! This one sped through in only three years. Of course there will always be critics whining that the subject is very narrow. But let me point out the enormously important fiscal policy issue that has been resolved here--If something is free, you shouldn't be assessed 10% tax. It was tough debate, but in the end IRS stuck to their principles even in the face of special interest lobbyists. They did the right thing, and I for one am proud to be an American where taxation is administered with common sense and fairness!

[GeneInAlabama]

Don't you just love it that when the government decides that something is harmful to your health, instead of banning it, they just find a way to make money off of it?

Edit: Kinda reminds me of the way Muslims punish women who do things they consider inappropriate, by raping them. (Might as well get some benefit from dishing out the punishment!)

[Guest Taxed]

Don't you just love it that when the government decides that something is harmful to your health, instead of banning it, they just find a way to make money off of it?

Edit: Kinda reminds me of the way Muslims punish women who do things they consider inappropriate, by raping them. (Might as well get some benefit from dishing out the punishment!)

I don't know how many muslims you have met or know that do that but i seriously doubt it is the norm. Perhaps a very small section of narrow minded extremists and losers do that. And if that happened in USA I hope the laws of USA would apply with full force regardless of religion. But then we can probably find similar isolated examples for other religions too.

One of my doctor is a muslim, originally from Iran and he is a decent person.