Indoor Tanning Tax Final Regulations Issued
Sally P. Schreiber wrote in the Journal of Accountancy that:
On Monday, the IRS issued final regulations on the 10% excise tax that has been in effect for amounts paid for indoor tanning services since July 1, 2010 (T.D. 9621). The regulations, which apply to amounts paid on or after June 11, 2013, finalize proposed rules issued in 2010 when the tax first became effective and withdraw the temporary regulations issued at the same time (T.D. 9486; REG-112841-10). The final rules are slightly different from the proposed rules.
The regulations provide that “amount paid” includes all amounts paid to a tanning services provider for indoor tanning services, including any amount paid by insurance. Tans that are received as redemptions of “bonus points” in a loyalty program or “free” tans received after having a certain number of tans are not subject to the tax. Because many tanning salons sell other goods and services in addition to tanning services, the regulations provide rules for determining the tax when the provider charges for various goods and services in addition to the tanning services.
She went on to report:
The regulations carve out an exception for “qualified physical fitness facilities” that include access to indoor tanning facilities as part of a membership fee. The IRS has determined that where that access is incidental to a physical fitness facility’s predominant business, the amount attributable to the indoor tanning access is difficult to determine. Thus, amounts paid to qualified physical fitness facilities are not subject to the 10% tax. The regulations narrowly define “qualified physical fitness facility” to exclude businesses that predominantly engage in indoor tanning or other cosmetic services. Despite a number of commenters’ objections to this exception, the IRS retained these rules intact from the proposed regulations.
Read more at the Journal of Accountancy