The U.S. Federal government on Friday finally published guidelines for the collection of the new 10 percent luxury tax on UV-related indoor tanning services, a supplemental tax crammed into 2010 Health Care Reform legislation as a revenue alternative to a 5 percent tax on Botox injections and elective cosmetic surgeries.
“In general, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return,” the U.S. Internal Revenue Service reported in a press release on Friday.
Dermatology lobbying groups — who proposed the tax along with lobbyists for Botox — successfully exempted their own usage of indoor tanning equipment for phototherapy-related cosmetic services. Dermatologists use indoor tanning equipment to treat psoriasis, eczema and other conditions. Additionally, more than 1 million indoor tanning clients are referred to tanning facilities by dermatologists for informal treatment of skin conditions.
Most surprisingly the IRS guidelines exempt fitness facilities who offer tanning as a part of a membership fee. “The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee,” IRS wrote.
The Indoor Tanning Association on Friday released a preliminary analysis of the regulations prepared by ITA’s tax counsel. ITA advised that its preliminary analysis was for informational purposes, that its advisors will continue to study the issue and that tanning businesses should get actual advice from their own tax advisors.
According to the ITA:
Smart Tan on Friday published a SmartTan.com poll showing that — just 20 days before the 10 percent luxury tax on tanning is to go into effect — 95 percent of tanning businesses said they had received no information on how to collect the tax.
To read the IRS press statement with a link to the agency’s publication of rules in the Federal Register click here.