On June 11, 2013, the Internal Revenue Service published the final regulations on the excise tax on indoor tanning services.
Unfortunately, but not unexpectedly, the IRS chose to ignore the concerns we and others in the industry raised and did not make changes to the proposed regulations in several key areas.
By deciding that “qualified” fitness facilities can continue to avoid the Tan Tax if UV tanning services are not essentially subject to a separate charge, the IRS ignored ample evidence that those centers are improperly exploiting a loophole to create a competitive advantage over professional indoor tanning facilities.
The IRS further penalized the industry by ruling that registration and freeze fees are subject to the 10% excise tax, in spite of the fact that the fees do not pay for tanning services and are clearly unrelated to future taxable tanning services.
The only good news in the regulations is that the IRS clarified that free services are not subject to the tax.
The ITA will continue its efforts to get Congress to repeal this tax which, on its three year anniversary, has been responsible for the closure of thousands of small businesses, has been difficult and expensive for IRS to implement and is generating a mere fraction of the revenue that was projected when it was enacted.
To read the full text of the regulations and the explanation offered by the IRS for these decisions, please visit theita.com and click on the link “for more information regarding the tan tax regulations”.
A 14-year industry veteran, John "Ribby" Ribner has written hundreds of
articles for IST Magazine and, as Director of Editorial Content, has also
helped guide the publication's evolution. Ribby is a graduate of Central
Michigan University's journalism program and has brought many years of newspaper reporting experience to his position of Head Writer. He is also the author of three novels, "Legacy of the Bear," "Prophecy of the Bear" and "World So Dark."
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