A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. The first payment of the tax is due Monday, Nov. 1. The payment is made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn’t apply to phototherapy services performed by a licensed medical professional on his or her premises. There’s also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.
Here is a littleInformation With Regard to the Tanning Tax Part of the Affordable Healthcare Act of 2010:
Indoor tanning service providers are responsible for collecting the tax from the person paying for the service and in some situations, from the person receiving the service. Taxable indoor tanning service means a service employing any electronic product designed to incorporate one or more ultraviolet lamps intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning. This means the tax does not apply to spray tans or topical creams and lotions.
If the taxes is not collected from the person receiving the services, then the person receiving the payment for the indoor tanning service (usually, the provider of the service) is liable. The person receiving the payment for the indoor tanning service must report the indoor tanning services tax on and remit the full amount of tax with a timely filed return. Reporting the indoor tanning services tax must be done on Form 720.
The IRS is revising Form 720 to add a line for the indoor tanning services tax. All indoor tanning service providers who do not have an EIN must acquire an EIN in order to file and remit tax due on Form 720. It is also crucial to know that if a business has multiple establishments with multiple EIN’s they must remit a separate Form 720 for each EIN, they can not be lumped into one form. Also remember that Form 720 is filed quarterly and that the first return to report the indoor tanning services tax is due on Monday November 1st, 2010 for the third quarter period includes July, August and September 2010. Service providers who do not file Form 720 and remit the tax by the due date may be subject to a penalty, as will any person who intentionally fails to collect and remit the tax. The indoor tanning service provider must remit the full amount of tax with a timely filed Form 720. Excise tax deposits are not required for the tax on indoor tanning services.
Exclusions & Non-Exclusions:
Phototherapy Services are excluded from this tax but must meet the regultions and guidelines. Phototherapy service is a service which exposes an individual to specific wavelengths of light for the treatment of dermatological conditions, sleep disorders, seasonal affective disorder or other psychiatric disorder, neonatal jaundice, wound healing, or other medical condition determined by a licensed medical professional to be treatable by exposing the individual to specific wavelengths of light. It is exempt from the indoor tanning services tax if performed by a licensed medical professional on the medical professional’s premises.
Membership fees of Physical Fitness Facility are not subject to the indoor tanning services tax if the facility meets the definition of a “qualified physical fitness facility.” A “qualified physical fitness facility” is a facility (i) in which the predominant business or activity is providing facilities, equipment and services to its members for purposes of exercise and physical fitness, (ii) indoor tanning services is not a substantial part of its business and, (iii) it does not offer tanning services to the public for a fee or offer different pricing options to its members based on indoor tanning services. To determine the predominant business or activity all facts and circumstances should be considered including, but not limited to, the following:
- the cost of the equipment
- variety of services offered
- actual usage of services by customers
- revenue generated by different services and
- how the entity holds itself out to the public through advertising or other means.
Consult your Accountant or Tax Professional who would be most adept at being able to assess qualifications and applicability.
Tax Exempt Entities are not exempt from the Indoor Tanning Tax. For example Universities that offer this service, as part of an activities fee, still must remit payment of those taxes and are not exempt for this particular instance. Consult a trusted tax professional to see how this regulation may affect you.