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Old 07-09-2014, 12:56 PM   #2 (permalink)
Ken
 
Join Date: Nov 21 2000
Location: Midwest
Posts: 198
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Re: ACA Tan Tax question

Quote:
Originally Posted by VitamenDee View Post
Trying to figure out the IRS position on free tans where the tan tax is concerned.

Example is giving away non-UV product with the purchase of a tan.

"buy this upgrade, get a free sample of this lotion"
This one's simple: UV upgrade costs $10 bucks, offer spend $10 for upgrade and get $10 lotion packet free. Tan Tax based on the $10 upgrade.

Quote:
Originally Posted by VitamenDee View Post

"buy this bottle of lotion, get a free tan in this amazing bed"

Is the IRS still going to demand a 10% tax on the retail of that offer?
Short version: Bottle of lotion retails for $50, Amazing bed single session retails for $25. Offer, spend $50 on bottle, get tan free. IRS view: Total value of lotion and service $75, ratio of taxable compared to full value $25 divided by $75 for 1/3, therefore, 1/3 of $50 price actually charged is taxable $50 x 1/3 = $16.67 taxable so tan tax is $1.67.
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