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Old 07-09-2014, 10:49 AM   #1 (permalink)
 
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ACA Tan Tax question

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"

or

"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?
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Old 07-09-2014, 12:56 PM   #2 (permalink)
Ken
 
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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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Old 07-09-2014, 01:12 PM   #3 (permalink)
 
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Wink Re: ACA Tan Tax question

you just made me feel incredibly stupid ... but in a good way =)

Thank you for the reply
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Old 07-09-2014, 10:39 PM   #4 (permalink)
 
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Re: ACA Tan Tax question

50.00 come under sale tax 25 come under tan tax so the tan tax would be 2.50. also what about free tanning for your employee, to me it for the sale of the product you are selling. We want our employee looking tan. It like the uniform, they are wearing.
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Old 07-10-2014, 06:43 AM   #5 (permalink)
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Re: ACA Tan Tax question

VitaminDee, no need to feel stupid. The whole tan tax thing is incredibly stupid.

Suncity - the tan tax in the 2nd example is $1.67, not $2.50. That's per IRS guidance.
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Old 07-10-2014, 10:37 PM   #6 (permalink)
 
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Re: ACA Tan Tax question

You are double taxing the customer for sale tax plus tan tax. For 1 service.

Sale tax Mass 6.25

Tan tax 10.00

in your example you are showing sale & tan tax together not so, for we are dealing with federal tax only.
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