ITA's Tan Tax Response

[Don Smith]

Indoor Tanning Association’s statement on the IRS’s final regulations on the excise tax on indoor tanning services

The Indoor Tanning Association is very disappointed 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 is acting outside of the plain letter of the statute and is picking winners and losers by exempting gyms from the tax.

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.

This is just another blow to thousands of struggling small businesses nationwide. Since 2009, more than 4000 businesses representing 20% of the industry have closed, resulting in thousands of lost jobs in the private sector. The tan tax has only compounded the problem. We estimate 10% of the businesses have closed nationwide as a direct result of the tan tax and data released by the IRS bears this out.

Congress should repeal this tax which, on the eve of its three year anniversary, 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.

http://www.theita.com/news/128450/Indoor-Tanning-Associations-statement-on-the-IRSs-final-regulations.htm

[peach]

Originally Posted by Don Smith

Indoor Tanning Association’s statement on the IRS’s final regulations on the excise tax on indoor tanning services

The Indoor Tanning Association is very disappointed 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 is acting outside of the plain letter of the statute and is picking winners and losers by exempting gyms from the tax.

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.

This is just another blow to thousands of struggling small businesses nationwide. Since 2009, more than 4000 businesses representing 20% of the industry have closed, resulting in thousands of lost jobs in the private sector. The tan tax has only compounded the problem. We estimate 10% of the businesses have closed nationwide as a direct result of the tan tax and data released by the IRS bears this out.

Congress should repeal this tax which, on the eve of its three year anniversary, 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.

http://www.theita.com/news/128450/Indoor-Tanning-Associations-statement-on-the-IRSs-final-regulations.htm

All true and all good points; however, when was the last time the government repealed an excise tax? It was never about income to the govt., it was a favor to the AMA for supporting Obamacare, and that is why it will remain.

[Black Sun]

Then tanning salons need to throw in a couple of 'circuit' machines and change the name of biz to reflect 'health' and 'workout'.

If you can't fight 'em..

[Black Sun]

Then tanning salons need to throw in a couple of 'circuit' machines and change the name of biz to reflect 'health' and 'workout'.

If you can't fight 'em..

[peach]

Originally Posted by Black Sun

Then tanning salons need to throw in a couple of 'circuit' machines and change the name of biz to reflect 'health' and 'workout'.

If you can't fight 'em..

You are absolutely right. Change your name to "ABC Tan and fitness"
Put an elliptical in your lobby, sell tan and fitness memberships together in a package and you are good to go.

[parrot head]

^^^^Do you suppose, that this would be constued as fraud? You're kidding, right? I could understand, if a new salon was opening, you could do this, but changing in mid-stream, would cause a red flag. One would be audited for sure.

[peach]

Originally Posted by parrot head

^^^^Do you suppose, that this would be constued as fraud? You're kidding, right? I could understand, if a new salon was opening, you could do this, but changing in mid-stream, would cause a red flag. One would be audited for sure.

Why? Is it against the law to adapt to the tax code when it is changed or when you find it to your advantage to change your business to take advantage of a clarification in the tax code? Is it against the law for Apple to park 100 billion dollars in Ireland? Do you know that Ted Turner and Bon Jovi get huge tax breaks tax wise because they put a couple of beehives on their 100's of acres of real estate? It is perfectly legal, bottom line. What is worse, getting audited or losing your livelihood? This industry is running so scared, it is silly.

[parrot head]

^^^Nobody, maybe one customer, has even mentioned, or been critical of the Tan Tax. If the tan tax causes salons to close, then they wouldn't have lasted long anyway. Like I said, don't screw with the IRS, and do something stupid, like changing your name and adding a treadmill in your lobby. Can we now talk about something intelligent, in trying get around paying this tax. If you can't beat them, buy them. Buy yourself a Snap Fitness, put in 20 beds, and be legal in the eyes of the IRS.

[peach]

Originally Posted by parrot head

^^^Nobody, maybe one customer, has even mentioned, or been critical of the Tan Tax. If the tan tax causes salons to close, then they wouldn't have lasted long anyway. Like I said, don't screw with the IRS, and do something stupid, like changing your name and adding a treadmill in your lobby. Can we now talk about something intelligent, in trying get around paying this tax. If you can't beat them, buy them. Buy yourself a Snap Fitness, put in 20 beds, and be legal in the eyes of the IRS.

I don't want to open the can of worms on the tan tax. It is the law and I comply. The bottom line is that it is bad for the industry. It has cost jobs, and it puts money that would normally put in your pocket in theirs. It's a federal shakedown. I wouldn't put 1 treadmill in-I would put many. I would be legit; as legit as any fitness franchise hiding behind its name.

[Turbo Girl]

I guess for me, it's not so much about the tan tax dollars....it's more about the negative connotation. Taxing tanning really sends the message that tanning IS bad like alcohol, cigarettes, etc.

Like Parrot said, the tax is passed on to the customer, therefore it was never "ours" to begin with.

And of course, the medical and fitness exemptions all in the so called name of health (a/k/a dollars). It is absolutely discriminatory.