IRS Sheds Light on Tanning Tax Guidance

To help tanning salons that will need to start collecting a 10 percent excise tax on their tanning services starting July 1, the IRS has released guidance on what should be taxed and when. The tanning tax is part of the Affordable Care Act that was enacted in March.

According to the IRS, tanning services providers must collect the 10 percent excise tax at the time the customer pays for the tanning services. If the customer does not pay the excise tax, the provider is liable for the tax.

Additionally, when a customer purchases a bundle of services or pays for goods along with the tanning service, the provider must apply the tax to the portion of the payment that can be attributed to indoor tanning services, not the total amount of the bill. Providers are required to report and pay the excise tax on a quarterly basis and can do so by filing Form 720, Quarterly Federal Excise Tax Return.

Tanning services providers do not have to collect tax on spray tan services or phototherapy services performed by a licensed medical professional in his or her office. The tax also does not apply to membership fees for fitness facilities that offer indoor tanning as an incidental service without a separately identifiable fee.