With the continuous efforts to Repeal and Replace Affordable Healthcare Act (ACA), they have also decided to include tax provisions related to the ACA.
Let's Discuss the Tanning Tax today!
Currently retail sales tax is imposed on indoor tanning services is 10% of the total cost, regardless if there is an insurance payment or reimbursement. Any company that imposes taxes on their clients must turn ALL those monies collected to the Federal Government, based on the companies tax schedule. This case is no different, however the tanning tax collected should be remitted to the Federal government on a quarterly basis. Thus Consumers (anyone trying to get darker by getting a tan) pays the taxes , that is their liability. I have not investigated the % increase from pre ACA to ACA but I have to say if this has to make a lot of tanners very upset, where there is a repeal to reduce a tax for tanning. Moving along the current law goes on to explain the loophole as there is always at least one that is easily identifiable. Which is the below:
Indoor tanning services are services employing any electronic product designed to induce skin tanning and which incorporate one or more ultraviolet lamps with wavelengths in air between 200 and 400 nanometers. Taxable services do not include phototherapy services performed by a licensed medical professional. There is also an exemption for qualified physical fitness facilities that meet certain criteria and offer tanning as an incidental service to members without a separately identifiable fee.
This is copied right out of the JCT description so we can clearly identify the loophole here so I won't even go into that. I will move on to the proposal.
The Description of Proposal states that the tax on indoor tanning services applies for services performed proper to January 1, 2018. Thus does not apply to services performed after December 31, 2017. That's it! Really! So basically they are getting rid of the tanning tax, why? I haven't seen any reasoning in these documents. To further discredit themselves they also stated that the Loss from this repeal will be less than $50 million dollars in just 2018.
Who Stands to benefit the most from the repeal of the tanning tax?
We're Here to Help
Get advice from our experienced network of financial managers.
If you Value our Blog, We have an ask.
We spend hours researching data to help you understand your finances and taxes, including historical context, issues, and solutions. Our goal is to empower people to improve their relationship with money. Please consider a $3 donation today.
Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.