Tanning Services Excise Tax

• Posted on July 6, 2010
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For indoor tanning services performed on or after July 1, 2010, a new 10% excise tax is imposed on the amount paid for any indoor tanning service, whether paid for by insurance or otherwise. The tax is imposed on tanning service recipients, although the service provider is liable for the collection and payment of the tax; thus, service providers are liable if they fail to collect the tax.

"Indoor tanning service" is a service that uses any electronic product that is designed to incorporate one or more ultraviolet lamps, and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in the air between 200 and 400 nanometers, to induce skin tanning.

The term “indoor tanning service” excludes phototherapy.  Phototherapy must be performed by, and on the premises of, a licensed medical professional for the treatment of: dermatological conditions, sleep disorders, seasonal affective disorder or other psychiatric disorders, neonatal jaundice, wound healing, or other medical conditions treatable by exposure to specific wavelengths of light.

In general, a payment for indoor tanning services is treated as made, and the liability for the tax is imposed, at the time it can reasonably be determined that the payment is made specifically for indoor tanning services.

o Gift Certificates & Gift Cards – Payment for tanning services is made when the card is redeemed, not when it is originally sold.

o Bundled Services – Payment for tanning services is made at the time the bundled services are purchased. (Temp. Reg § 49.5000B-1T(d)(3))

o Membership Fees – Where the tanning services are incidental to the overall services provided by a qualified physical fitness facility, the membership fee is not payment for tanning services.

o Other Goods & Services – If a payment covers indoor tanning services and other goods and services, the charges for the other goods and services may be excluded in computing the tax, but only if the charges (1) are separable, (2) do not exceed the fair market value of the goods and services, and (3) are shown in the exact amount in the records of the transaction. If the tax is not paid at the time payments for the tanning services are made, then to the extent that it is not collected, it has to be paid by the person performing the service.

The tax is to be remitted quarterly on IRS Form 720.  Where there are multiple locations, Form 720 must be filed for each separate EIN.  Semi-monthly deposits of tax are not required.