TAX NEWS - 2010

Tanning tax begins Thursday

A new federal tanning tax begins Thursday.

Many businesses offering tanning services must collect a 10 percent excise tax on their services. This requirement is part of a healthcare reform bill that was enacted in March.

The IRS has provided nine tips on the tanning excise tax:

- Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.

- If the customer fails to pay the excise tax, the tanning service provider is liable for the tanning tax.

- The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.

- The tax does not apply to spray-on tanning services.

- If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tanning tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.

- If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.

- The tanning tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.

- Tanning service providers must report and pay the excise tax on a quarterly basis.

- To pay tanning tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS.