OUR THOUGHTS ON:

IRS Reports that Fewer Taxpayers than Expected are Paying the Tanning Excise Tax

Tax

By Ron Kramer

In March 2010, The Patient Protection and Affordable Care Act enacted a 10 percent excise tax on indoor tanning services. The tanning tax took effect on July 1, 2010, and is paid by the person receiving the tanning service and is collected (and remitted to the IRS) by the tanning salon.

The Treasury Inspector General for Tax Administration (TIGTA) recently issued a report that found fewer taxpayers than expected are paying the tanning excise tax. The Joint Committee on Taxation (JCT) originally estimated that the tanning tax would raise a little less than $50 million in the last quarter of fiscal 2010, and about $200 million for fiscal year 2011. The TIGTA report indicates that only $17.8 million in taxes were reported in the last quarter of fiscal 2010, and only $36.6 million has been raised in the first half of fiscal 2011, far short of original estimates.

The IRS estimated that about 25,000 tanning businesses would be affected by the new excise tax; however, only about 10,300 tanning businesses have filed excise tax returns for the first three quarters in which the tanning tax has been in existence. Has the tanning excise tax had that significant of an effect on the tanning business? I see a lot of pale faces in Pittsburgh!

For more on the tanning excise tax see Tanning Beds and Donut Holes. These Are a Few of My Favorite Things.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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