Tanning tax

Last updated

The tanning tax is a ten percent federal excise tax that the U.S. government requires tanning providers to collect on indoor tanning services. Tanning service providers must pay the tax each quarter to the IRS. [1] The ten percent tax must be collected from the client, according to the IRS, similar to the collection of a sales tax. [2]

Contents

History

The tanning tax originates from passage of the Patient Protection and Affordable Care Act, also known as Obamacare. [3] The tax was among 21 new taxes that were included in the law. [4]

According to Forbes , the tax was expected to raise $2.7 billion over the first decade. After five years of the tax going into effect, it raised less than $500 million. [3]

Exclusions

Phototherapy services, which the IRS defines as a "service which exposes an individual to specific wavelengths of light for the treatment of dermatological conditions, sleep disorders, seasonal affective disorder or other psychiatric disorder, neonatal jaundice, wound healing, or other medical condition determined by a licensed medical professional to be treatable by exposing the individual to specific wavelengths of light" are excluded from the tax if they are performed by a licensed medical professional on that professional's premises. [2]

If tanning services are provided as part of a gym membership that is considered a "qualified physical fitness facility", [lower-alpha 1] the tax is not applicable. [2]

Spray tanning services, as well as the purchase of topical creams and lotions, are also excluded from the tax. [4]

Economic effects

According to the American Suntanning Association, almost 10,000 tanning salons have gone out of business since the tax went into effect, resulting in the loss of 81,000 jobs. [3]

Prior to passage of the PPACA, over 164,000 people worked in the tanning industry. As of June 2015 that number was 83,000. In California, the number of tanning salons dropped in half between passage of the PPACA in 2010 and 2015. [3]

Business owners say the "little-noticed 10 percent tax on tanning in President Barack Obama's health care overhaul has crippled the industry," according to the Denver Post. However, experts say the tanning industry is overstating the tax's effects on jobs and business closings, and that other factors such as public health warning against tanning play into the equation. [5]

Legislation

In the U.S. House, Congressman George Holding of North Carolina introduced a bill on June 9, 2015. H.R. 2698, "The Tanning Tax Repeal Act of 2015" would repeal the ten percent excise tax. [6]

See also

Notes

  1. ↑ According to the IRS, qualified physical fitness facility "is a facility (i) in which the predominant business or activity is providing facilities, equipment and services to its members for purposes of exercise and physical fitness, (ii) indoor tanning services is not a substantial part of its business and, (iii) it does not offer tanning services to the public for a fee or offer different pricing options to its members based on indoor tanning services."

Related Research Articles

Indoor tanning Tanning using an artificial source of ultraviolet light

Indoor tanning involves using a device that emits ultraviolet radiation to produce a cosmetic tan. Typically found in tanning salons, gyms, spas, hotels, and sporting facilities, and less often in private residences, the most common device is a horizontal tanning bed, also known as a sunbed or solarium. Vertical devices are known as tanning booths or stand-up sunbeds.

Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state and local governments and are not uniform throughout the United States. Some excise taxes are collected from the producer or retailer and not paid directly by the consumer, and as such often remain "hidden" in the price of a product or service, rather than being listed separately.

Indian Revenue Service

The Indian Revenue Service, often abbreviated as IRS, is the administrative revenue civil service under Group A of the Central Civil Services of the executive branch of the Government of India. It functions under the Department of Revenue of the Ministry of Finance and is under the administrative direction of the Revenue Secretary and the ministerial command of the Minister of Finance. The IRS is primarily responsible for collecting and administering direct and indirect taxes accruing to the Government of India.

The federal telephone excise tax is a statutory federal excise tax imposed under the Internal Revenue Code in the United States under 26 U.S.C. § 4251 on amounts paid for certain "communications services". The tax was to be imposed on the person paying for the communications services but, under 26 U.S.C. § 4291, is collected from the customer by the "person receiving any payment for facilities or services" on which the tax is imposed.

Taxes in India are levied by the Central Government and the state governments. Some minor taxes are also levied by the local authorities such as the Municipality.

In the United States of America, individuals and corporations pay U.S. federal income tax on the net total of all their capital gains. The tax rate depends on both the investor's tax bracket and the amount of time the investment was held. Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, on dispositions of assets held for more than one year, are taxed at a lower rate.

In the United States, health insurance marketplaces, also called health exchanges, are organizations in each state through which people can purchase health insurance. People can purchase health insurance that complies with the Patient Protection and Affordable Care Act at ACA health exchanges, where they can choose from a range of government-regulated and standardized health care plans offered by the insurers participating in the exchange.

Internal Revenue Service Revenue service of the United States federal government

The Internal Revenue Service (IRS) is the revenue service of the United States federal government. The government agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The IRS is responsible for collecting taxes and administering the Internal Revenue Code, the main body of federal statutory tax law of the United States. The duties of the IRS include providing tax assistance to taxpayers and pursuing and resolving instances of erroneous or fraudulent tax filings. The IRS has also overseen various benefits programs, and enforces portions of the Affordable Care Act.

Informally, a Cadillac plan is any unusually expensive health insurance plan, usually arising in discussions of medical-cost control measures in the United States. The term derives from the Cadillac automobile, which has represented American luxury goods since its introduction in 1902, and as a health care metaphor dates to the 1970s. The term gained popularity in the early 1990s during the debate over the Clinton health care plan of 1993, and was also widespread during debate over possible excise taxes on "Cadillac" plans during the health care reforms proposed during the Obama administration.

Affordable Care Act Obamacare, ACA - U.S. federal statute

The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act, and commonly known as Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 amendment, it represents the U.S. healthcare system's most significant regulatory overhaul and expansion of coverage since the passage of Medicare and Medicaid in 1965.

Health care sharing ministries are organizations in the United States in which health care costs are shared among members who have common ethical or religious beliefs.

The Affordable Care Act (ACA) is divided into 10 titles and contains provisions that became effective immediately, 90 days after enactment, and six months after enactment, as well as provisions phased in through to 2020. Below are some of the key provisions of the ACA. For simplicity, the amendments in the Health Care and Education Reconciliation Act of 2010 are integrated into this timeline.

In 2014, the Internal Revenue Service (IRS) introduced a host of tax provisions to accommodate the Affordable Care Act.

The individual shared responsibility provision, less formally known as the individual mandate, was the health insurance mandate imposed on individuals by the Affordable Care Act in the United States until tax year 2019. This individual mandate required most individuals and their families to have a certain minimal amount of health insurance, with certain exemptions. Otherwise, they were required to pay the individual shared responsibility payment as a fine. The corresponding payment is the individual shared responsibility payment. It was one of the many Affordable Care Act tax provisions. The federal tax penalty for violating the mandate was eliminated by the Tax Cuts and Jobs Act of 2017, starting in 2019..

The following is a list of efforts to repeal the Affordable Care Act, which had been enacted by the 111th United States Congress on March 23, 2010.

Executive Order 13765 Executive order signed by U.S. President Donald Trump

Executive Order 13765 is the first executive order signed by U.S. President Donald Trump on January 20, 2017, which set out interim procedures in anticipation of repeal of the Affordable Care Act (Obamacare).

Tanning Tax Repeal Act of 2015

The Tanning Tax Repeal Act of 2015 was legislation introduced in the U.S. House of Representatives by Congressman George Holding (R-NC). The bill would repeal the national 10% tax on indoor tanning services. Congressman Holding introduced the bill as H.R. 2698 on June 9, 2015.

American Health Care Act of 2017 Proposed U.S. law

The American Health Care Act of 2017 was a bill in the 115th United States Congress. The bill, which was passed by the United States House of Representatives but not by the United States Senate, would have partially repealed the Patient Protection and Affordable Care Act (ACA).

The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act (ACA) or nicknamed Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 amendment, it represents the U.S. healthcare system's most significant regulatory overhaul and expansion of coverage since the passage of Medicare and Medicaid in 1965. Once the law was signed, provisions began taking effect, in a process that continued for years. Some provisions never took effect, while others were deferred for various periods.

The Crude Oil Windfall Profit Tax Act of 1980 was enacted as part of a compromise between the Carter Administration and the Congress over the decontrol of crude oil prices. The Act was intended to recoup the revenue earned by oil producers as a result of the sharp increase in oil prices brought about by the OPEC oil embargo. According to the Congressional Research Service, the Act's title was a misnomer. "Despite its name, the crude oil windfall profit tax... was not a tax on profits. It was an excise tax... imposed on the difference between the market price of oil, which was technically referred to as the removal price, and a statutory 1979 base price that was adjusted quarterly for inflation and state severance taxes."

References

  1. ↑ "Indoor Tanning Services Tax Center". www.irs.gov. Retrieved 2016-11-15.
  2. 1 2 3 "Excise Tax on Indoor Tanning Services Frequently Asked Questions". www.irs.gov. Retrieved 2016-11-15.
  3. 1 2 3 4 Ellis, Ryan (2015-06-05). "Obamacare's Tanning Tax Turns Five". Forbes. Retrieved 2016-11-15.
  4. 1 2 Alex, Paul (2015-07-10). "How to Fund Obamacare? Gimmicks Like a Tanning Tax Are Not the Answer". The Huffington Post. Retrieved 2016-11-15.
  5. ↑ "Tanning industry blames 10,000 salon closings on tax in Affordable Care Act". The Denver Post. 2016-08-20. Retrieved 2016-11-15.
  6. ↑ "H.R.2698 - Tanning Tax Repeal Act of 2015". Congress.gov. Library of Congress. Retrieved 2016-11-15.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.