What Is the Indoor Tanning Tax & How to File It Online?
What it is: The indoor tanning tax is a federal excise tax imposed on amounts paid for indoor tanning services in the United States.
Who collects it: The service provider (tanning salon, gym, or spa) is responsible for collecting the tax from the customer.
Tax rate: The tax is calculated as a percentage of the amount paid for the tanning service, excluding sales tax.
When it applies: It applies when UV light tanning services are provided using tanning beds, booths, or lamps.
How it is reported: Providers must report and pay the tax quarterly using IRS Form 720, which can be filed electronically.
Understanding the Indoor Tanning Tax
The Affordable Care Act created a penalty for indoor tanning services that utilize artificial ultraviolet rays to deter people from using artificial UV tanning beds because of the potential for harm associated with such usage. The tax is considered a federal excise tax, which is an obligation independent of either your sales or income tax.
This tax applies to customers who pay for services that include UV tanning by their indoor tanning facility. The indoor tanning facility (the service provider) has sole responsibility for collecting and reporting/filing the indoor tanning tax.
Most indoor tanning facilities will pass the tax cost on to the respective customer by including it in their total charges for indoor tanning services. However, the indoor tanning facility has to make sure to collect, report/file and pay the tax to the federal government (IRS).
ALSO CHECK - Is the Indoor Tanning Tax Still in Effect?
Who Must Comply and What Is Taxable
Any business that provides indoor UV tanning services for a fee is subject to this tax. This includes standalone tanning salons, fitness centers, apartment complexes with paid tanning access and beauty spas offering UV-based tanning.
The following table outlines taxable and non-taxable scenarios for clarity:
| Category | Tax Treatment | Key Notes |
|---|---|---|
| UV tanning sessions | Taxable | Includes single sessions and packages |
| Monthly tanning memberships | Taxable | If the fee grants access to UV tanning |
| Spray tanning (non-UV) | Not taxable | Does not use ultraviolet light |
| Proteyctive eyewear sales | Not taxable | Retail product, not a tanning service |
| Free promotional sessions | Not taxable | No amount paid by the customer |
This breakdown helps businesses isolate taxable receipts accurately and avoid over- or under-reporting.
How the Tax Is Calculated
To value the tanning services for the excise tax, the tanning amount is based on the total fees charged for those services, not including any applicable state or local sales taxes.
When a provider offers bundled packages that contain not only tanning but also other services, they must allocate the fee associated with the tanning portion of the package reasonably.
For instance, if you are purchasing a monthly package that includes both gym access and tanning, you would only pay excise tax on the tanning amount.
As such, clear pricing structures and accurate invoices are very important to help ensure the appropriate calculation of the excise tax and to ensure that your provider is well-prepared for an excise tax audit.
How to File the Tax Online
Use IRS Form 720 - Quarterly Federal Excise Tax Return to file taxes every quarter. Electronic filing of IRS Form 720 through an authorized e-file provider is usually faster than paper filing and eliminates many potential mistakes.
The online filing process typically includes:
- Identifying the correct quarter being filed
- Reporting total taxable tanning receipts
- Calculating the excise tax due
- Submitting Form 720 electronically
- Making payment through IRS-approved electronic payment methods
A complete calendar year has four quarters of tax filings and the filing deadline for each quarter is the last day of the month following the end of that quarter. Failing to file your return in a timely manner could result in penalty and/or interest charges.
ALSO CHECK - Is the Indoor Tanning Tax Still in Effect?
Businesses providing UV tanning services need to be completely informed about IRS regulations regarding federal excise taxes as it relates to tanning services.
By being informed about what is taxable, how to compute the taxes correctly and the ease of filing electronically, businesses can comply effectively and reduce potential penalties associated with failure to comply.
FAQs
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Is the indoor tanning tax paid by the customer or the business?
- Indoor tanning taxes are assessed to customers at the time they obtain the services but businesses collect, report, and pay to the IRS.
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Do gyms that offer tanning need to file even if tanning is not their primary service?
- A gym with a tanning business has to report taxes even if it does not derive its revenue mainly from tanning services.
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Are prepaid packages or gift cards taxable?
- Gift cards or prepaid tanning packages are subject to the tanning tax.
- Payment for tanning services whether through pre-paid packages or gift cards will incur tanning taxes as of the time of payment for any taxable UV tanning services.
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What happens if a business fails to file Form 720 on time?
- If a business does not file Form 720 by the deadline, it could face fines, interest and potentially receive correspondence from the IRS regarding compliance with the filing of Form 720 and payment of tax.
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Can the tax be filed manually instead of online?
- Businesses may still manually file for the tax, however, because electronic filings are generally processed much more quickly and with fewer errors and businesses receive immediate confirmation upon successful electronic filing with the IRS.