Tanning Tax Is Still Mystery to Some

WELLINGTON, CO -- The 10 percent tanning tax that went into effect this month is changing the way some club operators do business.

Matthew Beeners, owner and general manager of Fitness1 in Wellington, CO, decided not to pass along most of the added cost of the tax because he says the possible business lost could be greater than lowering his club's tanning fee by 9 percent.

“I'm not too concerned about per unit profit, which will obviously go down,” Beeners says, adding that not lowering his rates to offset the tax would have caused a decrease in his overall tanning business volume. “I'm not changing the service at all, so to increase [the price] wouldn't go over well with members.”

Tanning fees, which are paid separately from membership dues at Fitness1, make up 4 percent of the club's revenue.

Operators who do charge extra for tanning were supposed to start charging the tax on July 1, according to the IRS. The tax is part of the health care reform bill passed by Congress in late December.

The regulations specifically exempt “qualified physical fitness facilities” that offer tanning as an incidental service to members without a separately identifiable fee, according to an IRS statement. A qualified facility is one whose predominant business is providing facilities and service for the purpose of exercise. The regulations exempt phototherapy services performed by a licensed medical professional on his or her premises.

Health club operators who are not exempt from collecting the tax must collect it at the time the purchaser pays for the service. The provider then must pay these amounts to the government quarterly along with IRS Form 720, Quarterly Federal Excise Tax Return.

Beeners had not been notified about the tax by the IRS as of late June.

"It doesn't seem like they are working very hard to collect it," he says. "I don't have the proper forms and documentation. I don't know if there will be penalties if you don't pay it in the third quarter."

Despite the lack of information, Beeners has notified members through in-club signs about the new tax and the fact that he's absorbing the cost.

"I'm hoping to get some good will out it," he says.

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