What Is the Federal Tan Tax on Indoor Tanning?

The federal government imposes a 10 percent excise tax on indoor tanning services, a measure enacted as part of the Patient Protection and Affordable Care Act (ACA) in 2010. This tax, often called the “tan tax,” applies to the amount paid for services that use ultraviolet (UV) lamps for skin tanning. The revenue generated from this tax helps fund healthcare programs established by the ACA. Businesses that provide these services, such as tanning salons, spas, and some gyms, are responsible for collecting the tax from customers and remitting it to the Internal Revenue Service (IRS).

Scope of the Tax

The tax applies to services that employ electronic devices with one or more ultraviolet lamps, such as traditional tanning beds and booths, and is calculated on the total amount paid. Conversely, several common tanning methods are not subject to this tax. It does not apply to spray tanning services, which use a fine mist of sunless tanning solution. The purchase of topical creams, lotions, and other self-tanning products are also outside the scope of this tax. This distinction isolates the tax strictly to services involving UV-emitting equipment.

Tax Collection and Payment for Consumers

For consumers, the tax is a straightforward addition to the cost of their indoor tanning session, calculated at a rate of 10 percent of the amount paid. For instance, if a single tanning session costs $30, the consumer will pay an additional $3 in federal excise tax, making the total payment $33. The tanning facility is legally obligated to collect this tax from the customer at the time of payment. The consumer will see the tax itemized on their receipt. If the business fails to separately state the tax on the invoice, the total amount paid is presumed to include the tax, and the business must calculate the tax owed by multiplying the total payment by a factor of 0.09091.

Business Reporting and Remittance

Businesses must report and remit collected tan taxes to the federal government using IRS Form 720, the Quarterly Federal Excise Tax Return. This form is used for various federal excise taxes, and indoor tanning services are listed under IRS No. 140. Businesses must have an Employer Identification Number (EIN) to file. The filing deadlines for Form 720 are quarterly throughout the year:

• April 30 for the first quarter (January, February, March)
• July 31 for the second quarter
• October 31 for the third quarter
• January 31 for the fourth quarter

Payments can be made through the Electronic Federal Tax Payment System (EFTPS) or by check or money order with a paper filing.

Exemptions from the Tax

Certain specific circumstances provide an exemption from the federal tan tax, even when UV-emitting equipment is used. One primary exemption is for phototherapy services. These services are not subject to the tax if they are performed by a licensed medical professional on their own premises for the treatment of a diagnosed medical condition, such as psoriasis, eczema, or other specific disorders.

Another exemption applies to “qualified physical fitness facilities.” For a facility to meet this definition, its main purpose must be providing exercise and fitness services, and the indoor tanning services offered must not be a substantial part of its business. Furthermore, the facility cannot charge a separate fee for tanning or offer different membership prices based on access to tanning services. If these specific criteria are met, the tanning services are considered an incidental amenity and are exempt from the tax.