Tan Tax Update

Salon owners often contact us to ask if there’s any news on repeal efforts of the 10 percent tan tax. Personally, I don’t see it ever being repealed – mostly because it’s part of President Obama’s healthcare reform. I imagine there’s immense pressure in political circles to keep the legislation in place, as dissecting any part of it puts the whole thing at risk of being unraveled (can you say “legal precedent”?). And it’d also be too sloppy figuring out how to undo a tax that’s already begun to bring in revenue to the government’s coffers, even if it is far less than they’d hoped for.

All that being said, I will share tidbits of what I’ve heard in terms of a repeal, as well as some other tan-tax related developments.

Repeal Efforts

Earlier this month, the Indoor Tanning Association (ITA) held its quarterly meeting in Washington, D.C., bringing more than 80 industry leaders face-to-face with some of the elected officials representing them. The goal was to build on – or establish – those crucial personal relationships, while also allowing our business community to ask for support in repealing the tan tax. The interactive setting helped industry representatives share their concerns about how the tan tax has directly impacted their businesses. You can see photo highlights of “Capitol Hill Day” in this Looking Fit gallery.

On a high note, during the D.C. trip, U.S. Rep. Michael Grimm (R-NY) announced his intention to introduce legislation to repeal the tan tax. He shared concern for hard-working business owners and the strain of excessive taxes on their livelihoods. Needless to say, the tanning professionals who were present were thrilled and took the opportunity to personally ask their representatives to co-sponsor the bill. The congressman has also begun soliciting his fellow lawmakers’ support of the potential legislation.

Down the road, when the bill is introduced, the ITA has pledged to help make materials available for salon owners (and their staff and customers) to support the measure.

IRS Resource

The Internal Revenue Service has updated its web portal for all things tan-tax related. Click on this link to visit the IRS’ Indoor Tanning Services Tax Center.

Tan Tax Economic Impact Study

The Economics Department at the University of Nebraska Lincoln (UNL) is conducting research to investigate the impact of the tan tax on the nation’s indoor tanning salons. Barton D. Bonn, president of Ashley Lynn's Inc., confirms that the study is legit in its focus on the tax’s economic impact. Any salon owners who are contacted by researchers are encouraged to aid in the efforts.

Bonn shared that this year in the Nebraska Legislature – in light of the 10 percent tan tax – several Nebraska tanning salons pushed legislation to exempt tanning salons from the state's 7 percent sales tax on indoor tanning. Nebraska is one of 19 states that levies a state sales tax on indoor tanning, making their combined tax 17 percent. Sadly, Nebraska’s is not the most expensive tan tax combo in the nation.

The legislation has been tabled, yet local news coverage picked up on the effort, and so did the UNL Economics Department. Local news reported that 20 percent of the state's tanning salons closed during 2010 and the first quarter of 2011. The sudden and negative impact of this tax is what interests this economics department, which is now examining the matter on a national level.

If there are any tan tax developments in your neck of the woods – or you have additional input or a differing opinion than shared here – please weigh in on the comments feature below.