Tan Tax IRS Public Hearing

The IRS held a public hearing on “Indoor Tanning Services; Cosmetic Services Excise Taxes” (a.k.a. the 10 percent tan tax) on Tuesday, October 11, in the IRS Auditorium in Washington, D.C. The hearing was made possible by a provision in the notice of proposed rulemaking, which was published in the Federal Register on June 15, 2010 (75 FR 33740). It allowed for the scheduling of a public hearing if the public requested it in writing by Sept. 13, 2010.

Interested speakers were allotted 10 minutes each and had to submit an outline of their discussion topic to the IRS in advance. Anyone planning to attend also had to respond ahead of time to receive access to enter the building.

The IRS prepared an agenda containing the schedule of speakers, which was available at the hearing. Blogger Sarah Kliff attended the meeting and provided a summary in The Washington Post, where she shares that only about a dozen people were in attendance for the half-hour gathering. She states the Internal Revenue Service didn’t ask any questions of the indoor tanning salon owners who had flown into town to testify.

Kliff, who covers a beat on health policy and reform law, admits the whole scenario was interesting to her (props to my fellow journalist for seeing there’s more than one side of the story!). “The hearing was a good representation of where business opponents of the health reform law are right now: They don’t like the law, but they’re begrudgingly learning to live with it,” she reports.

Of the speakers, President Bart Bonn of Nebraska-based Ashley Lynn’s Tanning spoke regarding the economic hardship of the tan tax, citing that he’s had to lay off employees. Jeff Gordon, general counsel for Kentucky-based Sun Tan City, spoke to the competitive disadvantage created by exempting certain businesses from the tax: gyms, video stores or Laundromats – which often don’t offer tanning as a primary paid service, or wrap it in as a freebie with other purchases. And Ohio-based TanPro’s founder and CEO Rob Quinn also focused on the disparity between large-chain tanning salons with full computer-tracking programs in place versus smaller businesses that are less likely to be as diligent about tracking – and possibly even charging – the tan tax.

Kudos to the men who spoke on behalf of the industry, particularly Bonn, who summed things up by saying, “My request is that you tell the IRS commissioner that this thing is not working.”

Editor’s Note: For information about a 20+ page report the government released acknowledging the tan tax has brought in much less revenue than anticipated, click here.