Indoor Tanning Services; Cosmetic Services; Excise Taxes, 33683-33688 [2010-14398]
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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Rules and Regulations
the final rule (i.e., RIN 0694–AE93)—all
comments on the latter should be
submitted by one of the three methods
outlined above.
FOR FURTHER INFORMATION CONTACT:
Sheila Quarterman, Bureau of Industry
and Security, Office of Exporter
Services, Regulatory Policy Division, by
phone at 202–482–2440 or by fax 202–
482–3355.
SUPPLEMENTARY INFORMATION:
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Background
In this rule, BIS makes a technical
amendment to the Export
Administration Regulations (EAR) to
remove three references concerning
Federal court jurisdiction to review
certain BIS enforcement orders.
Paragraph (e) of section 766.22
discusses judicial review of a final
decision and order by the Under
Secretary for Industry and Security in a
BIS export control administrative
proceeding. Section 766.24 contains two
references to judicial review. Paragraph
(g) of section 766.24 discusses judicial
review of a final decision and order by
the Under Secretary concerning the
administrative appeal of a temporary
denial order issued by the Assistant
Secretary for Export Enforcement, and
paragraph (e)(5) of the same section
includes a reference to paragraph (g).
Federal court jurisdiction to review
these BIS final orders is governed by
statute, not by regulation. BIS is deleting
these provisions, which were not
promulgated with the intent to create or
govern Federal court jurisdiction.
Since August 21, 2001, the Export
Administration Act has been in lapse
and the President, through Executive
Order 13222 of August 17, 2001 (3 CFR,
2001 Comp., p. 783 (2002)), as extended
most recently by the Notice of August
13, 2009 (74 FR 41325 (August 14,
2009)), has continued the EAR in effect
under the International Emergency
Economic Powers Act.
Rulemaking Requirements
1. This final rule has been determined
to be not significant for the purposes of
Executive Order 12866.
2. Notwithstanding any other
provisions of law, no person is required
to respond to nor be subject to a penalty
for failure to comply with a collection
of information, subject to the
requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501,
et seq.) (PRA), unless that collection of
information displays a currently valid
Office of Management and Budget
(OMB) Control Number. This rule does
not involve a collection of information,
and, therefore, does not implicate
requirements of the PRA.
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3. This rule does not contain policies
with Federalism implications as that
term is defined under Executive Order
13132.
4. The Department finds that there is
good cause under 5 U.S.C. 553(b)(A) and
(B) to waive the provisions of the
Administrative Procedure Act requiring
prior notice and the opportunity for
public comment because they are
unnecessary. This rule is one of
procedure, which is exempted from the
notice and comment requirements of the
APA. This rule only deletes provisions
from Part 766 that discuss federal court
jurisdiction, which is an issue governed
by statute, not by regulation. Because
these revisions are not substantive
changes, it is unnecessary to provide
notice and opportunity for public
comment. In addition, the 30-day delay
in effectiveness required by 5 U.S.C.
553(d) is not applicable because this
rule is not a substantive rule. Further,
no other law requires that a notice of
proposed rulemaking and an
opportunity for public comment be
given for this final rule. Because a
notice of proposed rulemaking and an
opportunity for public comment are not
required to be given for this rule under
the Administrative Procedure Act or by
any other law, the analytical
requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) are
not applicable. Therefore, this
regulation is issued in final form.
Although there is no formal comment
period, public comments on this
regulation are welcome on a continuing
basis. Comments should be submitted to
Sheila Quarterman, Regulatory Policy
Division, Bureau of Industry and
Security, U.S. Department of Commerce,
14th Street & Pennsylvania Avenue,
NW., Room 2705, Washington, DC
20230.
§ 766.24
List of Subjects in 15 CFR Part 766
Administrative practice and
procedure, Confidential business
information, Exports, Law enforcement,
Penalties.
■ Accordingly, 15 CFR part 766 of the
Export Administration Regulations (15
CFR Parts 730–774) is amended as
follows:
33683
Internal Revenue Service
PART 766—[AMENDED]
1. The authority citation for 15 CFR
Part 766 continues to read as follows:
■
Authority: 50 U.S.C. app. 2401 et seq.; 50
U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025,
3 CFR, 2001 Comp., p. 783; Notice of August
13, 2009, 74 FR 41325 (August 14, 2009).
§ 766.22
■
[Amended]
2. In § 766.22, remove paragraph (e).
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[Amended]
3. In § 766.24, remove the last
sentence from paragraph (e)(5) and
remove paragraph (g).
■
Dated: June 11, 2010.
Matthew S. Borman,
Deputy Assistant Secretary for Export
Administration.
[FR Doc. 2010–14525 Filed 6–14–10; 8:45 am]
BILLING CODE 3510–33–P
CONSUMER PRODUCT SAFETY
COMMISSION
16 CFR Part 1215
[CPSC Docket No. CPSC–2009–0064]
Third Party Testing for Certain
Children’s Products; Infant Bath Seats:
Requirements for Accreditation of
Third Party Conformity
Correction
In rule document 2010–13080
beginning on page 31688 in the issue of
Friday, June 4, 2010 make the following
corrections:
1. On page 31689, in the third
column, in the first full paragraph, in
the fourth and fifth lines, ‘‘December 1,
2010’’ should read ‘‘December 6, 2010’’.
2. On the same page, in the same
column, in the same paragraph, in the
10th and 11th lines, ‘‘December 2, 2010’’
should read ‘‘December 7, 2010’’.
3. On page 31691, in the first column,
in the second line from the top,
‘‘December 1, 2010’’ should read
‘‘December 7, 2010’’.
[FR Doc. C1–2010–13080 Filed 6–14–10; 8:45 am]
BILLING CODE 1505–01–D
DEPARTMENT OF THE TREASURY
26 CFR Parts 40, 49, and 602
[TD 9486]
RIN 1545–BJ41
Indoor Tanning Services; Cosmetic
Services; Excise Taxes
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
SUMMARY: This document contains final
and temporary regulations that provide
guidance on the indoor tanning services
excise tax imposed by the Patient
Protection and Affordable Care Act.
These final and temporary regulations
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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Rules and Regulations
affect persons that use, provide, or pay
for indoor tanning services. The text of
these temporary regulations also serves
as the text of the proposed regulations
set forth in the notice of proposed
rulemaking on this subject in the
Proposed Rules section of this issue of
the Federal Register.
DATES: Effective Date: These regulations
are effective on June 15, 2010.
Applicability Date: For dates of
applicability, see §§ 40.0–1T(e) and
49.5000B–1T(h).
FOR FURTHER INFORMATION CONTACT:
Taylor Cortright, (202) 622–3130 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information
contained in these regulations has been
reviewed and approved by the Office of
Management and Budget under control
number 1545–2177. The information is
required to be maintained in order for
the provider of indoor tanning services
to accurately calculate the tax on indoor
tanning services when those services are
offered with other goods and services, as
described in § 49.5000B–1T(d)(2). An
agency may not conduct or sponsor, and
a person is not required to respond to,
a collection of information unless the
collection of information displays a
valid control number.
For further information concerning
this collection of information, and
where to submit comments on the
collection of information and the
accuracy of the estimated burden, and
suggestions for reducing this burden,
please refer to the preamble to the crossreference notice of proposed rulemaking
on this subject in the Proposed Rules
section in this issue of the Federal
Register.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
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Background
This document amends the Excise
Tax Procedural Regulations (26 CFR
part 40) and the Facilities and Services
Excise Tax Regulations (26 CFR part 49)
under section 5000B of the Internal
Revenue Code (Code). Section 5000B
was added to the Code by section 10907
of the Patient Protection and Affordable
Care Act, Public Law 111–148 (124 Stat.
119 (2010)), to impose an excise tax on
indoor tanning services.
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Explanation of Provisions
Section 5000B(a) imposes on any
indoor tanning service a tax equal to 10
percent of the amount paid for such
service. Indoor tanning service, as
defined in section 5000B(b), does not
include any phototherapy service
provided by a licensed medical
professional. The regulations define
phototherapy service and clarify that
such service must be performed by, and
on the premises of, a licensed medical
professional.
The tax applies to amounts paid after
June 30, 2010, for indoor tanning
services. Liability for the tax arises at
the time of payment for the indoor
tanning services. In some cases (such as
purchase of an undesignated payment
card, discussed later in this preamble),
it may not be possible to determine
whether there is a payment for indoor
tanning services. Thus, the regulations
provide in those cases that a payment is
treated as made, and the tax is imposed,
at the time it can reasonably be
determined that the payment is made
specifically for indoor tanning services.
In the case of membership fees paid to
certain physical fitness facilities that
provide indoor tanning services, the
regulations provide a different rule,
discussed later in this preamble.
The regulations provide that the
‘‘amount paid’’ for purposes of
determining the tax base includes all
amounts paid to the provider for indoor
tanning services, including any amount
paid by insurance. Providers of indoor
tanning services, however, often sell
other goods and services (such as
protective eyewear, footwear, towels,
and tanning lotions; manicures,
pedicures and other cosmetic or spa
treatments; and access to sport or
exercise facilities) in addition to indoor
tanning services. Thus, the regulations
provide rules for determining the tax
when the provider charges for other
goods and services in addition to indoor
tanning services.
Section 6001 requires taxpayers to
keep books and records sufficient to
show whether or not they are liable for
tax. To that end, the regulations allow
the provider to exclude charges for other
goods and services if the charges are
separable, do not exceed the fair market
value of the other goods and services,
and are shown in the exact amounts in
the records pertaining to the indoor
tanning services charge.
If the charges are not separately
stated, but the total amount paid covers
indoor tanning services, then the tax is
based on the portion of the amount paid
that is reasonably attributable to the
indoor tanning services. For example, if
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the provider sells bundled services in
which the indoor tanning service is
bundled with other goods and services,
and the charge is not separately stated,
the tax applies to the amount paid that
is reasonably attributable to the indoor
tanning services. This is consistent with
the approach taken in Rev. Rul. 63–155
(1963–2 CB 566) (relating to the
application of the section 4261 tax on
transportation by air to a package tour
sold by a hotel that includes airfare,
hotel accommodations, and other
services not subject to the section 4261
tax).
The regulations provide that a
payment for indoor tanning services is
treated as made, and liability for the tax
is imposed, at the time it can reasonably
be determined that the payment is made
specifically for indoor tanning services.
If a payment is made with a gift
certificate, gift card or similar device
with a monetary value that can be
redeemed for goods or services that
may, but do not necessarily, include
indoor tanning services (an
undesignated payment card), it can
reasonably be determined that a
payment is made specifically for indoor
tanning services when the undesignated
payment card is redeemed, in whole or
in part, to pay specifically for indoor
tanning services (and not when a
payment is made to purchase the
undesignated payment card). This is
consistent with the approach taken in
Rev. Rul. 56–157 (1956–1 CB 523)
(relating to the application of the section
4261 tax on transportation by air to a
gift certificate that could be redeemed
for air transportation or cash). In these
cases, the provider of the services
calculates the tax on the amount of the
undesignated payment card that is
redeemed for indoor tanning services at
the time it is redeemed, and the rules of
section 5000B(c) apply to determine the
person liable for the tax.
If, however, the provider sells
bundled services in which access to
indoor tanning services (in a specified
or unlimited amount) over a period of
time is bundled with other goods and
services, it can reasonably be
determined that the payment is made
specifically for indoor tanning services
at the time the bundled services are
purchased, because there is value
attributable to the access to indoor
tanning services. This is different than
the example of the gift certificate,
because the gift certificate can be
redeemed entirely for non-taxable
services, but the purchase of bundled
services will always include access to
indoor tanning services in the ‘‘bundle’’.
In addition, for purposes of these
regulations, payments for indoor
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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Rules and Regulations
tanning services are subject to tax,
regardless of actual usage. Thus, the tax
applies to the amount paid that is
reasonably attributable to the access to
indoor tanning services, and the rules of
section 5000B(c) apply to determine the
person liable for the tax.
On the other hand, in the case of a
payment of a membership fee to a
qualified physical fitness facility (QPFF)
(as defined in the regulations) that
includes access to indoor tanning
services, the IRS and Treasury
Department have determined that the
access is incidental to the QPFF’s
predominant business or activity and
any amount attributable to such access
would be difficult to calculate and
administer. Thus, an amount paid to a
QPFF is not a payment for indoor
tanning services and the tax is not
imposed on the amount paid. The
regulations narrowly define QPFF to
require, among other things, that the
predominant business or activity of the
facility is to serve as a physical fitness
facility, taking into consideration all of
the facts and circumstances. Thus, for
example, a business predominantly
engaged in providing indoor tanning or
other cosmetic services cannot become
a QPFF by allowing users access to
exercise classes or pieces of exercise
equipment. The regulations further
provide that a QPFF cannot charge
separately for indoor tanning services,
offer such services to the public, or offer
different membership fee rates based on
access to indoor tanning services. Thus,
a physical fitness facility that
distinguishes memberships based on
access to indoor tanning services is not
a QPFF.
Section 5000B(c)(1) provides that the
person liable for the tax is the
individual on whom the indoor tanning
service is performed. In some cases, a
person might pay for services to be
performed on someone else, such as by
purchasing a gift certificate for indoor
tanning services. Because the tax is
calculated on the amount paid for the
indoor tanning services, and because the
statute contemplates that the tax will be
collected at the time payment is made,
the person who pays for the services
(payor) is deemed to be the person on
whom the services are performed for
purposes of collecting the tax. Thus, the
payor is liable for the tax on the
services. If a person pays for a gift
certificate for indoor tanning services
(or for bundled services that includes
indoor tanning services), then the
liability for the tax arises at the time of
payment.
However, if a person purchases an
undesignated payment card, then a
payment has not been made for indoor
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tanning services until the undesignated
payment card is redeemed specifically
to pay for indoor tanning services. In
that case, the liability for the tax arises
at the time the undesignated payment
card is redeemed. The person who
redeems the card for indoor tanning
services is deemed to be the person on
whom the services are performed for
purposes of collecting the tax, and that
person is liable for the tax on the
services.
Section 5000B(c)(2) provides that the
person receiving the payment on which
tax is imposed (the provider) generally
must collect the tax from the payor and
pay the tax over quarterly to the
government. These regulations provide
that the amount paid by the payor to the
provider is presumed to include the tax
if the tax is not separately stated.
In the Proposed Rules section in this
issue of the Federal Register, the IRS
and Treasury Department are requesting
comments regarding these temporary
regulations, including comments on
whether the presumption relating to
section 5000B(c)(2) (that the amount
paid by the payor to the provider
includes the tax if the tax is not
separately stated) is consistent with the
manner in which providers maintain
books and records and specifically
whether such a rule is useful for
purposes of minimizing recordkeeping
burdens of the providers.
If the payor does not pay the tax at the
time payment for the indoor tanning
services is made, section 5000B(c)(3)
provides that, to the extent the tax is not
collected, the provider must pay the tax.
Thus, the regulations provide that if the
provider of the indoor tanning services
fails to collect the tax from the payor at
the time the payor makes a payment for
indoor tanning services, the provider is
liable for the tax.
These regulations apply the existing
excise tax procedural rules in 26 CFR
part 40 to the tax on indoor tanning
services. Thus, the tax, whether paid by
the payor or the provider under section
5000B(c), is reported by the provider on
Form 720 ‘‘Quarterly Federal Excise Tax
Return.’’ These temporary part 40
regulations do not require semimonthly
deposits of tax; rather, full payment of
the tax is due quarterly at the time Form
720 is timely filed. The existing
regulations also provide that once a
Form 720 is required to be filed for a
calendar quarter, a Form 720 must be
filed for each subsequent calendar
quarter, whether or not liability is
incurred (or tax must be collected and
paid over) during that subsequent
quarter, until a final return under
§ 40.6011(a)–2 is filed.
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33685
Some providers of indoor tanning
services may operate more than one
location at which the services are
provided. Each business unit that has,
or is required to have, a separate
employer identification number is
treated as a separate person that must
file a separate Form 720.
Collected taxes are held in special
trust for the United States pursuant to
section 7501, and any person who
willfully fails to collect and pay over the
tax may be subject to the penalty in
section 6672. The IRS will generally
administer the indoor tanning services
tax (in Chapter 49 of the Code), the same
way it administers the other collected
excise taxes in Chapter 33 of the Code
(the communications and transportation
taxes). However, the reporting
provisions in § 49.4291–1 of the
regulations (relating to certain
inabilities to collect or refusals to pay
tax) do not apply to the tax on indoor
tanning services because section 4291
provides that these rules apply only to
the Chapter 33 taxes.
Availability of IRS Documents
The IRS revenue rulings cited in this
preamble are published in the Internal
Revenue Cumulative Bulletin and are
available from the Superintendent of
Documents, P.O. Box 371954,
Pittsburgh, PA 15250–7954.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations. For applicability of
the Regulatory Flexibility Act (5 U.S.C.
chapter 6), please refer to the Special
Analysis section in the preamble to the
cross-referenced notice of proposed
rulemaking in the Proposed Rules
section in this issue of the Federal
Register. Pursuant to section 7805(f) of
the Code, these regulations have been
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on their
impact on small business.
Drafting Information
The principal author of these
regulations is Taylor Cortright, Office of
the Associate Chief Counsel
(Passthroughs and Special Industries).
However, other personnel from the IRS
and the Treasury Department
participated in their development.
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List of Subjects
2. Revising the paragraph heading in
paragraph (f).
■ 3. Adding paragraph (g).
The revision and additions read as
follows:
■
26 CFR Part 40
Excise taxes, Reporting and
recordkeeping requirements.
26 CFR Part 49
Excise taxes, Reporting and
recordkeeping requirements, Telephone,
Transportation.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Amendments to the Regulations
Accordingly, 26 CFR parts 40, 49, and
602 are amended as follows:
■
PART 40—EXCISE TAX PROCEDURAL
REGULATIONS
Paragraph 1. The authority citation
for part 40 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805. * * *
Par. 2. Section 40.0–1 is amended as
follows:
■ 1. Paragraph (d) is redesignated as
paragraph (f) and new paragraphs (d)
and (e) are added.
■ 2. The paragraph heading of
redesignated paragraph (f) is revised.
The addition and revision read as
follows:
■
§ 40.0–1
§ 40.6302(c)–1T Use of government
depositaries (temporary).
(a) through (f) [Reserved]. For further
guidance, see § 40.6302(c)–1(a) through
(f).
(g) Exception for indoor tanning
services. No deposit is required for the
taxes imposed by section 5000B
(relating to indoor tanning services) for
any calendar quarter beginning after
June 30, 2010.
(h) Expiration date. This section
expires on or before June 11, 2013.
Authority: 26 U.S.C. 7805. * * *
Par. 7. Section 49.0–3T is added to
read as follows:
■
Par. 3. Section 40.0–1T is added to
read as follows:
■
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*
*
*
*
(f) Effective/applicability date. * * *
(g) [Reserved]. For further guidance,
see § 40.6302(c)–1T(g).
■ Par. 5. Section 40.6302(c)–1T is added
to read as follows:
Par. 6. The authority citation for part
49 continues to read in part as follows:
*
*
*
*
(d) [Reserved]. For further guidance,
see § 40.0–1T(d).
(e) [Reserved]. For further guidance,
see § 40.0–1T(e).
(f) Effective/applicability dates. * * *
Introduction (temporary).
(a) through (c) [Reserved]. For further
guidance, see § 40.0–1(a) through (c).
(d) Indoor tanning services. The
regulations in this part 40 also set forth
administrative provisions relating to the
excise taxes imposed by chapter 49,
relating to cosmetic services.
(e) Effective/applicability date.
Paragraph (d) of this section applies to
returns that relate to calendar quarters
beginning after June 30, 2010.
(f) [Reserved]. For further guidance,
see § 40.0–1(f).
(g) Expiration date. Paragraph (d) of
this section expires on or before June 11,
2013.
Par. 4. Section 40.6302(c)–1 is
amended by:
■ 1. In paragraph (a)(1), removing the
language ‘‘by statute’’ and adding ‘‘by
statute, by § 40.6302(c)–1T(g),’’ in its
place.
■
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*
■
Introduction.
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PART 49—FACILITIES AND SERVICES
EXCISE TAX
*
§ 40.0–1T
§ 40.6302(c)–1
depositories.
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§ 49.0–3T Introduction; cosmetic services
(temporary).
On and after July 1, 2010, this part 49
also applies to taxes imposed by chapter
49 of the Internal Revenue Code,
relating to cosmetic services. See part 40
of this chapter for regulations relating to
returns and payments of taxes imposed
by chapter 49.
■ Par. 8. Subpart G is added to read as
follows:
Subpart G—Cosmetic Services
§ 49.5000B–1T
(temporary).
Indoor tanning services
(a) Overview. This section provides
rules for the tax imposed by section
5000B on any indoor tanning service.
(b) Imposition of tax—(1) General
rule. Tax is imposed by section 5000B
at the time of payment for any indoor
tanning service.
(2) Undesignated payment cards. In
the case of an undesignated payment
card (within the meaning of paragraph
(c)(5) of this section), payment for
indoor tanning services is made when it
can reasonably be determined that a
payment is made specifically for indoor
tanning services. Thus, when the
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undesignated payment card is
redeemed, in whole or in part, to pay for
indoor tanning services (and not when
a payment is made to purchase the
undesignated payment card), it can
reasonably be determined that a
payment for indoor tanning services is
made, and the tax is imposed.
(3) Payments to qualified physical
fitness facilities. No portion of a
payment to a qualified physical fitness
facility (within the meaning of
paragraph (c)(4) of this section) that
includes access to indoor tanning
services is treated as a payment for
indoor tanning services.
(c) Definitions—(1) Indoor tanning
service means a service employing any
electronic product designed to
incorporate one or more ultraviolet
lamps and intended for the irradiation
of an individual by ultraviolet radiation,
with wavelengths in air between 200
and 400 nanometers, to induce skin
tanning. The term does not include
phototherapy service performed by, and
on the premises of, a licensed medical
professional (such as a dermatologist,
psychologist, or registered nurse).
(2) Other goods and services include,
but are not limited to, protective
eyewear, footwear, towels, and tanning
lotions; manicures, pedicures and other
cosmetic or spa treatments; and access
to sport or exercise facilities.
(3) Phototherapy service means a
service that exposes an individual to
specific wavelengths of light for the
treatment of—
(i) Dermatological conditions (such as
acne, psoriasis, and eczema);
(ii) Sleep disorders;
(iii) Seasonal affective disorder or
other psychiatric disorder;
(iv) Neonatal jaundice;
(v) Wound healing; or
(vi) Other medical condition
determined by a licensed medical
professional to be treatable by exposing
the individual to specific wavelengths
of light.
(4) Qualified physical fitness facility
means a facility—
(i) In which the predominant business
or activity is providing facilities,
equipment, and services to its members
for purposes of exercise and physical
fitness (determined by taking into
consideration all of the facts and
circumstances, such as the cost of the
equipment, variety of services offered,
actual usage of services by customers,
revenue generated by different services,
and how the entity holds itself out to
the public through advertising or other
means);
(ii) In which providing indoor tanning
services is not a substantial part of the
business or activity; and
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(iii) That does not sell indoor tanning
services for a fee to the public or
otherwise offer different pricing options
to its members based in whole or in part
on access to indoor tanning services.
(5) Undesignated payment card
means a gift certificate, gift card, or
similar item that can be redeemed for
goods or services that may, but do not
necessarily, include indoor tanning
services.
(d) Application of tax—(1) Tax on
total amount paid for indoor tanning
services. The tax is imposed on the total
amount paid for indoor tanning
services, including any amount paid by
insurance.
(2) Charges for other goods and
services; tanning services separately
stated. If a payment covers charges for
indoor tanning services as well as other
goods and services, the charges for other
goods and services may be excluded in
computing the tax payable on the
amount paid, if the charges—
(i) Are separable (regardless of the
manner of invoicing the charges);
(ii) Do not exceed the fair market
value of such other goods and services;
and
(iii) Are shown in the exact amounts
in the records pertaining to the indoor
tanning services charge.
(3) Charges for other goods and
services; tanning services bundled. This
paragraph (d)(3) applies if paragraph
(d)(2) of this section does not apply. If
a provider offers indoor tanning services
(whether of a specified or unlimited
amount, including ‘‘free’’ or reduced-rate
indoor tanning services) bundled with
other goods and services, the payment
for the bundled services includes an
amount paid for indoor tanning
services. The tax applies to that portion
of the amount paid to the provider that
is reasonably attributable to indoor
tanning services. The amount
reasonably attributable to indoor
tanning services may be determined by
applying to the total amount paid a ratio
determined by comparing—
(i) The provider’s charge for indoor
tanning services not in bundled services
or, in the event the provider only
charges for other goods and services as
part of bundled services, the fair market
value of similar services (based on the
amount charged by comparable
providers in the same geographic area);
to
(ii) The charge determined in
paragraph (d)(3)(i) of this section plus
the provider’s charge for the other goods
and services in the bundled services or,
in the event the provider only charges
for other goods and services as part of
bundled services, the fair market value
of similar goods and services (based on
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16:10 Jun 14, 2010
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the amount charged by comparable
providers in the same geographic area).
(e) Person liable for the tax—(1)
General rule. The person who pays for
the indoor tanning service is deemed to
be the person on whom the service is
performed for purposes of collecting the
tax. Thus, the person paying for the
indoor tanning service is liable for the
tax at the time of payment.
(2) Undesignated payment cards. In
the case of a payment made with an
undesignated payment card (within the
meaning of paragraph (c)(5) of this
section) described in paragraph (b)(2) of
this section, the person who redeems
the card, in whole or in part, to pay
specifically for indoor tanning services
is the person who pays for the indoor
tanning services. Thus, the person who
redeems an undesignated payment card,
in whole or in part, to pay specifically
for indoor tanning services is liable for
the tax at the time such payment is
made.
(3) Tax not collected at time of
payment. If the person paying for the
indoor tanning services does not pay the
tax to the person receiving the payment
for the services at the time of payment
for the services, the person receiving the
payment is liable for the tax.
(f) Persons receiving payment must
collect tax. Every person receiving a
payment for indoor tanning services on
which a tax is imposed under this
section shall collect the amount of the
tax from the person making that
payment. The total amount paid is
presumed to include the tax if the tax
is not separately stated.
(g) Examples. The following examples
illustrate the application of section
5000B and this section.
Example 1. A is a provider of indoor
tanning services and other goods and
services. On July 1, 2010, B, an individual,
pays A for one 10-minute indoor tanning
service (as defined in paragraph (c)(1) of this
section) and one pair of protective eyewear.
A charges $15.00 for the 10-minute indoor
tanning service and $2.00 for a pair of
protective eyewear. The $2.00 charge for the
protective eyewear does not exceed its fair
market value. The invoice from A is $17.00
(exclusive of the tax imposed by section
5000B) and separately states the cost of the
protective eyewear. Because the cost of the
protective eyewear is separately stated, A
calculates the section 5000B tax on $15.00 as
provided by paragraph (d)(2) of this section.
B is liable for the tax when B pays for the
services. If A does not collect the tax from
B at the time B pays for the services, A is
liable for the tax.
Example 2. A, a provider of indoor tanning
services and other goods and services,
periodically offers bundled services to
promote additional business. On July 1, 2010,
C, an individual, buys bundled service from
A that includes 10 swimming lessons, the use
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33687
of towels while on A’s premises, one pair of
protective eyewear, and 2 ‘‘free’’ 10-minute
indoor tanning services. A charges $252.00
(exclusive of the tax imposed by section
5000B) for the bundled services. If these
services are purchased separately, A charges
(exclusive of the tax imposed by section
5000B) $25.00 per swimming lesson, $15.00
for a 10-minute indoor tanning service, $2.00
for the protective eyewear and does not
charge for the use of towels while on A’s
premises. As determined under paragraph
(d)(3) of this section, the section 5000B tax
applies to the amount reasonably attributable
to the indoor tanning service, which is
$26.81 (($30/$282) × $252).
Example 3. On July 1, 2010, D buys
bundled services (described in Example 2)
from A as a gift for C. Under paragraph (e)(1)
of this section, D is deemed to be the person
on whom the indoor tanning services are
performed for purposes of collecting the tax.
Therefore, under paragraph (b)(1) of this
section, D is liable for the tax when D pays
for the services. The tax will be computed
under the rules of paragraph (d)(3) of this
section. If D does not pay the tax at the time
D pays for the services, A is liable for the tax.
Example 4. S operates a spa that provides
a variety of cosmetic goods and services,
including indoor tanning services. On July 1,
2010, D buys a gift certificate in the amount
of $100.00 from S as a gift for C. The gift
certificate may be redeemed by C for C’s
choice among several services offered by S,
including indoor tanning services. On July
15, 2010, C partially redeems the gift
certificate to pay for one 10-minute indoor
tanning service. Under paragraph (b)(2) of
this section, a payment for indoor tanning
services is made, and the tax under section
5000B is imposed, on July 15, 2010, when C
partially redeems the gift certificate to pay for
one indoor tanning service. Under paragraph
(e)(2) of this section, C is the person who
pays for the indoor tanning services.
Therefore, C is liable for the tax, computed
under the rules of paragraph (d) of this
section, and pays the tax by permitting S to
debit the amount of the tax from the balance
of the gift certificate or by paying the amount
of the tax to S in cash. If C does not pay the
tax at the time C partially redeems the gift
certificate to pay for the indoor tanning
services, S is liable for the tax.
Example 5. On July 1, 2010, E pays $1000
(exclusive of the tax imposed by section
5000B) to spa S for the right to use the
following equipment and services during the
month of July: up to four massages or facials,
unlimited use of a sauna, steam room,
showers, and towel service, and unlimited
indoor tanning services. If the services are
purchased separately, S charges (exclusive of
the tax imposed by section 5000B) $150 for
unlimited indoor tanning services during the
month of July, and $900 for the other
equipment and services during the month of
July, not including indoor tanning services.
Under paragraph (b) of this section, E has
made a payment for indoor tanning services
and the tax will be computed under the rules
of paragraph (d)(3) of this section. As
determined under paragraph (d)(3) of this
section, the section 5000B tax applies to the
amount reasonably attributable to the indoor
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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Rules and Regulations
tanning services, which is $142.86 (($150/
$1050) × $1000). If E does not pay the tax at
the time E pays for the bundled services, S
is liable for the tax.
Example 6. G operates a full-service gym
facility that offers fitness classes, multiple
exercise machines (such as treadmills,
stationary bicycles, weight training
machines, and free weights), and has as its
predominant business providing these
facilities, equipment, and services to
members for purposes of exercise and
physical fitness. G provides its members with
access to indoor tanning services, comprised
of two tanning beds that meet the definition
of indoor tanning services under paragraph
(c)(1) of this section. G generally charges its
members a fee for monthly usage of its
facilities, equipment, and services, but also
offers short-term or free trial memberships
and allows non-members to purchase
individual or a series of exercise classes. G
does not charge any fee for the indoor
tanning services, does not offer indoor
tanning services separately from its other
services, and has no membership tier or
category that differs from others based on
access to the indoor tanning services. G holds
itself out to the public through advertising
and marketing as providing equipment and
services to improve physical fitness. On July
1, 2010, F pays a membership fee to G in
return for use of G’s facility during the month
of July. Under paragraph (b)(3) of this
section, no portion of F’s membership fee
payment is treated as a payment made for
indoor tanning services, because G is a
qualified physical fitness facility under
paragraph (c)(4) of this section. Therefore, no
liability for tax arises under section 5000B.
(h) Effective/applicability date. This
section applies to amounts paid after
June 30, 2010, for indoor tanning
services.
(i) Expiration date. This section
expires on or before June 11, 2013.
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
Par. 9. The authority citation for part
602 continues to read as follows:
■
Authority: 26 U.S.C. 7805.
Par. 10. In § 602.101, paragraph (b) is
amended by adding the following entry
in numerical order to the table to read
as follows:
■
§ 602.101
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*
OMB Control numbers.
*
*
(b) * * *
*
*
Current
OMB control
No.
CFR part or section where
indentified and described
*
*
*
*
*
1.5000B–1 ................................
1545–2177
*
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*
*
18:32 Jun 14, 2010
*
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*
Approved: June 9, 2010.
Steven T. Miller,
Deputy Commissioner for Services and
Enforcement.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2010–14398 Filed 6–11–10; 11:15 am]
BILLING CODE 4830–01–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4022 and 4044
Allocation of Assets in SingleEmployer Plans; Benefits Payable in
Terminated Single-Employer Plans;
Interest Assumptions for Valuing and
Paying Benefits
AGENCY: Pension Benefit Guaranty
Corporation.
ACTION: Final rule.
SUMMARY: Pension Benefit Guaranty
Corporation’s regulations on Allocation
of Assets in Single-Employer Plans and
Benefits Payable in Terminated SingleEmployer Plans prescribe interest
assumptions for valuing and paying
certain benefits under terminating
single-employer plans. This final rule
(1) amends the asset allocation
regulation to adopt interest assumptions
for plans with valuation dates in the
third quarter of 2010 and (2) amends the
benefit payments regulation to adopt
interest assumptions for plans with
valuation dates in July 2010. Interest
assumptions are also published on
PBGC=s Web site (https://www.pbgc.gov).
DATES: Effective July 1, 2010.
FOR FURTHER INFORMATION CONTACT:
Catherine B. Klion, Manager, Regulatory
and Policy Division, Legislative and
Regulatory Department, Pension Benefit
Guaranty Corporation, 1200 K Street,
NW., Washington, DC 20005, 202–326–
4024. (TTY/TDD users may call the
Federal relay service toll-free at 1–800–
877–8339 and ask to be connected to
202–326–4024.)
SUPPLEMENTARY INFORMATION: PBGC’s
regulations prescribe actuarial
assumptions—including interest
assumptions—for valuing and paying
plan benefits of terminating singleemployer plans covered by title IV of
the Employee Retirement Income
Security Act of 1974. The interest
assumptions are intended to reflect
current conditions in the financial and
annuity markets.
These interest assumptions are found
in two PBGC regulations: the regulation
on Allocation of Assets in Single-
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Employer Plans (29 CFR part 4044) and
the regulation on Benefits Payable in
Terminated Single-Employer Plans (29
CFR part 4022). Assumptions under the
asset allocation regulation are updated
quarterly; assumptions under the benefit
payments regulation are updated
monthly. This final rule updates the
assumptions under the asset allocation
regulation for the third quarter (July
through September) of 2010 and updates
the assumptions under the benefit
payments regulation for July 2010.
The interest assumptions prescribed
under the asset allocation regulation
(found in Appendix B to Part 4044) are
used for the valuation of benefits for
allocation purposes under ERISA
section 4044. Two sets of interest
assumptions are prescribed under the
benefit payments regulation: (1) A set
for PBGC to use to determine whether
a benefit is payable as a lump sum and
to determine lump-sum amounts to be
paid by PBGC (found in Appendix B to
Part 4022), and (2) a set for privatesector pension practitioners to refer to if
they wish to use lump-sum interest rates
determined using PBGC’s historical
methodology (found in Appendix C to
Part 4022).
This amendment (1) Adds to
appendix B to part 4044 the interest
assumptions for valuing benefits for
allocation purposes in plans with
valuation dates during the third quarter
(July through September) of 2010, (2)
adds to appendix B to part 4022 the
interest assumptions for PBGC to use for
its own lump-sum payments in plans
with valuation dates during July 2010,
and (3) adds to appendix C to part 4022
the interest assumptions for privatesector pension practitioners to refer to if
they wish to use lump-sum interest rates
determined using PBGC’s historical
methodology for valuation dates during
July 2010.
The interest assumptions that PBGC
will use for valuing benefits for
allocation purposes (set forth in
appendix B to part 4044) will be 4.93
percent for the first 20 years following
the valuation date and 4.66 percent
thereafter. In comparison with the
interest assumptions in effect for the
second quarter of 2010, these interest
assumptions represent an increase of
0.30 percent for the first 20 years
following the valuation date and an
increase of 0.15 percent for all years
thereafter.
The interest assumptions that PBGC
will use for its own lump-sum payments
(set forth in appendix B to part 4022)
will be 2.50 percent for the period
during which a benefit is in pay status
and 4.00 percent during any years
preceding the benefit’s placement in pay
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]]>Agencies
[Federal Register Volume 75, Number 114 (Tuesday, June 15, 2010)]
[Rules and Regulations]
[Pages 33683-33688]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14398]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 40, 49, and 602
[TD 9486]
RIN 1545-BJ41
Indoor Tanning Services; Cosmetic Services; Excise Taxes
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final and temporary regulations that
provide guidance on the indoor tanning services excise tax imposed by
the Patient Protection and Affordable Care Act. These final and
temporary regulations
[[Page 33684]]
affect persons that use, provide, or pay for indoor tanning services.
The text of these temporary regulations also serves as the text of the
proposed regulations set forth in the notice of proposed rulemaking on
this subject in the Proposed Rules section of this issue of the Federal
Register.
DATES: Effective Date: These regulations are effective on June 15,
2010.
Applicability Date: For dates of applicability, see Sec. Sec.
40.0-1T(e) and 49.5000B-1T(h).
FOR FURTHER INFORMATION CONTACT: Taylor Cortright, (202) 622-3130 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these regulations has
been reviewed and approved by the Office of Management and Budget under
control number 1545-2177. The information is required to be maintained
in order for the provider of indoor tanning services to accurately
calculate the tax on indoor tanning services when those services are
offered with other goods and services, as described in Sec. 49.5000B-
1T(d)(2). An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid control number.
For further information concerning this collection of information,
and where to submit comments on the collection of information and the
accuracy of the estimated burden, and suggestions for reducing this
burden, please refer to the preamble to the cross-reference notice of
proposed rulemaking on this subject in the Proposed Rules section in
this issue of the Federal Register.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document amends the Excise Tax Procedural Regulations (26 CFR
part 40) and the Facilities and Services Excise Tax Regulations (26 CFR
part 49) under section 5000B of the Internal Revenue Code (Code).
Section 5000B was added to the Code by section 10907 of the Patient
Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119
(2010)), to impose an excise tax on indoor tanning services.
Explanation of Provisions
Section 5000B(a) imposes on any indoor tanning service a tax equal
to 10 percent of the amount paid for such service. Indoor tanning
service, as defined in section 5000B(b), does not include any
phototherapy service provided by a licensed medical professional. The
regulations define phototherapy service and clarify that such service
must be performed by, and on the premises of, a licensed medical
professional.
The tax applies to amounts paid after June 30, 2010, for indoor
tanning services. Liability for the tax arises at the time of payment
for the indoor tanning services. In some cases (such as purchase of an
undesignated payment card, discussed later in this preamble), it may
not be possible to determine whether there is a payment for indoor
tanning services. Thus, the regulations provide in those cases that a
payment is treated as made, and the tax is imposed, at the time it can
reasonably be determined that the payment is made specifically for
indoor tanning services. In the case of membership fees paid to certain
physical fitness facilities that provide indoor tanning services, the
regulations provide a different rule, discussed later in this preamble.
The regulations provide that the ``amount paid'' for purposes of
determining the tax base includes all amounts paid to the provider for
indoor tanning services, including any amount paid by insurance.
Providers of indoor tanning services, however, often sell other goods
and services (such as protective eyewear, footwear, towels, and tanning
lotions; manicures, pedicures and other cosmetic or spa treatments; and
access to sport or exercise facilities) in addition to indoor tanning
services. Thus, the regulations provide rules for determining the tax
when the provider charges for other goods and services in addition to
indoor tanning services.
Section 6001 requires taxpayers to keep books and records
sufficient to show whether or not they are liable for tax. To that end,
the regulations allow the provider to exclude charges for other goods
and services if the charges are separable, do not exceed the fair
market value of the other goods and services, and are shown in the
exact amounts in the records pertaining to the indoor tanning services
charge.
If the charges are not separately stated, but the total amount paid
covers indoor tanning services, then the tax is based on the portion of
the amount paid that is reasonably attributable to the indoor tanning
services. For example, if the provider sells bundled services in which
the indoor tanning service is bundled with other goods and services,
and the charge is not separately stated, the tax applies to the amount
paid that is reasonably attributable to the indoor tanning services.
This is consistent with the approach taken in Rev. Rul. 63-155 (1963-2
CB 566) (relating to the application of the section 4261 tax on
transportation by air to a package tour sold by a hotel that includes
airfare, hotel accommodations, and other services not subject to the
section 4261 tax).
The regulations provide that a payment for indoor tanning services
is treated as made, and liability for the tax is imposed, at the time
it can reasonably be determined that the payment is made specifically
for indoor tanning services. If a payment is made with a gift
certificate, gift card or similar device with a monetary value that can
be redeemed for goods or services that may, but do not necessarily,
include indoor tanning services (an undesignated payment card), it can
reasonably be determined that a payment is made specifically for indoor
tanning services when the undesignated payment card is redeemed, in
whole or in part, to pay specifically for indoor tanning services (and
not when a payment is made to purchase the undesignated payment card).
This is consistent with the approach taken in Rev. Rul. 56-157 (1956-1
CB 523) (relating to the application of the section 4261 tax on
transportation by air to a gift certificate that could be redeemed for
air transportation or cash). In these cases, the provider of the
services calculates the tax on the amount of the undesignated payment
card that is redeemed for indoor tanning services at the time it is
redeemed, and the rules of section 5000B(c) apply to determine the
person liable for the tax.
If, however, the provider sells bundled services in which access to
indoor tanning services (in a specified or unlimited amount) over a
period of time is bundled with other goods and services, it can
reasonably be determined that the payment is made specifically for
indoor tanning services at the time the bundled services are purchased,
because there is value attributable to the access to indoor tanning
services. This is different than the example of the gift certificate,
because the gift certificate can be redeemed entirely for non-taxable
services, but the purchase of bundled services will always include
access to indoor tanning services in the ``bundle''. In addition, for
purposes of these regulations, payments for indoor
[[Page 33685]]
tanning services are subject to tax, regardless of actual usage. Thus,
the tax applies to the amount paid that is reasonably attributable to
the access to indoor tanning services, and the rules of section
5000B(c) apply to determine the person liable for the tax.
On the other hand, in the case of a payment of a membership fee to
a qualified physical fitness facility (QPFF) (as defined in the
regulations) that includes access to indoor tanning services, the IRS
and Treasury Department have determined that the access is incidental
to the QPFF's predominant business or activity and any amount
attributable to such access would be difficult to calculate and
administer. Thus, an amount paid to a QPFF is not a payment for indoor
tanning services and the tax is not imposed on the amount paid. The
regulations narrowly define QPFF to require, among other things, that
the predominant business or activity of the facility is to serve as a
physical fitness facility, taking into consideration all of the facts
and circumstances. Thus, for example, a business predominantly engaged
in providing indoor tanning or other cosmetic services cannot become a
QPFF by allowing users access to exercise classes or pieces of exercise
equipment. The regulations further provide that a QPFF cannot charge
separately for indoor tanning services, offer such services to the
public, or offer different membership fee rates based on access to
indoor tanning services. Thus, a physical fitness facility that
distinguishes memberships based on access to indoor tanning services is
not a QPFF.
Section 5000B(c)(1) provides that the person liable for the tax is
the individual on whom the indoor tanning service is performed. In some
cases, a person might pay for services to be performed on someone else,
such as by purchasing a gift certificate for indoor tanning services.
Because the tax is calculated on the amount paid for the indoor tanning
services, and because the statute contemplates that the tax will be
collected at the time payment is made, the person who pays for the
services (payor) is deemed to be the person on whom the services are
performed for purposes of collecting the tax. Thus, the payor is liable
for the tax on the services. If a person pays for a gift certificate
for indoor tanning services (or for bundled services that includes
indoor tanning services), then the liability for the tax arises at the
time of payment.
However, if a person purchases an undesignated payment card, then a
payment has not been made for indoor tanning services until the
undesignated payment card is redeemed specifically to pay for indoor
tanning services. In that case, the liability for the tax arises at the
time the undesignated payment card is redeemed. The person who redeems
the card for indoor tanning services is deemed to be the person on whom
the services are performed for purposes of collecting the tax, and that
person is liable for the tax on the services.
Section 5000B(c)(2) provides that the person receiving the payment
on which tax is imposed (the provider) generally must collect the tax
from the payor and pay the tax over quarterly to the government. These
regulations provide that the amount paid by the payor to the provider
is presumed to include the tax if the tax is not separately stated.
In the Proposed Rules section in this issue of the Federal
Register, the IRS and Treasury Department are requesting comments
regarding these temporary regulations, including comments on whether
the presumption relating to section 5000B(c)(2) (that the amount paid
by the payor to the provider includes the tax if the tax is not
separately stated) is consistent with the manner in which providers
maintain books and records and specifically whether such a rule is
useful for purposes of minimizing recordkeeping burdens of the
providers.
If the payor does not pay the tax at the time payment for the
indoor tanning services is made, section 5000B(c)(3) provides that, to
the extent the tax is not collected, the provider must pay the tax.
Thus, the regulations provide that if the provider of the indoor
tanning services fails to collect the tax from the payor at the time
the payor makes a payment for indoor tanning services, the provider is
liable for the tax.
These regulations apply the existing excise tax procedural rules in
26 CFR part 40 to the tax on indoor tanning services. Thus, the tax,
whether paid by the payor or the provider under section 5000B(c), is
reported by the provider on Form 720 ``Quarterly Federal Excise Tax
Return.'' These temporary part 40 regulations do not require
semimonthly deposits of tax; rather, full payment of the tax is due
quarterly at the time Form 720 is timely filed. The existing
regulations also provide that once a Form 720 is required to be filed
for a calendar quarter, a Form 720 must be filed for each subsequent
calendar quarter, whether or not liability is incurred (or tax must be
collected and paid over) during that subsequent quarter, until a final
return under Sec. 40.6011(a)-2 is filed.
Some providers of indoor tanning services may operate more than one
location at which the services are provided. Each business unit that
has, or is required to have, a separate employer identification number
is treated as a separate person that must file a separate Form 720.
Collected taxes are held in special trust for the United States
pursuant to section 7501, and any person who willfully fails to collect
and pay over the tax may be subject to the penalty in section 6672. The
IRS will generally administer the indoor tanning services tax (in
Chapter 49 of the Code), the same way it administers the other
collected excise taxes in Chapter 33 of the Code (the communications
and transportation taxes). However, the reporting provisions in Sec.
49.4291-1 of the regulations (relating to certain inabilities to
collect or refusals to pay tax) do not apply to the tax on indoor
tanning services because section 4291 provides that these rules apply
only to the Chapter 33 taxes.
Availability of IRS Documents
The IRS revenue rulings cited in this preamble are published in the
Internal Revenue Cumulative Bulletin and are available from the
Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-
7954.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. For
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6),
please refer to the Special Analysis section in the preamble to the
cross-referenced notice of proposed rulemaking in the Proposed Rules
section in this issue of the Federal Register. Pursuant to section
7805(f) of the Code, these regulations have been submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on their impact on small business.
Drafting Information
The principal author of these regulations is Taylor Cortright,
Office of the Associate Chief Counsel (Passthroughs and Special
Industries). However, other personnel from the IRS and the Treasury
Department participated in their development.
[[Page 33686]]
List of Subjects
26 CFR Part 40
Excise taxes, Reporting and recordkeeping requirements.
26 CFR Part 49
Excise taxes, Reporting and recordkeeping requirements, Telephone,
Transportation.
26 CFR Part 602
Reporting and recordkeeping requirements.
Amendments to the Regulations
0
Accordingly, 26 CFR parts 40, 49, and 602 are amended as follows:
PART 40--EXCISE TAX PROCEDURAL REGULATIONS
0
Paragraph 1. The authority citation for part 40 continues to read in
part as follows:
Authority: 26 U.S.C. 7805. * * *
0
Par. 2. Section 40.0-1 is amended as follows:
0
1. Paragraph (d) is redesignated as paragraph (f) and new paragraphs
(d) and (e) are added.
0
2. The paragraph heading of redesignated paragraph (f) is revised.
The addition and revision read as follows:
Sec. 40.0-1 Introduction.
* * * * *
(d) [Reserved]. For further guidance, see Sec. 40.0-1T(d).
(e) [Reserved]. For further guidance, see Sec. 40.0-1T(e).
(f) Effective/applicability dates. * * *
0
Par. 3. Section 40.0-1T is added to read as follows:
Sec. 40.0-1T Introduction (temporary).
(a) through (c) [Reserved]. For further guidance, see Sec. 40.0-
1(a) through (c).
(d) Indoor tanning services. The regulations in this part 40 also
set forth administrative provisions relating to the excise taxes
imposed by chapter 49, relating to cosmetic services.
(e) Effective/applicability date. Paragraph (d) of this section
applies to returns that relate to calendar quarters beginning after
June 30, 2010.
(f) [Reserved]. For further guidance, see Sec. 40.0-1(f).
(g) Expiration date. Paragraph (d) of this section expires on or
before June 11, 2013.
0
Par. 4. Section 40.6302(c)-1 is amended by:
0
1. In paragraph (a)(1), removing the language ``by statute'' and adding
``by statute, by Sec. 40.6302(c)-1T(g),'' in its place.
0
2. Revising the paragraph heading in paragraph (f).
0
3. Adding paragraph (g).
The revision and additions read as follows:
Sec. 40.6302(c)-1 Use of Government depositories.
* * * * *
(f) Effective/applicability date. * * *
(g) [Reserved]. For further guidance, see Sec. 40.6302(c)-1T(g).
0
Par. 5. Section 40.6302(c)-1T is added to read as follows:
Sec. 40.6302(c)-1T Use of government depositaries (temporary).
(a) through (f) [Reserved]. For further guidance, see Sec.
40.6302(c)-1(a) through (f).
(g) Exception for indoor tanning services. No deposit is required
for the taxes imposed by section 5000B (relating to indoor tanning
services) for any calendar quarter beginning after June 30, 2010.
(h) Expiration date. This section expires on or before June 11,
2013.
PART 49--FACILITIES AND SERVICES EXCISE TAX
0
Par. 6. The authority citation for part 49 continues to read in part as
follows:
Authority: 26 U.S.C. 7805. * * *
0
Par. 7. Section 49.0-3T is added to read as follows:
Sec. 49.0-3T Introduction; cosmetic services (temporary).
On and after July 1, 2010, this part 49 also applies to taxes
imposed by chapter 49 of the Internal Revenue Code, relating to
cosmetic services. See part 40 of this chapter for regulations relating
to returns and payments of taxes imposed by chapter 49.
0
Par. 8. Subpart G is added to read as follows:
Subpart G--Cosmetic Services
Sec. 49.5000B-1T Indoor tanning services (temporary).
(a) Overview. This section provides rules for the tax imposed by
section 5000B on any indoor tanning service.
(b) Imposition of tax--(1) General rule. Tax is imposed by section
5000B at the time of payment for any indoor tanning service.
(2) Undesignated payment cards. In the case of an undesignated
payment card (within the meaning of paragraph (c)(5) of this section),
payment for indoor tanning services is made when it can reasonably be
determined that a payment is made specifically for indoor tanning
services. Thus, when the undesignated payment card is redeemed, in
whole or in part, to pay for indoor tanning services (and not when a
payment is made to purchase the undesignated payment card), it can
reasonably be determined that a payment for indoor tanning services is
made, and the tax is imposed.
(3) Payments to qualified physical fitness facilities. No portion
of a payment to a qualified physical fitness facility (within the
meaning of paragraph (c)(4) of this section) that includes access to
indoor tanning services is treated as a payment for indoor tanning
services.
(c) Definitions--(1) Indoor tanning service means a service
employing any electronic product designed to incorporate one or more
ultraviolet lamps and intended for the irradiation of an individual by
ultraviolet radiation, with wavelengths in air between 200 and 400
nanometers, to induce skin tanning. The term does not include
phototherapy service performed by, and on the premises of, a licensed
medical professional (such as a dermatologist, psychologist, or
registered nurse).
(2) Other goods and services include, but are not limited to,
protective eyewear, footwear, towels, and tanning lotions; manicures,
pedicures and other cosmetic or spa treatments; and access to sport or
exercise facilities.
(3) Phototherapy service means a service that exposes an individual
to specific wavelengths of light for the treatment of--
(i) Dermatological conditions (such as acne, psoriasis, and
eczema);
(ii) Sleep disorders;
(iii) Seasonal affective disorder or other psychiatric disorder;
(iv) Neonatal jaundice;
(v) Wound healing; or
(vi) Other medical condition determined by a licensed medical
professional to be treatable by exposing the individual to specific
wavelengths of light.
(4) Qualified physical fitness facility means a facility--
(i) In which the predominant business or activity is providing
facilities, equipment, and services to its members for purposes of
exercise and physical fitness (determined by taking into consideration
all of the facts and circumstances, such as the cost of the equipment,
variety of services offered, actual usage of services by customers,
revenue generated by different services, and how the entity holds
itself out to the public through advertising or other means);
(ii) In which providing indoor tanning services is not a
substantial part of the business or activity; and
[[Page 33687]]
(iii) That does not sell indoor tanning services for a fee to the
public or otherwise offer different pricing options to its members
based in whole or in part on access to indoor tanning services.
(5) Undesignated payment card means a gift certificate, gift card,
or similar item that can be redeemed for goods or services that may,
but do not necessarily, include indoor tanning services.
(d) Application of tax--(1) Tax on total amount paid for indoor
tanning services. The tax is imposed on the total amount paid for
indoor tanning services, including any amount paid by insurance.
(2) Charges for other goods and services; tanning services
separately stated. If a payment covers charges for indoor tanning
services as well as other goods and services, the charges for other
goods and services may be excluded in computing the tax payable on the
amount paid, if the charges--
(i) Are separable (regardless of the manner of invoicing the
charges);
(ii) Do not exceed the fair market value of such other goods and
services; and
(iii) Are shown in the exact amounts in the records pertaining to
the indoor tanning services charge.
(3) Charges for other goods and services; tanning services bundled.
This paragraph (d)(3) applies if paragraph (d)(2) of this section does
not apply. If a provider offers indoor tanning services (whether of a
specified or unlimited amount, including ``free'' or reduced-rate
indoor tanning services) bundled with other goods and services, the
payment for the bundled services includes an amount paid for indoor
tanning services. The tax applies to that portion of the amount paid to
the provider that is reasonably attributable to indoor tanning
services. The amount reasonably attributable to indoor tanning services
may be determined by applying to the total amount paid a ratio
determined by comparing--
(i) The provider's charge for indoor tanning services not in
bundled services or, in the event the provider only charges for other
goods and services as part of bundled services, the fair market value
of similar services (based on the amount charged by comparable
providers in the same geographic area); to
(ii) The charge determined in paragraph (d)(3)(i) of this section
plus the provider's charge for the other goods and services in the
bundled services or, in the event the provider only charges for other
goods and services as part of bundled services, the fair market value
of similar goods and services (based on the amount charged by
comparable providers in the same geographic area).
(e) Person liable for the tax--(1) General rule. The person who
pays for the indoor tanning service is deemed to be the person on whom
the service is performed for purposes of collecting the tax. Thus, the
person paying for the indoor tanning service is liable for the tax at
the time of payment.
(2) Undesignated payment cards. In the case of a payment made with
an undesignated payment card (within the meaning of paragraph (c)(5) of
this section) described in paragraph (b)(2) of this section, the person
who redeems the card, in whole or in part, to pay specifically for
indoor tanning services is the person who pays for the indoor tanning
services. Thus, the person who redeems an undesignated payment card, in
whole or in part, to pay specifically for indoor tanning services is
liable for the tax at the time such payment is made.
(3) Tax not collected at time of payment. If the person paying for
the indoor tanning services does not pay the tax to the person
receiving the payment for the services at the time of payment for the
services, the person receiving the payment is liable for the tax.
(f) Persons receiving payment must collect tax. Every person
receiving a payment for indoor tanning services on which a tax is
imposed under this section shall collect the amount of the tax from the
person making that payment. The total amount paid is presumed to
include the tax if the tax is not separately stated.
(g) Examples. The following examples illustrate the application of
section 5000B and this section.
Example 1. A is a provider of indoor tanning services and other
goods and services. On July 1, 2010, B, an individual, pays A for
one 10-minute indoor tanning service (as defined in paragraph (c)(1)
of this section) and one pair of protective eyewear. A charges
$15.00 for the 10-minute indoor tanning service and $2.00 for a pair
of protective eyewear. The $2.00 charge for the protective eyewear
does not exceed its fair market value. The invoice from A is $17.00
(exclusive of the tax imposed by section 5000B) and separately
states the cost of the protective eyewear. Because the cost of the
protective eyewear is separately stated, A calculates the section
5000B tax on $15.00 as provided by paragraph (d)(2) of this section.
B is liable for the tax when B pays for the services. If A does not
collect the tax from B at the time B pays for the services, A is
liable for the tax.
Example 2. A, a provider of indoor tanning services and other
goods and services, periodically offers bundled services to promote
additional business. On July 1, 2010, C, an individual, buys bundled
service from A that includes 10 swimming lessons, the use of towels
while on A's premises, one pair of protective eyewear, and 2
``free'' 10-minute indoor tanning services. A charges $252.00
(exclusive of the tax imposed by section 5000B) for the bundled
services. If these services are purchased separately, A charges
(exclusive of the tax imposed by section 5000B) $25.00 per swimming
lesson, $15.00 for a 10-minute indoor tanning service, $2.00 for the
protective eyewear and does not charge for the use of towels while
on A's premises. As determined under paragraph (d)(3) of this
section, the section 5000B tax applies to the amount reasonably
attributable to the indoor tanning service, which is $26.81 (($30/
$282) x $252).
Example 3. On July 1, 2010, D buys bundled services (described
in Example 2) from A as a gift for C. Under paragraph (e)(1) of this
section, D is deemed to be the person on whom the indoor tanning
services are performed for purposes of collecting the tax.
Therefore, under paragraph (b)(1) of this section, D is liable for
the tax when D pays for the services. The tax will be computed under
the rules of paragraph (d)(3) of this section. If D does not pay the
tax at the time D pays for the services, A is liable for the tax.
Example 4. S operates a spa that provides a variety of cosmetic
goods and services, including indoor tanning services. On July 1,
2010, D buys a gift certificate in the amount of $100.00 from S as a
gift for C. The gift certificate may be redeemed by C for C's choice
among several services offered by S, including indoor tanning
services. On July 15, 2010, C partially redeems the gift certificate
to pay for one 10-minute indoor tanning service. Under paragraph
(b)(2) of this section, a payment for indoor tanning services is
made, and the tax under section 5000B is imposed, on July 15, 2010,
when C partially redeems the gift certificate to pay for one indoor
tanning service. Under paragraph (e)(2) of this section, C is the
person who pays for the indoor tanning services. Therefore, C is
liable for the tax, computed under the rules of paragraph (d) of
this section, and pays the tax by permitting S to debit the amount
of the tax from the balance of the gift certificate or by paying the
amount of the tax to S in cash. If C does not pay the tax at the
time C partially redeems the gift certificate to pay for the indoor
tanning services, S is liable for the tax.
Example 5. On July 1, 2010, E pays $1000 (exclusive of the tax
imposed by section 5000B) to spa S for the right to use the
following equipment and services during the month of July: up to
four massages or facials, unlimited use of a sauna, steam room,
showers, and towel service, and unlimited indoor tanning services.
If the services are purchased separately, S charges (exclusive of
the tax imposed by section 5000B) $150 for unlimited indoor tanning
services during the month of July, and $900 for the other equipment
and services during the month of July, not including indoor tanning
services. Under paragraph (b) of this section, E has made a payment
for indoor tanning services and the tax will be computed under the
rules of paragraph (d)(3) of this section. As determined under
paragraph (d)(3) of this section, the section 5000B tax applies to
the amount reasonably attributable to the indoor
[[Page 33688]]
tanning services, which is $142.86 (($150/$1050) x $1000). If E does
not pay the tax at the time E pays for the bundled services, S is
liable for the tax.
Example 6. G operates a full-service gym facility that offers
fitness classes, multiple exercise machines (such as treadmills,
stationary bicycles, weight training machines, and free weights),
and has as its predominant business providing these facilities,
equipment, and services to members for purposes of exercise and
physical fitness. G provides its members with access to indoor
tanning services, comprised of two tanning beds that meet the
definition of indoor tanning services under paragraph (c)(1) of this
section. G generally charges its members a fee for monthly usage of
its facilities, equipment, and services, but also offers short-term
or free trial memberships and allows non-members to purchase
individual or a series of exercise classes. G does not charge any
fee for the indoor tanning services, does not offer indoor tanning
services separately from its other services, and has no membership
tier or category that differs from others based on access to the
indoor tanning services. G holds itself out to the public through
advertising and marketing as providing equipment and services to
improve physical fitness. On July 1, 2010, F pays a membership fee
to G in return for use of G's facility during the month of July.
Under paragraph (b)(3) of this section, no portion of F's membership
fee payment is treated as a payment made for indoor tanning
services, because G is a qualified physical fitness facility under
paragraph (c)(4) of this section. Therefore, no liability for tax
arises under section 5000B.
(h) Effective/applicability date. This section applies to amounts
paid after June 30, 2010, for indoor tanning services.
(i) Expiration date. This section expires on or before June 11,
2013.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 9. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 10. In Sec. 602.101, paragraph (b) is amended by adding the
following entry in numerical order to the table to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where indentified and described control No.
------------------------------------------------------------------------
* * * * *
1.5000B-1.................................................. 1545-2177
* * * * *
------------------------------------------------------------------------
Approved: June 9, 2010.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2010-14398 Filed 6-11-10; 11:15 am]
BILLING CODE 4830-01-P
