Indoor Tanning Services; Excise Taxes, 34874-34879 [2013-13876]
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Federal Register / Vol. 78, No. 112 / Tuesday, June 11, 2013 / Rules and Regulations
will give a procurement preference for
qualifying biobased paint removers. By
that date, Federal agencies that have the
responsibility for drafting or reviewing
specifications for products to be
procured shall ensure that the relevant
specifications require the use of
biobased paint removers.
§ 3201.107
Dated: June 5, 2013.
Gregory L. Parham,
Acting Assistant Secretary for
Administration, U.S. Department of
Agriculture.
[FR Doc. 2013–13763 Filed 6–10–13; 8:45 am]
BILLING CODE 3410–TX–P
FEDERAL RESERVE SYSTEM
12 CFR Part 261
Rules Regarding Availability of
Information
CFR Correction
In Title 12 of the Code of Federal
Regulations, Parts 230 to 299, revised as
of January 1, 2013, on page 258, in
§ 261.2(c)(1)(ii), paragraphs (A) and (B)
are reinstated to read as follows:
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Definitions.
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(c)(1) * * *
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(ii) * * *
(A) Such final orders, amendments, or
modifications of final orders, or other
actions or documents that are
specifically required to be published or
made available to the public pursuant to
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[FR Doc. 2013–13917 Filed 6–10–13; 8:45 am]
BILLING CODE 1505–01–P
Water turbine bearing oils.
(a) Definition. Lubricants that are
specifically formulated for use in the
bearings found in water turbines for
electric power generation. Previously
designated turbine drip oils are used to
lubricate bearings of shaft driven water
well turbine pumps.
(b) Minimum biobased content. The
Federal preferred procurement product
must have a minimum biobased content
of at least 46 percent, which shall be
based on the amount of qualifying
biobased carbon in the product as a
percent of the weight (mass) of the total
organic carbon in the finished product.
(c) Preference compliance date. No
later than June 11, 2014, procuring
agencies, in accordance with this part,
will give a procurement preference for
qualifying biobased water turbine
bearing oils. By that date, Federal
agencies that have the responsibility for
drafting or reviewing specifications for
products to be procured shall ensure
that the relevant specifications require
the use of biobased water turbine
bearing oils.
§ 261.2
12 U.S.C. 1818(u), or other applicable
law, including the record of litigated
proceedings; and (B) The public section
of Community Reinvestment Act
examination reports, pursuant to 12
U.S.C. 2906(b); and
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 40, 49, and 602
[TD 9621]
RIN 1545–BJ40
Indoor Tanning Services; Excise Taxes
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
SUMMARY: This document contains final
regulations on the indoor tanning
services excise tax imposed by the
Patient Protection and Affordable Care
Act. These final regulations affect
persons that use, provide, or pay for
indoor tanning services.
DATES: Effective Date: These regulations
are effective on June 11, 2013.
Applicability Dates: For dates of
applicability, see §§ 40.0–1(d),
40.6302(c)–1(f), and 49.5000B–1(h).
FOR FURTHER INFORMATION CONTACT:
Michael H. Beker or Natalie A. Payne,
at (202) 622–3130 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget under
control number 1545–2177. The
collection of information in these final
regulations is in § 49.5000B–1. The
information is required to be maintained
by 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.
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.
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
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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. On June 15,
2010, temporary regulations relating to
this topic and a notice of proposed
rulemaking cross-referencing the
temporary regulations were published
in the Federal Register (TD 9486, 75 FR
33683; REG–112841–10, 75 FR 33740)
(2010 regulations). Written and
electronic comments were received and
a public hearing was held on October
11, 2011. All comments were
considered and are available for public
inspection at https://
www.regulations.gov. After considering
the written comments and comments
made at the public hearing, the
proposed regulations are adopted as
final regulations by this Treasury
decision and the corresponding
temporary regulations are removed.
Public comments on the 2010
regulations identified two issues that
the IRS and the Treasury Department
will study further and on which the IRS
and the Treasury Department request
additional comments. Those issues, the
treatment of bundled services and
undesignated payment cards, are
discussed later in this preamble.
Comments on those issues should be
submitted in writing by October 9, 2013
and can be mailed to the Office of
Associate Chief Counsel (Passthroughs
and Special Industries), Re: REG–
112841–10, CC:PSI:B7, Room 5314,
1111 Constitution Avenue NW.,
Washington, DC 20224. All comments
received will be available for public
inspection at https://
www.regulations.gov (IRS REG–112841–
10).
Summary of Comments
Qualified Physical Fitness Facilities.
Commenters questioned the exception
for Qualified Physical Fitness Facilities
(QPFFs) in the 2010 regulations.
The 2010 regulations exempt from the
tax any membership fee paid to a QPFF
that includes access to indoor tanning
services. In a QPFF, taking into
consideration all of the facts and
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circumstances, the predominant
business or activity of the facility is to
serve as a physical fitness facility. The
2010 regulations limit the definition of
a QPFF to a business that does not
charge separately for indoor tanning
services, offer such services to the
general public, or offer different
membership fee rates based on access to
indoor tanning services.
Commenters stated that an exception
for QPFFs does not appear in section
5000B and suggested that there is no
compelling reason to differentiate these
facilities from other indoor tanning
service facilities. Commenters argued
that while other providers of bundled
services must use a complicated method
of determining the amount attributable
to indoor tanning services (as described
in § 49.5000B–1T(d)(3) of the 2010
regulations), QPFFs are exempt from the
tax even though they provide the same
indoor tanning services. Thus, these
commenters suggested, the exception for
QPFFs creates an unfair competitive
advantage for some providers of indoor
tanning services over others, and should
not be included in the final regulations.
The final regulations do not adopt this
suggestion. Access to indoor tanning
services is incidental to a QPFF’s
predominant business or activity.
Customers of a QPFF typically pay a
monthly fee in exchange for access to all
equipment in the QPFF, including any
indoor tanning equipment. Requiring a
QPFF to allocate its customers’ monthly
membership fees among tanning and
non-tanning services under such an
arrangement would be burdensome and
difficult to administer. In contrast, nonQPFF providers of bundled goods and
services typically offer indoor tanning
services to customers as part of the
purchase of a package of specific goods
or services. This generally allows the
provider to determine the portion of the
purchase price that relates to the use of
indoor tanning services by the customer
and allocate the appropriate portion of
the purchase price to those services.
Free indoor tanning services; bonus
points. Commenters requested guidance
on the application of the tax to free
indoor tanning services and indoor
tanning services that are sold at reduced
rates.
The final regulations provide that the
section 5000B tax only applies if an
amount is paid for indoor tanning
services. If services are provided at a
reduced rate, the tax applies to the
amount actually paid for the services.
See Rev. Rul. 84–12 (1984–1 CB 211)
and the rulings cited therein. Also
consistent with Rev. Rul. 84–12, the
final regulations do not apply the tax to
indoor tanning services that are
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obtained by redemption of ‘‘bonus
points’’ through a loyalty program or
similar program. In the case of
promotions that entitle a customer to a
‘‘free’’ tan with the purchase of a certain
number of tans, the amount paid for the
purchased tans reflects a reduced price
for all of the tans rather than a package
of tans at full price coupled with a
‘‘free’’ purchased tan. Thus, the tax is
imposed on the purchase of the package
of tans rather than on the redemption of
the additional tan.
Bundled goods and services. If a
provider (other than a QPFF) 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, the 2010 regulations set out a
formula to determine the amount
reasonably attributable to indoor
tanning services.
Commenters noted that there are no
commercially available point-of-sale
software programs that automatically
calculate the tax on the sale of indoor
tanning services that are bundled with
other goods and services. Thus,
providers must manually calculate the
tax on these types of sales, a process
that the commenters said is time
consuming, expensive, and prone to
error.
The final regulations do not change
the rules for bundled goods and
services. The statute imposes the tax on
indoor tanning services; if those services
are bundled with other goods and
services, the provider must determine
the amount of the payment for the
bundled goods and services that is
reasonably attributable to indoor
tanning services. The 2010 regulations
set forth a reasonable method for
making this determination, which is
retained with minor clarifications in the
final regulations. However, the final
regulations also authorize the Treasury
Department and the IRS to issue future
guidance to provide additional options
for making this determination. The
Treasury Department and the IRS
request comments on other reasonable
methods for determining the amount of
a payment for bundled goods and
services that is reasonably attributable
to indoor tanning services.
Undesignated payment cards. The
2010 regulations define an undesignated
payment card as 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. Under the 2010
regulations, the tax is not imposed on
the purchase of these cards; rather, the
tax is imposed only when the card is
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redeemed specifically to pay for indoor
tanning service.
Commenters noted that, in practice, a
provider can collect the tax only when
the card is bought and not when the
card is redeemed for indoor tanning
service. Thus, the commenters
suggested that the tax be imposed on the
purchase of an undesignated payment
card. Providers could either estimate
how much of the card will be used for
indoor tanning service in the future or
collect tax on the entire purchase price.
The final regulations do not adopt this
suggestion. However, the Treasury
Department and the IRS welcome
comments on this issue. The final
regulations authorize the Treasury
Department and the IRS to issue future
guidance to provide additional options
for administering the tax with respect to
undesignated payment cards.
Form 720. The temporary regulations
require the tax to be reported and paid
quarterly on Form 720, ‘‘Quarterly
Federal Excise Tax Return.’’
Commenters suggested that Form 720 is
too complex or burdensome for the
average provider to complete and file.
These commenters request that the IRS
issue a special tax return form
specifically and exclusively for
reporting the section 5000B tax.
The final regulations do not adopt this
suggestion. Form 720 is the standard
form used to report many excise taxes,
including the other types of excise taxes
collected from a customer upon the
purchase of services, such as the taxes
on communications services and
transportation of persons and property
by air. In addition, the Treasury
Department and the IRS believe that
creating a new form would add
unnecessary complexity. For more
information about reporting
requirements, see § 40.6011(a)–1(a).
Additional Clarification of 2010
Regulations
Membership and enrollment fees. The
final regulations clarify that the tax is
imposed on amounts paid for prepaid
monthly membership and enrollment
fees to a provider of indoor tanning
services, other than a QPFF, even if a
member does not use any indoor
tanning services during the period to
which the fee relates.
Some providers offer monthly
membership programs through which
customers receive a number of tanning
sessions at a lower cost than would be
charged for each session individually.
Some of these providers charge
customers an enrollment fee when the
customers join a membership program.
Typically, the customer pays the
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Drafting Information
Availability of IRS Documents
The IRS revenue ruling cited in this
preamble is published in the Internal
Revenue Cumulative Bulletin and is
available from the Superintendent of
Documents, P.O. Box 371954, Pittsburgh
PA, 15250–7954.
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enrollment fee before paying the first
monthly membership charge.
Some providers also impose fees on
their customers to allow the customer to
skip one or more months of membership
dues without being charged an
enrollment fee when the customer
restarts the monthly membership.
Amounts paid to a provider that
temporarily suspend a periodic
membership program are amounts paid
for indoor tanning services. Because
payment of these fees allows the
customer to receive indoor tanning
services at reduced prices, the final
regulations clarify that these fees are
subject to the section 5000B tax as
amounts paid for indoor tanning
services.
26 CFR Part 602
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866, as
supplemented by Executive Order
13563. 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. It is hereby certified that
these regulations will not have a
significant economic impact on a
substantial number of small entities.
This certification is based on the fact
that these regulations are designed to
accommodate the recordkeeping
methods currently used by small
entities that provide indoor tanning
services. The regulations merely
implement the tax imposed by section
5000B of the Code, and section 6001 of
the Code already requires taxpayers to
keep books and records sufficient to
show whether or not they are liable for
tax. The information necessary to
prepare these records is readily
available to providers, and this
recordkeeping will take little additional
time to complete. Accordingly, a
Regulatory Flexibility Analysis under
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to
section 7805(f) of the Code, the notice
of proposed rulemaking that preceded
these regulations was submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business, and no
comments were received.
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Excise taxes, Reporting and
recordkeeping requirements.
§ 40.6302(c)–1T(g),’’ and adding ‘‘by
statute’’ in its place.
■ 2. Paragraph (e)(1)(iii) is amended by
removing the language ‘‘chemicals);
and’’ and adding ‘‘chemicals);’’ in its
place.
■ 3. Paragraph (e)(1)(iv) is amended by
removing the language ‘‘plans).’’ and
adding ‘‘plans); and’’ in its place.
■ 4. Paragraph (e)(1)(v) is added.
■ 5. Paragraph (f) is revised.
■ 6. Paragraph (g) is removed.
The addition and revision read as
follows:
26 CFR Part 49
§ 40.6302(c)–1
Excise taxes, Reporting and
recordkeeping requirements, Telephone,
Transportation.
*
The principal author of these
regulations is Michael H. Beker, Office
of the Associate Chief Counsel
(Passthroughs and Special Industries).
However, other personnel from the IRS
and the Treasury Department
participated in their development.
List of Subjects
26 CFR Part 40
Reporting and recordkeeping
requirements.
Adoption of 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 (a), second sentence, is
amended by removing the language
‘‘and 39’’ and adding ‘‘39, and 49’’ in its
place.
■ 2. Paragraph (a), third sentence, is
amended by removing the language
‘‘and chapter 39 to taxes imposed on
registration-required obligations’’ and
adding ‘‘chapter 39 to taxes imposed on
registration-required obligations; and
chapter 49 to taxes imposed on indoor
tanning services’’ in its place.
■ 3. Paragraph (d) is revised.
■ 4. Paragraphs (e) and (f) are removed.
The revision reads as follows:
■
§ 40.0–1
Introduction.
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Deposits.
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(e) * * *
(1) * * *
(v) Section 5000B (relating to indoor
tanning services).
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(f) Effective/applicability date. This
section applies to deposits and
payments made after March 31, 2013.
For rules that apply before that date, see
26 CFR part 40 (revised as of April 1,
2013).
§ 40.6302(c)–1T
[Removed]
Par. 5. Section 40.6302(c)–1T is
removed.
■
PART 49—FACILITIES AND SERVICES
EXCISE TAX
■ Par. 6. The authority citation for part
49 continues to read in part as follows:
Authority: 26 U.S.C. 7805. * * *
Par. 7. Section 49.0–1 is revised to
read as follows:
■
§ 49.0–1
Introduction.
The regulations in this part 49 are
designated ‘‘Facilities and Services
Excise Tax Regulations.’’ The
regulations relate to the taxes on
communications and transportation by
air imposed by chapter 33 of the
Internal Revenue Code and the taxes on
indoor tanning services imposed by
section 5000B. See part 40 of this
chapter for regulations relating to
returns, payments, and deposits of these
taxes.
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(d) Effective/applicability date. This
part applies to returns that relate to
periods beginning after March 31, 2013.
For rules that apply before that date, see
26 CFR part 40 (revised as of April 1,
2013).
Par. 8. Section 49.0–3T is removed.
■ Par. 9. Subpart G is revised to read as
follows:
§ 40.0–1T
§ 49.5000B–1
[Removed]
Par. 3. Section 40.0–1T is removed.
■ Par. 4. Section 40.6302(c)–1 is
amended as follows:
■ 1. Paragraph (a)(1) is amended by
removing the language ‘‘by statute, by
■
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§ 49.0–3T
[Removed]
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Subpart G—Indoor Tanning Services
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
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at the time of payment for any indoor
tanning service.
(2) Undesignated payment cards—In
general. Payment for indoor tanning
services is made when an 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).
(c) Definitions—(1) The term 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) The term other goods and services
includes, but is 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) The term 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) The term provider means a person
that provides an indoor tanning service
as defined in paragraph (c)(1) of this
section.
(5) The term qualified physical fitness
facility means a facility—
(i) In which the predominant business
or activity is providing 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.
(6) The term 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—(i) In general. The tax is
imposed on the total amount paid for
indoor tanning services, including any
amount paid by insurance. The total
amount paid is presumed to include the
tax if the tax is not separately stated.
(ii) Free services and reduced rates.
The tax does not apply to indoor
tanning services that are provided free
of charge. Indoor tanning services are
provided free of charge if no one pays
anything of value to the provider of the
service for the indoor tanning service.
Thus, for example, tax is not imposed
on the redemption of a promotional
coupon for indoor tanning services if
the coupon is provided at no cost and
at no obligation to purchase anything. If
indoor tanning services are provided at
a reduced rate, the tax applies to the
amount actually paid for the services.
(iii) Bonus points. The redemption of
benefits such as ‘‘bonus points’’ under
a loyalty program or similar program or
promotion is not a payment for indoor
tanning services. Thus, for example, in
a promotion that entitles a customer to
a ‘‘free’’ tan with the purchase of four
tans, tax is not imposed on the
redemption of the fifth tan because the
amount paid for the four tans included
a reduced price for the fifth tan.
(iv) Other fees. Fees for starting,
joining, registering, enrolling, and
similar fees paid to a provider to join a
monthly (or other periodic) membership
program that provides indoor tanning
services are amounts paid for indoor
tanning services. Similarly, amounts
paid to a provider that temporarily
suspend a periodic membership
program are amounts paid for indoor
tanning services.
(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
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(iii) Are shown in the exact amounts
in the provider’s 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 reducedrate 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—
(i) Applying to the total amount paid
a ratio determined by comparing—
(A) The provider’s charge for indoor
tanning services not in bundled services
or, if the provider only charges for
indoor tanning services as part of
bundled services, the fair market value
of similar indoor tanning services (based
on the amount charged by comparable
providers in the same geographic area);
to
(B) The charge determined in
paragraph (d)(3)(i)(A) of this section
plus the provider’s charge for the other
goods and services in the bundled
services or, if 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);
or
(ii) Any other method allowed in
guidance published in the Internal
Revenue Bulletin.
(4) Exemption; qualified physical
fitness facilities. No portion of a
payment to a qualified physical fitness
facility (within the meaning of
paragraph (c)(5) of this section) that
includes access to indoor tanning
services is treated as a payment for
indoor tanning services.
(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—(i)
In general. In the case of a payment
made with an undesignated payment
card (as defined in paragraph (c)(6) of
this section), the person who redeems
the card, in whole or in part, to pay
specifically for indoor tanning services
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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 (as described in paragraph (b)(2)
of this section).
(ii) Alternative treatment. The
Treasury Department and IRS may
provide additional options for the
treatment of undesignated payment
cards in guidance published in the
Internal Revenue Bulletin.
(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 must collect the amount of the
tax from the person making that
payment.
(g) Examples. The following examples
illustrate the application of section
5000B and this section.
Example 1: Imposition of tax; general rule.
(i) P is a nail salon that also provides indoor
tanning service incidental to its primary
business of providing nail salon services. P
advertises a price of $15.00 (exclusive of the
tax imposed by section 5000B) for one 10minute indoor tanning service. During a
period when the tax is 10 percent of the
amount paid, P calculates the section 5000B
tax on $15.00 as provided by paragraph (d)(1)
of this section. Thus, the tax is $1.50 ($15.00
× 10%). The person paying for the service is
liable for the tax when that person pays for
the services. If P does not collect the tax from
the person at the time of the payment for the
services, P is liable for the tax.
(ii) The facts are the same as in paragraph
(i) of this example except that P’s advertised
price of $15.00 includes the tanning tax. In
this case, the tax is $1.36 ($15.00 × 10%/
110%) under the second sentence of
paragraph (d)(1) of this section.
Example 2: Charges for other goods and
services; tanning services separately stated.
P provides indoor tanning services and other
goods and services. On July 1, 2013, A, an
individual, pays P for one 10-minute indoor
tanning service and one pair of protective
eyewear. P 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 P 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, P
calculates the section 5000B tax on $15.00 as
provided by paragraph (d)(2) of this section.
A is liable for the tax when A pays for the
services. If P does not collect the tax from A
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at the time A pays for the services, P is liable
for the tax.
Example 3: Charges for other goods and
services; tanning services bundled. P
provides indoor tanning services and other
goods and services and offers bundled
services. On July 1, 2013, A, an individual,
buys bundled service from P that includes 10
swimming lessons, the use of towels while
on P’s premises, one pair of protective
eyewear, and 2 ‘‘free’’ 10-minute indoor
tanning services. P charges $252.00
(exclusive of the tax imposed by section
5000B) for the bundled services. If these
services are purchased separately, P 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 P’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 (($30.00/$282.00) × $252.00).
Example 4: Person liable for the tax. On
July 1, 2013, A buys bundled services
(described in Example 3) from P as a gift for
B. Under paragraph (e)(1) of this section, A
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, A is
liable for the tax when A pays for the
services. The tax will be computed under the
rules of paragraph (d)(3) of this section. If A
does not pay the tax at the time A pays for
the services, P is liable for the tax.
Example 5: Undesignated payment cards.
(i) P operates a spa that provides a variety of
cosmetic goods and services, including
indoor tanning services. On July 1, 2013, A
buys a gift certificate in the amount of
$100.00 from P as a gift for B. The gift
certificate may be redeemed by B for B’s
choice among several services offered by P,
including indoor tanning services. On July
15, 2013, B partially redeems the gift
certificate to pay for one 10-minute indoor
tanning service.
(ii) 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, 2013, when B partially
redeems the gift certificate to pay for one
indoor tanning service. Under paragraph
(e)(2) of this section, B is the person who
pays for the indoor tanning services.
Therefore, B is liable for the tax, computed
under the rules of paragraph (d) of this
section, and pays the tax by permitting P to
debit the amount of the tax from the balance
of the gift certificate or by paying the amount
of the tax to P in cash. If B does not pay the
tax at the time B partially redeems the gift
certificate to pay for the indoor tanning
services, P is liable for the tax.
Example 6: Charges for other goods and
services; tanning services bundled; amount
attributable to tanning services. On July 1,
2013, A pays $1,000.00 (exclusive of the tax
imposed by section 5000B) to spa P 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
PO 00000
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Fmt 4700
Sfmt 4700
unlimited indoor tanning services. If the
services are purchased separately, P charges
(exclusive of the tax imposed by section
5000B) $150.00 for unlimited indoor tanning
services during the month of July, and
$900.00 for the other equipment and services
during the month of July, not including
indoor tanning services. Under paragraph (b)
of this section, A 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 tanning services,
which is $142.86 (($150.00/$1050.00) ×
$1000.00). If A does not pay the tax at the
time A pays for the bundled services, P is
liable for the tax.
Example 7: Payments to qualified physical
fitness facilities. P 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. P 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. P 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. P
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. P holds
itself out to the public through advertising
and marketing as providing equipment and
services to improve physical fitness. On July
1, 2013, A pays a membership fee to P in
return for use of P’s facility during the month
of July. Under paragraph (d)(4) of this
section, no portion of A’s membership fee
payment is treated as a payment made for
indoor tanning services, because A is a
qualified physical fitness facility under
paragraph (c)(5) of this section. Therefore, no
liability for tax arises under section 5000B.
(h) Effective/applicability date. This
section applies to amounts paid on or
after June 11, 2013. For rules that apply
before that date, see 26 CFR part 49
(revised as of April 1, 2013).
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
Par. 10. The authority citation for part
602 continues to read as follows:
■
Authority: 26 U.S.C. 7805.
Par. 11. In § 602.101, paragraph (b) is
amended by removing the entry for
§ 1.5000B–1 and adding an entry for
49.5000B–1 in numerical order to the
table to read as follows:
■
E:\FR\FM\11JNR1.SGM
11JNR1
Federal Register / Vol. 78, No. 112 / Tuesday, June 11, 2013 / Rules and Regulations
§ 602.101
OMB Control numbers.
Folder on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
CFR part or section where
Current OMB
Department of Transportation West
identified and described
control No.
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
*
*
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*
*
49.5000B–1 ..........................
1545–2177 except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
*
*
*
*
*
you have questions on this rule, call or
email Lieutenant Corrina Ott, U.S. Coast
Guard Sector Delaware Bay, Chief of
Beth Tucker,
Acting Deputy Commissioner for Services and Waterways Management Division;
telephone 215–271–4902, email
Enforcement.
corrina.ott@uscg.mil. If you have
Approved: May 31, 2013.
questions on viewing or submitting
Mark J. Mazur,
material to the docket, call Renee V.
Assistant Secretary of the Treasury (Tax
Wright, Program Manager, Docket
Policy).
Operations, telephone 202–366–9826.
[FR Doc. 2013–13876 Filed 6–10–13; 8:45 am]
SUPPLEMENTARY INFORMATION:
BILLING CODE 4830–01–P
*
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(b) * * *
*
*
Table of Acronyms
DEPARTMENT OF HOMELAND
SECURITY
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
Coast Guard
A. Regulatory History and Information
33 CFR Part 100
[Docket No. USCG–2013–0305]
RIN 1625–AA08
Special Local Regulations for Marine
Events, Atlantic City Offshore Race,
Atlantic Ocean; Atlantic City, NJ
Coast Guard, DHS.
Temporary final rule.
AGENCY:
wreier-aviles on DSK5TPTVN1PROD with RULES
ACTION:
SUMMARY: The Coast Guard is
temporarily changing the enforcement
date of a special local regulation for one
specific recurring marine event in the
Fifth Coast Guard District. This
regulation applies to only one recurring
marine event, held on the Atlantic
Ocean, offshore of Atlantic City, New
Jersey. The marine event formerly
originated on the third Sunday in July,
but now is on the fourth Sunday in
June; the special local regulation is
necessary to provide for the safety of life
on navigable waters during the event.
This action is intended to temporarily
restrict vessel traffic in a portion of the
Atlantic Ocean near Atlantic City, New
Jersey, during the event.
DATES: This rule will be effective on
June 23, 2013, only.
ADDRESSES: Documents mentioned in
this preamble are part of docket [USCG–
2013–0305]. To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
VerDate Mar<15>2010
15:08 Jun 10, 2013
Jkt 229001
The regulation for this marine event is
located at 33 CFR 100.501, Table to
§ 100.501, section (a.) line 4.
The Coast Guard is issuing this
temporary final rule without prior
notice and opportunity to comment
pursuant to authority under section 4(a)
of the Administrative Procedure Act
(APA) (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b)(B), the Coast Guard finds that
good cause exists for not publishing a
notice of proposed rulemaking (NPRM)
with respect to this rule because
immediate action is needed to minimize
potential danger to the public during the
event. The potential dangers posed by
marine events conducted on the
Atlantic Ocean, near Atlantic City, with
other vessel traffic makes a special local
regulation necessary to provide for the
safety of participants, spectator craft and
other vessels transiting the event area.
For the safety concerns noted, it is in
the public interest to have this
regulation in effect during the event. In
addition, it is impracticable to provide
for a notice and comment period
because the Coast Guard received late
notice from the event planner of this
change in date. The Coast Guard will
issue broadcast notice to mariners to
advise vessel operators of navigational
restrictions. On scene Coast Guard and
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34879
local law enforcement vessels will also
provide actual notice to mariners.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective less than 30
days after publication in the Federal
Register. The Coast Guard did not
receive information from the event
sponsor early enough to allow 30 days
after publication before making this rule
effective. This final rule is necessary to
protect the public and race participants
during the regatta, and therefore, must
be effective by the start of the event on
June 23, 2013.
B. Basis and Purpose
Offshore Performance Association
sponsors an annual offshore race held
on the third Sunday in July on the
waters of the Atlantic Ocean at Atlantic
City, New Jersey.
The regulation listing annual marine
events within the Fifth Coast Guard
District and special local regulations
locations is 33 CFR 100.501. The Table
to § 100.501 identifies special local
regulations by COTP zone, with the
COTP Delaware Bay zone listed in
section ‘‘(a.)’’ of the Table. The Table to
§ 100.501, at section (a.) event Number
‘‘4’’ describes the enforcement date and
regulated location for this marine event.
The date listed in the Table has the
marine event on the third Sunday in
July. However, this temporary rule
changes the marine event date to the
fourth Sunday in June.
A fleet of spectator vessels is
anticipated to gather nearby to view the
marine event. Due to the need for vessel
control during the marine event vessel
traffic will be temporarily restricted to
provide for the safety of participants,
spectators and transiting vessels. Under
provisions of 33 CFR 100.501, during
the enforcement period, vessels may not
enter the regulated area unless they
receive permission from the Coast
Guard Patrol Commander.
C. Discussion of the Final Rule
The Coast Guard will temporarily
suspend the regulation listed in Table to
§ 100.501, section (a.) event Number 4,
and insert this temporary regulation at
Table to § 100.501, at section (a.) as
event Number ‘‘14’’, in order to reflect
that the marine event will be held on
June 23, 2013. This special local
regulation will be enforced from 10 a.m.
until 5 p.m.
The regulated area of this special local
regulation includes all the waters of the
Atlantic Ocean, adjacent to Atlantic
City, New Jersey, bounded by a line
drawn between the following points:
southeasterly from a point along the
shoreline at latitude 39°21′50″ N,
E:\FR\FM\11JNR1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 112 (Tuesday, June 11, 2013)]
[Rules and Regulations]
[Pages 34874-34879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13876]
=======================================================================
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 40, 49, and 602
[TD 9621]
RIN 1545-BJ40
Indoor Tanning Services; Excise Taxes
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations on the indoor tanning
services excise tax imposed by the Patient Protection and Affordable
Care Act. These final regulations affect persons that use, provide, or
pay for indoor tanning services.
DATES: Effective Date: These regulations are effective on June 11,
2013.
Applicability Dates: For dates of applicability, see Sec. Sec.
40.0-1(d), 40.6302(c)-1(f), and 49.5000B-1(h).
FOR FURTHER INFORMATION CONTACT: Michael H. Beker or Natalie A. Payne,
at (202) 622-3130 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
under control number 1545-2177. The collection of information in these
final regulations is in Sec. 49.5000B-1. The information is required
to be maintained by 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.
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.
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. On June
15, 2010, temporary regulations relating to this topic and a notice of
proposed rulemaking cross-referencing the temporary regulations were
published in the Federal Register (TD 9486, 75 FR 33683; REG-112841-10,
75 FR 33740) (2010 regulations). Written and electronic comments were
received and a public hearing was held on October 11, 2011. All
comments were considered and are available for public inspection at
https://www.regulations.gov. After considering the written comments and
comments made at the public hearing, the proposed regulations are
adopted as final regulations by this Treasury decision and the
corresponding temporary regulations are removed.
Public comments on the 2010 regulations identified two issues that
the IRS and the Treasury Department will study further and on which the
IRS and the Treasury Department request additional comments. Those
issues, the treatment of bundled services and undesignated payment
cards, are discussed later in this preamble. Comments on those issues
should be submitted in writing by October 9, 2013 and can be mailed to
the Office of Associate Chief Counsel (Passthroughs and Special
Industries), Re: REG-112841-10, CC:PSI:B7, Room 5314, 1111 Constitution
Avenue NW., Washington, DC 20224. All comments received will be
available for public inspection at https://www.regulations.gov (IRS REG-
112841-10).
Summary of Comments
Qualified Physical Fitness Facilities. Commenters questioned the
exception for Qualified Physical Fitness Facilities (QPFFs) in the 2010
regulations.
The 2010 regulations exempt from the tax any membership fee paid to
a QPFF that includes access to indoor tanning services. In a QPFF,
taking into consideration all of the facts and
[[Page 34875]]
circumstances, the predominant business or activity of the facility is
to serve as a physical fitness facility. The 2010 regulations limit the
definition of a QPFF to a business that does not charge separately for
indoor tanning services, offer such services to the general public, or
offer different membership fee rates based on access to indoor tanning
services.
Commenters stated that an exception for QPFFs does not appear in
section 5000B and suggested that there is no compelling reason to
differentiate these facilities from other indoor tanning service
facilities. Commenters argued that while other providers of bundled
services must use a complicated method of determining the amount
attributable to indoor tanning services (as described in Sec.
49.5000B-1T(d)(3) of the 2010 regulations), QPFFs are exempt from the
tax even though they provide the same indoor tanning services. Thus,
these commenters suggested, the exception for QPFFs creates an unfair
competitive advantage for some providers of indoor tanning services
over others, and should not be included in the final regulations.
The final regulations do not adopt this suggestion. Access to
indoor tanning services is incidental to a QPFF's predominant business
or activity. Customers of a QPFF typically pay a monthly fee in
exchange for access to all equipment in the QPFF, including any indoor
tanning equipment. Requiring a QPFF to allocate its customers' monthly
membership fees among tanning and non-tanning services under such an
arrangement would be burdensome and difficult to administer. In
contrast, non-QPFF providers of bundled goods and services typically
offer indoor tanning services to customers as part of the purchase of a
package of specific goods or services. This generally allows the
provider to determine the portion of the purchase price that relates to
the use of indoor tanning services by the customer and allocate the
appropriate portion of the purchase price to those services.
Free indoor tanning services; bonus points. Commenters requested
guidance on the application of the tax to free indoor tanning services
and indoor tanning services that are sold at reduced rates.
The final regulations provide that the section 5000B tax only
applies if an amount is paid for indoor tanning services. If services
are provided at a reduced rate, the tax applies to the amount actually
paid for the services. See Rev. Rul. 84-12 (1984-1 CB 211) and the
rulings cited therein. Also consistent with Rev. Rul. 84-12, the final
regulations do not apply the tax to indoor tanning services that are
obtained by redemption of ``bonus points'' through a loyalty program or
similar program. In the case of promotions that entitle a customer to a
``free'' tan with the purchase of a certain number of tans, the amount
paid for the purchased tans reflects a reduced price for all of the
tans rather than a package of tans at full price coupled with a
``free'' purchased tan. Thus, the tax is imposed on the purchase of the
package of tans rather than on the redemption of the additional tan.
Bundled goods and services. If a provider (other than a QPFF) 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, the 2010 regulations set out a formula to
determine the amount reasonably attributable to indoor tanning
services.
Commenters noted that there are no commercially available point-of-
sale software programs that automatically calculate the tax on the sale
of indoor tanning services that are bundled with other goods and
services. Thus, providers must manually calculate the tax on these
types of sales, a process that the commenters said is time consuming,
expensive, and prone to error.
The final regulations do not change the rules for bundled goods and
services. The statute imposes the tax on indoor tanning services; if
those services are bundled with other goods and services, the provider
must determine the amount of the payment for the bundled goods and
services that is reasonably attributable to indoor tanning services.
The 2010 regulations set forth a reasonable method for making this
determination, which is retained with minor clarifications in the final
regulations. However, the final regulations also authorize the Treasury
Department and the IRS to issue future guidance to provide additional
options for making this determination. The Treasury Department and the
IRS request comments on other reasonable methods for determining the
amount of a payment for bundled goods and services that is reasonably
attributable to indoor tanning services.
Undesignated payment cards. The 2010 regulations define an
undesignated payment card as 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. Under the 2010
regulations, the tax is not imposed on the purchase of these cards;
rather, the tax is imposed only when the card is redeemed specifically
to pay for indoor tanning service.
Commenters noted that, in practice, a provider can collect the tax
only when the card is bought and not when the card is redeemed for
indoor tanning service. Thus, the commenters suggested that the tax be
imposed on the purchase of an undesignated payment card. Providers
could either estimate how much of the card will be used for indoor
tanning service in the future or collect tax on the entire purchase
price.
The final regulations do not adopt this suggestion. However, the
Treasury Department and the IRS welcome comments on this issue. The
final regulations authorize the Treasury Department and the IRS to
issue future guidance to provide additional options for administering
the tax with respect to undesignated payment cards.
Form 720. The temporary regulations require the tax to be reported
and paid quarterly on Form 720, ``Quarterly Federal Excise Tax
Return.'' Commenters suggested that Form 720 is too complex or
burdensome for the average provider to complete and file. These
commenters request that the IRS issue a special tax return form
specifically and exclusively for reporting the section 5000B tax.
The final regulations do not adopt this suggestion. Form 720 is the
standard form used to report many excise taxes, including the other
types of excise taxes collected from a customer upon the purchase of
services, such as the taxes on communications services and
transportation of persons and property by air. In addition, the
Treasury Department and the IRS believe that creating a new form would
add unnecessary complexity. For more information about reporting
requirements, see Sec. 40.6011(a)-1(a).
Additional Clarification of 2010 Regulations
Membership and enrollment fees. The final regulations clarify that
the tax is imposed on amounts paid for prepaid monthly membership and
enrollment fees to a provider of indoor tanning services, other than a
QPFF, even if a member does not use any indoor tanning services during
the period to which the fee relates.
Some providers offer monthly membership programs through which
customers receive a number of tanning sessions at a lower cost than
would be charged for each session individually. Some of these providers
charge customers an enrollment fee when the customers join a membership
program. Typically, the customer pays the
[[Page 34876]]
enrollment fee before paying the first monthly membership charge.
Some providers also impose fees on their customers to allow the
customer to skip one or more months of membership dues without being
charged an enrollment fee when the customer restarts the monthly
membership. Amounts paid to a provider that temporarily suspend a
periodic membership program are amounts paid for indoor tanning
services. Because payment of these fees allows the customer to receive
indoor tanning services at reduced prices, the final regulations
clarify that these fees are subject to the section 5000B tax as amounts
paid for indoor tanning services.
Availability of IRS Documents
The IRS revenue ruling cited in this preamble is published in the
Internal Revenue Cumulative Bulletin and is 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, as
supplemented by Executive Order 13563. 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. It is hereby certified that these
regulations will not have a significant economic impact on a
substantial number of small entities. This certification is based on
the fact that these regulations are designed to accommodate the
recordkeeping methods currently used by small entities that provide
indoor tanning services. The regulations merely implement the tax
imposed by section 5000B of the Code, and section 6001 of the Code
already requires taxpayers to keep books and records sufficient to show
whether or not they are liable for tax. The information necessary to
prepare these records is readily available to providers, and this
recordkeeping will take little additional time to complete.
Accordingly, a Regulatory Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to
section 7805(f) of the Code, the notice of proposed rulemaking that
preceded these regulations was submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact
on small business, and no comments were received.
Drafting Information
The principal author of these regulations is Michael H. Beker,
Office of the Associate Chief Counsel (Passthroughs and Special
Industries). However, other personnel from the IRS and the Treasury
Department participated in their development.
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.
Adoption of Amendments to the Regulations
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 (a), second sentence, is amended by removing the language
``and 39'' and adding ``39, and 49'' in its place.
0
2. Paragraph (a), third sentence, is amended by removing the language
``and chapter 39 to taxes imposed on registration-required
obligations'' and adding ``chapter 39 to taxes imposed on registration-
required obligations; and chapter 49 to taxes imposed on indoor tanning
services'' in its place.
0
3. Paragraph (d) is revised.
0
4. Paragraphs (e) and (f) are removed.
The revision reads as follows:
Sec. 40.0-1 Introduction.
* * * * *
(d) Effective/applicability date. This part applies to returns that
relate to periods beginning after March 31, 2013. For rules that apply
before that date, see 26 CFR part 40 (revised as of April 1, 2013).
Sec. 40.0-1T [Removed]
0
Par. 3. Section 40.0-1T is removed.
0
Par. 4. Section 40.6302(c)-1 is amended as follows:
0
1. Paragraph (a)(1) is amended by removing the language ``by statute,
by Sec. 40.6302(c)-1T(g),'' and adding ``by statute'' in its place.
0
2. Paragraph (e)(1)(iii) is amended by removing the language
``chemicals); and'' and adding ``chemicals);'' in its place.
0
3. Paragraph (e)(1)(iv) is amended by removing the language ``plans).''
and adding ``plans); and'' in its place.
0
4. Paragraph (e)(1)(v) is added.
0
5. Paragraph (f) is revised.
0
6. Paragraph (g) is removed.
The addition and revision read as follows:
Sec. 40.6302(c)-1 Deposits.
* * * * *
(e) * * *
(1) * * *
(v) Section 5000B (relating to indoor tanning services).
* * * * *
(f) Effective/applicability date. This section applies to deposits
and payments made after March 31, 2013. For rules that apply before
that date, see 26 CFR part 40 (revised as of April 1, 2013).
Sec. 40.6302(c)-1T [Removed]
0
Par. 5. Section 40.6302(c)-1T is removed.
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 49.0-1 is revised to read as follows:
Sec. 49.0-1 Introduction.
The regulations in this part 49 are designated ``Facilities and
Services Excise Tax Regulations.'' The regulations relate to the taxes
on communications and transportation by air imposed by chapter 33 of
the Internal Revenue Code and the taxes on indoor tanning services
imposed by section 5000B. See part 40 of this chapter for regulations
relating to returns, payments, and deposits of these taxes.
Sec. 49.0-3T [Removed]
0
Par. 8. Section 49.0-3T is removed.
0
Par. 9. Subpart G is revised to read as follows:
Subpart G--Indoor Tanning Services
Sec. 49.5000B-1 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
[[Page 34877]]
at the time of payment for any indoor tanning service.
(2) Undesignated payment cards--In general. Payment for indoor
tanning services is made when an 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).
(c) Definitions--(1) The term 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) The term other goods and services includes, but is 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) The term 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) The term provider means a person that provides an indoor
tanning service as defined in paragraph (c)(1) of this section.
(5) The term qualified physical fitness facility means a facility--
(i) In which the predominant business or activity is providing
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
(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.
(6) The term 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--(i) In general. The tax is imposed on the total
amount paid for indoor tanning services, including any amount paid by
insurance. The total amount paid is presumed to include the tax if the
tax is not separately stated.
(ii) Free services and reduced rates. The tax does not apply to
indoor tanning services that are provided free of charge. Indoor
tanning services are provided free of charge if no one pays anything of
value to the provider of the service for the indoor tanning service.
Thus, for example, tax is not imposed on the redemption of a
promotional coupon for indoor tanning services if the coupon is
provided at no cost and at no obligation to purchase anything. If
indoor tanning services are provided at a reduced rate, the tax applies
to the amount actually paid for the services.
(iii) Bonus points. The redemption of benefits such as ``bonus
points'' under a loyalty program or similar program or promotion is not
a payment for indoor tanning services. Thus, for example, in a
promotion that entitles a customer to a ``free'' tan with the purchase
of four tans, tax is not imposed on the redemption of the fifth tan
because the amount paid for the four tans included a reduced price for
the fifth tan.
(iv) Other fees. Fees for starting, joining, registering,
enrolling, and similar fees paid to a provider to join a monthly (or
other periodic) membership program that provides indoor tanning
services are amounts paid for indoor tanning services. Similarly,
amounts paid to a provider that temporarily suspend a periodic
membership program are amounts paid for indoor tanning services.
(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 provider's 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--
(i) Applying to the total amount paid a ratio determined by
comparing--
(A) The provider's charge for indoor tanning services not in
bundled services or, if the provider only charges for indoor tanning
services as part of bundled services, the fair market value of similar
indoor tanning services (based on the amount charged by comparable
providers in the same geographic area); to
(B) The charge determined in paragraph (d)(3)(i)(A) of this section
plus the provider's charge for the other goods and services in the
bundled services or, if 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); or
(ii) Any other method allowed in guidance published in the Internal
Revenue Bulletin.
(4) Exemption; qualified physical fitness facilities. No portion of
a payment to a qualified physical fitness facility (within the meaning
of paragraph (c)(5) of this section) that includes access to indoor
tanning services is treated as a payment for indoor tanning services.
(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--(i) In general. In the case of a
payment made with an undesignated payment card (as defined in paragraph
(c)(6) of this section), the person who redeems the card, in whole or
in part, to pay specifically for indoor tanning services
[[Page 34878]]
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 (as described in paragraph (b)(2) of
this section).
(ii) Alternative treatment. The Treasury Department and IRS may
provide additional options for the treatment of undesignated payment
cards in guidance published in the Internal Revenue Bulletin.
(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 must collect the amount of the tax from the
person making that payment.
(g) Examples. The following examples illustrate the application of
section 5000B and this section.
Example 1: Imposition of tax; general rule. (i) P is a nail
salon that also provides indoor tanning service incidental to its
primary business of providing nail salon services. P advertises a
price of $15.00 (exclusive of the tax imposed by section 5000B) for
one 10-minute indoor tanning service. During a period when the tax
is 10 percent of the amount paid, P calculates the section 5000B tax
on $15.00 as provided by paragraph (d)(1) of this section. Thus, the
tax is $1.50 ($15.00 x 10%). The person paying for the service is
liable for the tax when that person pays for the services. If P does
not collect the tax from the person at the time of the payment for
the services, P is liable for the tax.
(ii) The facts are the same as in paragraph (i) of this example
except that P's advertised price of $15.00 includes the tanning tax.
In this case, the tax is $1.36 ($15.00 x 10%/110%) under the second
sentence of paragraph (d)(1) of this section.
Example 2: Charges for other goods and services; tanning
services separately stated. P provides indoor tanning services and
other goods and services. On July 1, 2013, A, an individual, pays P
for one 10-minute indoor tanning service and one pair of protective
eyewear. P 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 P 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, P
calculates the section 5000B tax on $15.00 as provided by paragraph
(d)(2) of this section. A is liable for the tax when A pays for the
services. If P does not collect the tax from A at the time A pays
for the services, P is liable for the tax.
Example 3: Charges for other goods and services; tanning
services bundled. P provides indoor tanning services and other
goods and services and offers bundled services. On July 1, 2013, A,
an individual, buys bundled service from P that includes 10 swimming
lessons, the use of towels while on P's premises, one pair of
protective eyewear, and 2 ``free'' 10-minute indoor tanning
services. P charges $252.00 (exclusive of the tax imposed by section
5000B) for the bundled services. If these services are purchased
separately, P 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 P'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 (($30.00/$282.00) x $252.00).
Example 4: Person liable for the tax. On July 1, 2013, A buys
bundled services (described in Example 3) from P as a gift for B.
Under paragraph (e)(1) of this section, A 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, A is liable for the tax when A pays for the services. The
tax will be computed under the rules of paragraph (d)(3) of this
section. If A does not pay the tax at the time A pays for the
services, P is liable for the tax.
Example 5: Undesignated payment cards. (i) P operates a spa
that provides a variety of cosmetic goods and services, including
indoor tanning services. On July 1, 2013, A buys a gift certificate
in the amount of $100.00 from P as a gift for B. The gift
certificate may be redeemed by B for B's choice among several
services offered by P, including indoor tanning services. On July
15, 2013, B partially redeems the gift certificate to pay for one
10-minute indoor tanning service.
(ii) 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, 2013, when B partially redeems the gift
certificate to pay for one indoor tanning service. Under paragraph
(e)(2) of this section, B is the person who pays for the indoor
tanning services. Therefore, B is liable for the tax, computed under
the rules of paragraph (d) of this section, and pays the tax by
permitting P to debit the amount of the tax from the balance of the
gift certificate or by paying the amount of the tax to P in cash. If
B does not pay the tax at the time B partially redeems the gift
certificate to pay for the indoor tanning services, P is liable for
the tax.
Example 6: Charges for other goods and services; tanning
services bundled; amount attributable to tanning services. On July
1, 2013, A pays $1,000.00 (exclusive of the tax imposed by section
5000B) to spa P 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, P charges (exclusive of the tax imposed by section
5000B) $150.00 for unlimited indoor tanning services during the
month of July, and $900.00 for the other equipment and services
during the month of July, not including indoor tanning services.
Under paragraph (b) of this section, A 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 tanning services, which is
$142.86 (($150.00/$1050.00) x $1000.00). If A does not pay the tax
at the time A pays for the bundled services, P is liable for the
tax.
Example 7: Payments to qualified physical fitness facilities. P
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. P
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. P 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. P 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.
P holds itself out to the public through advertising and marketing
as providing equipment and services to improve physical fitness. On
July 1, 2013, A pays a membership fee to P in return for use of P's
facility during the month of July. Under paragraph (d)(4) of this
section, no portion of A's membership fee payment is treated as a
payment made for indoor tanning services, because A is a qualified
physical fitness facility under paragraph (c)(5) of this section.
Therefore, no liability for tax arises under section 5000B.
(h) Effective/applicability date. This section applies to amounts
paid on or after June 11, 2013. For rules that apply before that date,
see 26 CFR part 49 (revised as of April 1, 2013).
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 10. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 11. In Sec. 602.101, paragraph (b) is amended by removing the
entry for Sec. 1.5000B-1 and adding an entry for 49.5000B-1 in
numerical order to the table to read as follows:
[[Page 34879]]
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control No.
------------------------------------------------------------------------
* * * * *
49.5000B-1.............................................. 1545-2177
* * * * *
------------------------------------------------------------------------
Beth Tucker,
Acting Deputy Commissioner for Services and Enforcement.
Approved: May 31, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-13876 Filed 6-10-13; 8:45 am]
BILLING CODE 4830-01-P
