Indoor Tanning Excise Tax
Welcome to our overview on the Indoor Tanning Services Excise Tax. If you’re a business owner that offers these services, this tax may affect you.
Today we will explain:
The tax affects any business that receives payment for indoor tanning services from customers using a tanning bed, an upright tanning station, portable device or any other method that meets the definition of indoor tanning services.
A word of caution: If you provide indoor tanning services but do not collect the tax, you are liable for the tax and you must pay the tax yourself. Also, an organization that is normally exempt from federal income or other excise taxes is not exempt from the indoor tanning services excise tax because of that status. That includes colleges and private clubs. For more information on the exceptions to the tax, go to our Indoor Tanning Service Tax Center on irs.gov.
So, how do you report the tax you collect or owe for indoor tanning services? You use the Form 720, Quarterly Federal Excise Tax Return. The form can be found at irs.gov by simply typing “Form 720” in the Search Box. The results will lead you to the form and separately to the Form 720 instructions.
You must report and pay the tax quarterly by January 31, April 30, July 31 and October 31 of each year.
Now let’s look at completing Form 720. We’ll start at the top of page 1. You must have an Employer Identification Number or “EIN” to file Form 720.
If you do not have an EIN, you must get one to file and pay or pay over the indoor tanning services excise tax. The IRS offers a free service for you to get an EIN: You can find the application instructions at IRS.gov.
A business with one EIN, but multiple locations, can file one Form 720 for all of the locations. However, if any location has its own EIN, it must file a separate Form 720 to report and pay the indoor tanning services excise tax.
You cannot use a social security number on the form. No matter how your business is structured, you must have an EIN to file Form 720.
Next, go to page 2 of the Form 720 and enter the amount of the tax in Part II, IRS Number 140. This is 10-percent of the amount paid by customers for indoor tanning services during the previous calendar quarter.
There are no deposit requirements for the indoor tanning services excise tax. This means you do not have to pay the tax throughout the quarter. Instead, the indoor tanning services tax must be paid when you file your quarterly Form 720. So, in Part III of Form 720, don’t fill out line 5, which relates to deposits. In a moment we’ll discuss how to pay the tax.
When you’ve completed the identification information, including your EIN, entered the tax due in Part II on IRS number 140, and completed Part III, you can mail the Form 720 to this address:
Department of the Treasury
Or you can efile your Form 720 through a Form 720 efile provider. You can find them on our website by typing 720 e-file in the search box. The provider will charge you a fee for this service.
You’ve completed Form 720 - let’s now cover the payment process. You can use the paper payment voucher, Form 720-V, which is attached to the bottom of the last page of Form 720. Mail it, along with your payment, to the IRS with the form. Or, you can pay electronically with our secure Electronic Federal Tax Payment System and not use the paper voucher.
Go to eftps.gov or call 1-800-555-4477 for more information or to enroll.
Just as you do with all your business records, make sure you keep supporting documentation for the amounts you enter on Form 720.
And what if you don’t file your Form 720 or file late? Prepare to face financial penalties.
If you have not filed or paid the tax, you may receive Letter 4664 advising you of your excise tax liability. You should respond within 30 days of the date of the letter by both filing a Form 720 for each quarter missed and paying the tax, or by completing the checkboxes within Letter 4664 with an explanation of why tax is not due. Your written explanation must include your name, address, EIN (or Social Security number if you do not have an EIN), daytime telephone number, and a copy of Letter 4664. Be sure to keep a copy of your submission for your records. Penalties and interest add up [?] on unpaid balances so we advise a prompt response. For more information, you can speak to a customer representative at 866-699-4096.
Forms 720 filed in response to Letter 4664 and written responses to Letter 4664 should be sent to this address:
Internal Revenue Service
To get more information on this tax and its requirements go to the Indoor Tanning Service Tax Center at IRS.gov. There you will find a list of helpful links including FAQs, videos, and tax tips.
And If you still have a question that is not listed in the FAQ, please call our toll free number 866-699-4096 to speak with a customer service representative.