[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]


=======================================================================
-----------------------------------------------------------------------

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 
http://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 http://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