Tanning Tax Penalty: Late Payment Rules Explained
For anyone who offers indoor tanning service, it is necessary to know about the filing and payment of the tanning tax because any delay in filing Form 720 or payment of tanning tax will lead to the imposition of penalties by the IRS.
The Indoor Tanning Services Excise Tax is levied under IRC section 5000B, which is filed on a quarterly basis using Form 720. This guide explains the tanning tax penalty rules, late payment consequences, applicable IRS sections, and key filing details.
What is the Tanning Tax Penalty?
According to IRC Section 5000B, a 10% excise tax applies to indoor tanning services. The tax is calculated based on the amount paid for the tanning service and must be reported quarterly on Form 720, Quarterly Federal Excise Tax Return, under IRS No. 140.
If the tanning tax liability is not properly reported or paid by the required deadline, the filer may be subject to IRS penalties. These penalties may apply due to:
Failure to file Form 720 on time
A penalty may apply when the required quarterly Form 720 return is not filed by the IRS due date.Failure to pay the reported tanning tax liability
If the tax amount reported on Form 720 is not paid by the due date, the IRS may impose a late payment penalty.Underpayment of tanning tax liability
If the reported tax amount is less than the actual liability due, penalties may apply for the unpaid tax amount.
Understanding these penalty rules helps tanning service providers remain compliant with IRS filing and payment requirements.
Late Payment Rules for Tanning Tax
When tanning tax is not paid or reported correctly, the IRS may apply different penalties depending on whether the return was filed and whether the tax was paid.
Generally, two common penalty situations apply:
-> Form 720 is filed on time, but the tanning tax is not paid
-> Form 720 is not filed by the due date
1. Form 720 Filed but Tanning Tax Not Paid
In case the taxpayer pays his/her Form 720 on time, but fails to pay the tanning tax by the deadline, then Failure-to-Pay Penalty will be imposed according to IRC Section 6651(a)(2).
The penalty generally applies as follows:
Example:
A tanning business reports tanning tax liability: $1,000 and Payment not made by the due date
Possible consequences:
Failure-to-pay penalty: 0.5% × $1,000 = $5 per month
Interest may also apply until payment is completed
2. Form 720 Not Filed by the Due Date
If the taxpayer does not file Form 720 within the prescribed deadline, the IRS may apply a Failure to File Penalty under IRC 6651(a)(1).
The penalty generally applies as follows:
The failure-to-file penalty is calculated based on the unpaid tax required to be shown on the return.
When both failure-to-file and failure-to-pay penalties apply for the same period, IRC Section 6651(c)(1) provides rules for coordinating these penalties to prevent overlapping charges.
Interest on Unpaid Tanning Tax
Apart from penalties, the IRS may charge interest on unpaid tanning tax liabilities. According to Section 6601 of the Internal Revenue Code, interest charges are applied from the due date until the date the liability is paid in full.
On-time payment of the tanning tax will help save you from any further costs.
Read our blog on FDA Regulations on Tanning Beds.
How to Avoid Tanning Tax Penalties
Businesses providing indoor tanning services can reduce penalty risks by following these best practices:
Submit Form 720 on time.
Make accurate calculations for the tanning tax using the taxable services paid amount.
Pay the tax when due.
Keep supporting documents for the tanning services and the tax payment calculation.
Check IRS announcements regarding federal excise tax reporting.
File your Tanning Excise Taxes Online with the IRS Authorized 720 Portal.
Tanning Tax Key Details
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