Planet Fitness charge draws questions on PPACA tanning taxNews added by Benefits Pro on February 13, 2014

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By Dan Cook

When Ashley Pratte moved from New Hampshire to the nation’s capital, she quickly located the nearest Planet Fitness center. “I already had my membership from New Hampshire and didn’t want to change gyms,” she said.

But when she got to the club, she saw a notice at the front desk informing members with Black Card memberships that they would henceforth be charged a nickel a month to cover a tanning tax “required by the implementation of the Affordable Health Care Act.”

This prompted Pratte – who is the public relations officer at Young America’s Foundation, a conservative group – to investigate.

Pratte doesn’t use the tanning stations at her new club, although tanning comes with the more expensive Black Card membership. It wasn’t the nickel a month that piqued her interest, but rather the idea that the club would pass along a federal tax to specific club members.

The more Pratte looked into her nickel-a-month tax, the more confusing the situation became.

For instance, she learned that Obamacare did indeed place a 10 percent excise tax on tanning salons. But when it came to fitness centers that offered tanning as just one service, it appeared that clubs like Planet Fitness were exempted from the tax. Here’s what the IRS had to say about its exemption of a “qualified physical fitness facility” from the tax:

“A ‘qualified physical fitness facility’ is a facility (i) in which the predominant business or activity is providing facilities, equipment and services to its members for purposes of exercise and physical fitness, (ii) indoor tanning services is not a substantial part of its business and, (iii) it does not offer tanning services to the public for a fee or offer different pricing options to its members based on indoor tanning services. To determine the predominant business or activity all facts and circumstances should be considered including, but not limited to, the following:
  • The cost of the equipment;
  • variety of services offered;
  • actual usage of services by customers;
  • revenue generated by different services;
  • how the entity holds itself out to the public through advertising or other means.
OK, she thought, so it looks like Planet Fitness may not be required to pay the tax. And, what's more, Black Card members should not have to pay, because in the FAQ section on the IRS’s page about tanning salons, here’s what she read:

Q: “Are membership fees taxable when paid to a “qualified physical fitness facility” that provides access to indoor tanning services?

A. No, the membership fee is not subject to the indoor tanning services tax if the facility meets the definition of a ‘qualified physical fitness facility.’”

This caused Pratte to write in her blog on Feb. 10: “When the Affordable Care Act's tanning tax was implemented in 2012, tanning salons were outraged that their small businesses were facing such a tax. In June of 2013, the IRS finalized the so-called tanning tax and exempted fitness centers who had tanning beds because their business was not entirely tanning. Why, then, are fitness centers and gyms such as Planet Fitness collecting this tax if in fact they are exempt, according to the IRS?”

Meantime, she called other Planet Fitness centers around the U.S. Some were charging a nickel a month, some 60 cents a month, and others weren’t charging members anything.

“There were only those three situations,” she said. “No clubs charge a quarter or 50 centers. It’s either five cents, 60 cents or nothing.”

Pratte’s requests for comment from Planet Fitness have so far been met with silence. She said she’s going to continue to probe further to determine if, in fact, Planet Fitness has to pay the fee and, if so, what it should be.

“The rules keep changing as far as fitness club exemptions go,” she said, “and it is possible they may have to pay.”

But to Pratte, the larger issue is why national healthcare reform had to include something as marginally relevant as tanning salons.

“Obamacare was sold to the American people as a program that would improve healthcare for everyone, but yet there have been millions of cancelled policies, 2.3 million full-time jobs lost, and skyrocketing premiums for the young and healthy,” she wrote in her blog. “Clearly, it makes little sense to tax those who have all-inclusive gym memberships and try to maintain physical fitness.”

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