Supreme Court Upholds the Affordable Care Act (ACA)
In a 5-4 ruling at the end of June, the Supreme Court crafted a decision that may have even caught the law’s supporters off guard. The majority opinion was written by the conservative Bush appointee, Chief Justice John Roberts, and held that the law was a valid exercise of Congress’ power to tax, not as an extension of the Constitution’s Commerce Clause. With this interpretation, the Court reframed the issue making the ACA the biggest tax increase in history.
Obviously, this is a bitter disappointment for the indoor tanning industry and the prospects for any short-term fix for the Tan Tax. On a macro level, this is another expansion of the Government’s ability to inject itself into our lives. If the government can tax you for not buying health insurance, it can tax you for practically anything; including, paraphrasing Justice Scalia, “for not eating broccoli”.
A repeal of the law is now up to the voters and therefore, not likely in this session of Congress. However, the politics are just gearing up again. On the day of the decision, House Majority Leader Eric Cantor announced that the House would vote again in July on legislation to repeal ACA entirely. This will no doubt pass the House and once again stall in the Senate. There is also no doubt that this legislation will be a rallying cry for both parties from now through November.
Federal Legislative Issues
In May and June, two legislative initiatives moved through Congress related to the Food and Drug Administration and both bills contained provisions affecting our industry. The first was legislation reauthorizing programs for the FDA. The House version of the FDA Reauthorization came out of the Energy and Commerce Committee with no specific reference to sunlamps or sunbeds, their labels or classification. However, the Senate version of the bill, which moved on a separate track, contained a provision directing the FDA to review the language on the warning label and report to Congress on the deliberations. When leadership from the House and Senate authorizing committees met to work out the differences, the House negotiators prevailed and the warning label reference was dropped. The compromise bill subsequently passed both Houses of the Congress.
A second and even more important issue arose when the bill funding legislation for the FDA for FY 2013 was being put together in the House Appropriations Committee. Congresswoman Rosa DeLauro (D-CT) – who for some reason that is still not clear really doesn’t like our industry – on two occasions offered an amendment that would have forced the FDA to reclassify indoor tanning units from a Class I medical device to a Class II or Class III medical device, a potentially devastating and completely uncalled-for regulatory change.
Rep. DeLauro was rebuffed both in subcommittee and by a record vote in full committee, thus putting the House Appropriations Committee firmly on record against any reclassification of the devices. However, the Appropriations bill for the FDA has been cleared for full House action, which was expected to come in July (at this printing), and we are actively preparing for the next phase of the process.
State Legislative Issues
Practically all state legislatures that have not adjourned for the year started an extended recess period at the end of June. Unfortunately, thanks to the publicity from the New Jersey “Tanning Mom”, we suffered another big hit in New York with the passage of another bill restricting teen access to indoor tanning. Although our enemies were not able to push through an under-18 ban, the New York State Senate amended the under-18 ban to a 16-and-under ban, and the Assembly followed suit.
In New Jersey, business owners were successful in working out a compromise with the Senate bill’s sponsor and in late June, the bill was amended to require an under-16 ban instead of an under-18 ban; additional parental controls were also added. This compromise is pending before the full Senate and will likely be considered in September.
At the end of June, several other state legislatures completed their regular sessions without taking action on legislation aimed at our industry. Proposed under-18 bans died in North Carolina and in Delaware leaving only Massachusetts, Michigan, Ohio and Pennsylvania with bills pending.
Tan Tax Regulations
Under proposed and temporary regulations published in the June 25, 2012 Federal Register, reporting and payment of the Tan Tax will change for “tax-disregarded” qualified Subchapter S subsidiaries and single-member LLCs for the IRS Form 720 due by October 31, 2012 (for payments collected in July, August & September, 2012). Specifically, for Tan Tax collected on payments received on or after July 1, 2012, Form 720 must be filed under the name and Employer Identification Number (EIN) of the “tax-disregarded” entity, rather than under the name and EIN of the disregarded entity’s owner. CONSULT YOUR TAX ADVISOR TO SEE IF AND HOW THIS CHANGE AFFECTS YOUR BUSINESS.
Any comments about the proposed rule and requests for a public hearing are due to the IRS by September 24, 2012. Texts of the temporary regulations and the request for comment can be found here and here.
ITA Elections
The nomination period for ITA Board of Directors seats closes on August 17th. If you are a member of the Association and interested in running for a seat on the Board, please go to the theita.com “Member’s Only” page to download a nomination form. For more information, please call 202.367.1142 or email admin@theita.com.
