The 2012 Presidential Elections
Over the last four years, the industry has made tremendous progress with our political outreach and fundraising efforts. In 2010, we raised over $300,000 to support small government/anti-regulatory candidates in the House and Senate. We accomplished this through local events hosted by a number of industry leaders nationwide and through a fundraiser at the trade show in Nashville.
Last year, again in Nashville under the leadership of ITA’s PAC Chairman Marty Gallagher and his committee, we hosted another event to support pro-business candidates, this time raising $150,000. These efforts have paid great dividends both in increasing our industry’s profile with political leaders on Capitol Hill and in building relationships with key policy makers who have served to buffer the industry against repeated attacks from our enemies.
As we move toward the close of the 112th Congress, our major Federal issues are at a crossroads. With regard to the repeal of the Tan Tax after the Supreme Court ruled that the Affordable Care Act (ACA) passed Constitutional muster, our only hope for liberating the industry from that unfair tax rests with the Republicans. The most likely way the tax will be repealed will be in one of two forms: an outright repeal of the ACA or as part of a comprehensive tax package. Either way, while we would prefer to be bi-partisan, we are dependent on the Republicans to carry our issue.
The other major issue about which we care most relates to the FDA’s oversight of our industry. We have seen repeated attempts over the past two years on the part of several House members to force the FDA to reclassify indoor tanning devices and sunlamps to a more restrictive class of medical device. Thanks to the relationships we have cultivated over the past few years, we have been able to fend off these attacks.
The 2012 Congressional and Presidential elections are perhaps the most critical we have ever faced – we have a lot to gain and a lot to lose. The number one goal is repeal of the Tan Tax and we must continue to support elected officials who are willing to help in this effort.
We are going back to Nashville again this year and we need the entire industry to get behind us. And before the election in November, take the time to meet candidates in your area and introduce our industry. Most importantly, don’t forget to vote for the ones who will support us.
Regulatory Update
The Congress adjourned in early August for six weeks without considering the bill appropriating funds for the Food and Drug Administration. The conventional wisdom is that in September, the House and Senate will pass a comprehensive funding bill called a “continuing resolution.” This bill will fund the entire government for six months, thereby taking contentious spending issues off the table until the new Congress convenes next year. This is a good development for us because it removes one of the primary legislative vehicles that our detractors have used in the past to attack us.
In the state capitals, the Massachusetts legislature completed its regular session without passing the proposed ban on teen tanning. New Jersey, Ohio and Pennsylvania are the only state legislatures that remain in regular session and have legislation pending that affects this industry.
Tan Tax: Taxing Registration & Freeze Fees
In July, the IRS released a memo stating that it has concluded that salon membership registration and freeze fees are now subject to the Tan Tax. It is the ITA’s position that there are some facts and good arguments that support registration and freeze fees not being subject to the Tan Tax, based on being characterized as a separate, administrative fee that is reasonable in relation to the associated costs and unrelated to future taxable tanning services.
The IRS’s new position is exactly opposite what the IRS stated in the IRS Audit Technique Guide (“Audit Guide”). The ITA is urging the IRS to reconsider this policy. In addition, because the existing regulations expire June 2013, the IRS needs to re-propose regulations on the Tan Tax, with a comment period. The ITA is urging the IRS to start that process sooner, rather than later, so that the industry has an opportunity to comment on this and so that the issues can be discussed openly and fairly.
