Tanning tax decision to come by year's end

Nebraska Tax Commissioner Doug Ewald said Thursday he will decide by year's end about whether to drop a state regulation that makes tanning salons subject to sales tax.

LINCOLN — Indoor tanning fans should get a better idea soon about whether the state will keep charging sales tax on their bronzing sessions.

Nebraska Tax Commissioner Doug Ewald said Thursday he will decide by year's end about whether to drop a state regulation that makes tanning salons subject to sales tax.

If he backs a change in state regulation, the matter would go to the attorney general and governor for final approval.

Ewald spoke following a low-key public hearing about the proposed regulation change.

The proposal would remove tanning salons from a list of “places of amusement, entertainment or recreation.” The state currently charges sales tax on admissions to such places.

The hearing attracted a handful of tanning salon owners and backers, who argued there is no legal basis for including tanning salons in that list.

The Nebraska Dermatology Society and American Academy of Dermatologists opposed the change. The groups submitted written testimony earlier.

Doctors and public health advocates have pushed for greater regulation of the tanning industry, citing links between indoor tanning and an increased risk of potentially deadly skin cancers.

Barton Bonn, owner of the Ashley Lynn's tanning salons, said indoor tanning should be treated like beauty salon and barber shop services, which are considered personal services and not subject to state sales tax.

“This is not only a matter of basic fairness,” he said, “but a matter of adhering to the rule of law.”

Bonn said the Nebraska sales tax, along with a new 10 percent federal tax, is driving tanning salons out of business. About half the salons operating three years ago are now closed, he said.

Attorney Steve Grasz, representing the Nebraska Indoor Tanning Association, said the current tax situation could put the state in legal jeopardy.

He said the Ashley Lynn's salons have filed claims seeking nearly $1.1 million worth of sales tax refunds from the state Department of Revenue. He said the claims sought refunds for “erroneously or illegally collected taxes.”

Ewald said he was unaware of the claims. However, he said, businesses that collect sales taxes cannot claim refunds; any refunds owed go to the customers who paid the taxes.

During the hearing, Ewald questioned Bonn about the tanning salons' two failed attempts to win a sales tax exemption from the Legislature.

Bonn said the proposals got out of committee, but lawmakers were unwilling to spend the time and political capital to pass the legislation.

He said the salons began taking a different tack last year when they realized there were legal questions about the basis for taxing indoor tanning.

The proposal to remove state sales tax from indoor tanning comes as a panel of lawmakers looks at revamping the state's tax system.

It also comes as a growing number of states are banning teenagers from indoor tanning.

Last week, Illinois became the sixth state to prohibit tanning for minors under age 18. Another 11 states have bans affecting younger teens only.

A bill introduced by State Sen. Jeremy Nordquist of Omaha this year would have added Nebraska to the list of states with bans for teens under age 18. Legislative Bill 132 remains in committee and could be considered again next year.

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