Oct 14, 2011 10:37 PM GMT
Is it any surprise that new taxes and increased taxes never reach estimates despite the corresponding spending that almost always exceeds estimates?
The IRS got red-faced trying to collect the new tanning tax, burning a hole in estimates on how much the levy would bring in to federal coffers, a new report said Thursday.
The Treasury Inspector General for Tax Administration said the IRS developed outreach plans to notify tanning salons the 10% federal tax would be due on ultraviolet light services paid for as of July 1, 2010.
But, while the agency also updated tax forms and tax return processing systems to prepare for the new levy, the IRS had difficulty determining the actual number and contacts for businesses required to collect the new tax from customers.
Using an April 2010 Indoor Tanning Association estimate, the IRS initially projected the tax would be due quarterly from roughly 25,000 stand-alone tanning salons, plus spas, health clubs and beauty parlors.
But the inspector general report found that actual tax returns filed for the first three quarters through March 31 averaged just above 10,300.