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Thread: sales tax on cosmetic surgery

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    God/dess Emily's Avatar
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    Default sales tax on cosmetic surgery

    I read in Newsweek today that many states want to cash in and start charging sales tax on elective cosmetic surgery and botox. New Jersey started doing this and other states like Washington and Illinois are pushing for it.

    I thought this was interesting

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    Banned Melonie's Avatar
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    Default Re: sales tax on cosmetic surgery

    It's based on the congressionally approved IRS rules regarding the non-tax deductibility of non-medically indicated cosmetic surgery procedures - i.e. that cosmetic surgery is a 'luxury item' and thus fair game for taxation.

    In the larger picture, all of the Blue states are going broke, and are looking to find extra tax revenues under any available rock. The cosmetic surgery 'luxury tax' will probably produce a fair amount of tax revenue paid by people who aren't going to do much complaining (i.e. if they can afford the cosmetic surgery in the first place they can also afford to pay the 'luxury tax').

    Also, the legal precedent of New Jersey's cosmetic surgery 'luxury tax' pretty much puts the kiss of death on dancers who try to deduct boob jobs, lipo or other cosmetic surgery procedures as business expenses in the future. About the only surviving cosmetic surgery deduction for dancers will be breast implants larger than 1000cc in size, based on the 'Chesty Love' IRS letter ruling.

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    Default Re: sales tax on cosmetic surgery

    On a side note, I always hated landing on the "Luxury Tax" square when playing Monopoly...



    Because there ain't no tits on the radio

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    Member Jon_CPA's Avatar
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    Default Re: sales tax on cosmetic surgery

    Quote Originally Posted by Melonie
    Also, the legal precedent of New Jersey's cosmetic surgery 'luxury tax' pretty much puts the kiss of death on dancers who try to deduct boob jobs, lipo or other cosmetic surgery procedures as business expenses in the future. About the only surviving cosmetic surgery deduction for dancers will be breast implants larger than 1000cc in size, based on the 'Chesty Love' IRS letter ruling.
    Have to disagree here. State tax law and case law has no bearing on federal tax law. What most people don't realize is that federal tax law and case law actually has no binding effect on state tax laws. States are free to accept, modify, or refuse to accept sections of the IRC when creating their own tax codes. Federal IRC, Procedures, and IRS Regs only apply at the federal level. State tax laws, Regulations, and Procedures only apply to the state you are filing in.

    Example, Massachusetts could allow same-sex couples to file as married filing jointly for their state tax returns, but the same couple would have to file individually as single for their federal return.

    As a side note for the 2004 and 2005 tax years, if you itemize you are allowed to elect take the greater of state and local income taxes or state and local sales taxes paid in that year. If you elect to deduct the sales tax in liu of income taxes then the sales tax on even a cosmetic B/A would be deductible, but the B/A itself would not.
    Last edited by Jon_CPA; 02-18-2005 at 09:17 PM.

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    Banned Melonie's Avatar
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    Default Re: sales tax on cosmetic surgery

    Have to disagree here. State tax law and case law has no bearing on federal tax law. What most people don't realize is that federal tax law and case law actually has no binding effect on state tax laws
    I agree with you of course about the 'details' of tax law. However, the issue of how a particular product or service is categorized under the law i.e. a 'luxury item' in this case DOES have some bearing on both. This is not because of any particular factor about the specifics of how it is taxed or not taxed under tax law, but at a more basic constitutional level regarding whether or not a state or the federal gov't has the authority to tax something in the first place. As a 'luxury item' that authority stems from the authority granted to gov't by the constitution to impose 'excise taxes'.

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    God/dess montythegeek's Avatar
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    Default Re: sales tax on cosmetic surgery

    The state sees this as no different an issue than not applying sales taxes on "food to be prepared" and applying the tax to "prepared food ready to eat". States with sales taxes make these distinctions for food in the same store, and many treat "take-out" different from "eat there".

    They do not ask you "here or to go" just to decide if to put it in a bag or give you a tray.

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