Details of New Jersey Repeals Tax on Cosmetic Surgery
The Internal Revenue Service (IRS) has ruled that it is not taxable for a non-disqualified cosmetic surgeon to receive payment from insurance companies for cosmetic procedures performed.The agency sent a letter to the Department of State’s Board of Examiners reminding the board that it is unlawful for the state to require a licensed medical professional to pay a fee just because a tax code allows such payment. The letter was addressed to the Board of Examining judges who had ordered an investigation into whether the practice was tax exempt. The examiners had found that the practice was not tax exempt because it did not perform medical services in the course of professional practice. The tax code in question contained a sunset provision that authorizes the federal government to tax expenses only after the four-year period described in the code.Do you want to learn more? check it out
Because most cosmetic procedures are not performed in a hospital setting and because there is no requirement that the practitioner have any medical training, states that have imposed a one percent tax cannot tax the practitioner. Practitioners are advised to not be confused with “physician advertising” because the revenue code does not apply to physician advertising. When taxpayers are informed of the differences between ordinary and professional fees, they will be better able to understand the differences between the regular fee billed for cosmetic procedures and those charged for reconstructive or ambulatory surgeries. While it is true that doctors make substantially more than six hundred dollars an hour, the revenue code provides no justification for taxing such incomes at levels greater than those charged for other professional services. At the very least, a tax on these incomes should be exempted from the tax code.
There are justifications for imposing taxes on many activities that most people would agree are completely unnecessary. One such justification has been applied to the deductibility of cosmetic surgery. Doctors are not likely to be disputing the tax on these earnings simply because the deductions can amount to a large sum over a lifetime. The taxpayers could try to establish that the deductibility of their medical expenses is justified by showing that they would have paid the taxes had they not received the tax benefits.