Tax deductions may help fight obesity.
The statistics are staggering. The Centers for Disease Control and Prevention reported that in 1999 and 2000 nearly two-thirds of Americans 20 years of age and older were overweight and almost one-third were obese. The highest percentage of obese men and women were 45 to 74 years old.
Revenue ruling 79-151 disallowed a deduction for participation in a weight-loss program unless it was to cure a specific ailment or disease. At the time obesity was not considered a disease. Since then traditional beliefs have changed. In 1998 the National Heart, Lung, and Blood Institute described obesity as a "complex, multifactorial chronic disease." In 2000 the Food and Drug Administration said, in the Federal Register, that "obesity is a disease."
A more significant announcement came in July 2004 when Medicare officials withdrew a previous declaration that obesity was not a disease. Americans on Medicare will no doubt begin to request i3ayments for stomach surgery, diet activities and other obesity-related medical costs. The policy change, therefore, has the potential to significantly influence tax planning for clients who spend money to lose weight.
Revenue ruling 55-261, which deals with medical deductions, said the cost of medical care includes the cost of special food if the food is part of a program to treat illness, is not part of a taxpayer's normal nutritional needs and a physician documents the need.
In revenue ruling 2002-19, the IRS provided many opportunities for taxpayers to deduct obesity-related costs. Weight-loss programs prescribed by a doctor now are tax-deductible. Also, since obesity may be controlled only through special diets prescribed by a physician and not part of an individual's normal nutritional needs, the potential exists for a tax deduction for what a taxpayer eats attempting to lose weight under a doctor's care.
Observation. Published reports show spending by Americans to lose weight may exceed $50 billion annually and that Americans are willing to pay as much as $180 per pound to lose weight. The new tax benefits may be a significant step forward in helping millions of Americans fight and overcome obesity.
CPAs should take an aggressive approach to tax planning for weight-loss spending, looking at every penny clients spend. Everything they eat, drink and do to lose weight should be given strong consideration for a deduction following the guidance in revenue ruling 55-261.
Prepared by W. Terry Dancer, CPA, PhD, associate professor of accounting, Arkansas State University, State University.
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|Author:||Dancer, W. Terry|
|Publication:||Journal of Accountancy|
|Date:||Nov 1, 2004|
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