"Sin" Industry Myths and Truths

We recently received several questions in the community regarding industries that pose potential health risks. Alcohol, gambling, tobacco, and firearms have traditionally been considered industries that fall under this category. Although it's clear that businesses in these fields face high regulatory demands, confusion remains however as to what additional concerns and obligations these industries face in terms of financial aid and tax requirements.

Myth - 'Sin' industries exclusively include alcohol, gambling, tobacco, and firearms.

Truth - Alcohol, gambling, tobacco, and firearms are all considered by federal and state governments to be potentially hazardous to a person's health and therefore are often subjected to additional obligations. As the government continues to study the health affects of other industries, they will continue to add industries to this list. For example, due to the rising level of dangerous skin cancers and rampant obesity, there has been recent talk about expanding this pool to include the indoor tanning and junk food industries.

Several pertinent articles from the last year explain efforts to expand what constitutes as a so-called;si- industries:

• For Cash-Strapped States, Sin Is Sure Lucrative*
• Soda Tax Weighed to Pay for Health Care*
• Tanning Salons Will Soon Pay a Federal Tax*

Myth - The federal government prohibits or limits financial aid to-si' industries.

Truth - A community member recently asked if their tanning bed business would encounter any problems in receiving a business loan. They had heard that the government limits loans to businesses that have adverse health effects. Like other for-profit businesses, the government does not provide start-up or operational grants for these purposes. However, the government does provide guaranteed loans and'si' industries are not excluded. For example, the federal Microloan Program provides small loans ($35,000 or less) to business for almost any purposes with limited qualifications. A tanning salon would have the same status in applying for one of these loans as another business that is not considered a health risk.

Although government does not place limits on commercial grants and loans, qualifications will vary from case to case. It is up to the discretion of the lender to determine whether or not they will lend to your business. Because there are health risks that come with these industries, in some cases a lender may be less likely to loan to a business in one of these fields.

Myth - Federal and state governments place an additional tax on'si' industries.

Truth - Both federal and state governments place an additional tax on these industries. Dubbed as 'sin taxes', they vary by industry and location. For example, a new 10% federal excise tax on indoor UV tanning goes into effect in July. For current information on alcohol, tobacco, and firearm taxes, see the Tax and Fee Rate guide from the Alcohol and Tobacco Tax and Trade Bureau.

Check with your state government and a small business expert for more information on what tax obligations your business requires based on type and location.

Related Resources

Several resources from Business.gov provide additional information on the regulatory and compliance issues surrounding the alcohol and firearms industries. For more regulatory information on these and other'si' industries, check out Business.go's License and Permit Tool.

If you have experience on with any of these industries, please share it with the your fellow members in the community!

* Directs user to a non-government website.