Washington, D.C. – Congressman Darin LaHood (R-IL) and Congresswoman Suzan DelBene (D-WA), members of the House Ways and Means Committee, reintroduced their legislation – H.R. 45, the Small Business Tax Fairness and Compliance Simplification Act. This legislation would extend the Federal Insurance Contribution Act (FICA) tax tip credit, which is currently available to the food service industry, to employer-based salon and beauty service establishments where tipping is also customary.
“Our bipartisan Small Business Tax Fairness and Compliance Simplification Act will level the playing field and provide direct relief to millions of salon and beauty care professionals who rely on tips," said Rep. LaHood. "I am proud to continue to champion this bill with Congresswoman DelBene, to strengthen small businesses, improve reporting of tip income, and help businesses navigate IRS administrative rules and procedures."
“The beauty industry is largely comprised of small businesses, predominantly owned by women and women of color, with workers who rely heavily on tips. Unfortunately, our tax code does not treat the salon industry the same as other tipped industries that enjoy a fairer and simpler tax administration,” said Rep DelBene. “Extending this tax relief to the beauty industry would provide parity with other industries, like food service, that already take advantage of this credit. This bipartisan legislation would bring commonsense tax relief to salons and their workers, support women-owned businesses, and expand our middle class.”
“Extending the FICA Tip Tax credit will allow me to expand benefits for my staff, offset rising costs, and strengthen my business operation. This legislation will bring parity to the beauty industry in relation to the restaurant industry which has had this tax credit for the last 30 years, and finally level the playing for myself and thousands of other small business owners around the country,” said Paola Hinton, Owner of Five Senses Spa, Salon & Barbershop in Peoria, Illinois.
- Currently, over 80 percent of the 1.2 million beauty industry businesses employ less than ten employees, which are predominantly owned and operated by women and minorities.
- The FICA tax tip credit is part of an integrated compliance system that has been effective in ensuring the accurate reporting of tip income and reducing the tax gap.
- The credit acts as a reimbursement for the costs employers incur in accounting for tip income.
- Extending the FICA tax tip credit will reduce tax burdens and improve reporting of tip income, as it did in the food and beverage industry. This would grant equal treatment to the beauty industry, allowing them to support their employees and grow their businesses.