[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3225 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 3225

To amend the Internal Revenue Code of 1986 to expand the tip tax credit 
  to employers of cosmetologists and to promote tax compliance in the 
                          cosmetology sector.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            October 19 (legislative day, September 22), 2000

 Mr. Santorum introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to expand the tip tax credit 
  to employers of cosmetologists and to promote tax compliance in the 
                          cosmetology sector.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cosmetology Tax Fairness and 
Compliance Act of 2000''.

SEC. 2. EXPANSION OF CREDIT FOR PORTION OF SOCIAL SECURITY TAXES PAID 
              WITH RESPECT TO EMPLOYEE TIPS.

    (a) Expansion of Credit to Other Lines of Business.--Paragraph (2) 
of section 45B(b) of the Internal Revenue Code of 1986 is amended to 
read as follows:
            ``(2) Application only to certain lines of business.--In 
        applying paragraph (1), there shall be taken into account only 
        tips received from customers or clients in connection with--
                    ``(A) the providing, delivering, or serving of food 
                or beverages for consumption if the tipping of 
                employees delivering or serving food or beverages by 
                customers is customary, or
                    ``(B) the providing of any cosmetology service for 
                customers or clients at a facility licensed to provide 
                such service if the tipping of employees providing such 
                service is customary.''.
    (b) Definition of Cosmetology Services.--Section 45B of such Code 
is amended by redesignating subsections (c) and (d) as subsections (d) 
and (e), respectively, and by inserting after subsection (b) the 
following new subsection:
    ``(c) Cosmetology Service.--For purposes of this section, the term 
`cosmetology service' means--
            ``(1) hairdressing,
            ``(2) haircutting,
            ``(3) manicures and pedicures,
            ``(4) body waxing, facials, mud packs, wraps and other 
        similar skin treatments, and
            ``(5) any other beauty related service provided at a 
        facility at which a majority of the services provided (as 
        determined on the basis of gross revenue) are described in 
        paragraphs (1) through (4).''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxes paid after December 31, 2000.

 SEC. 3. INFORMATION REPORTING BY PROVIDERS OF COSMETOLOGY SERVICES.

    (a) In General.--Chapter 61 of the Internal Revenue Code of 1986 is 
amended by inserting after section 6050S the following new section:

``SEC. 6050T. RETURNS RELATING TO COSMETOLOGY SERVICES AND INFORMATION 
              TO BE PROVIDED TO COSMETOLOGISTS.

    ``(a) In General.--Every person who leases space to any individual 
for use by the individual in providing cosmetology services (as defined 
in section 45B(c)) on more than 5 calendar days during a calendar year 
shall make a return, according to the forms or regulations prescribed 
by the Secretary, setting forth the name, address, and TIN of each such 
lessee.
    ``(b) Statement To Be Furnished to Individuals With Respect to Whom 
Information Is Furnished.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth on such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return, 
        and
            ``(2) a statement informing the recipient that (as required 
        by this section), the provider of the notice has advised the 
        Internal Revenue Service that the recipient provided 
        cosmetology services during the calendar year to which the 
        statement relates.
    ``(c) Additional Information To Be Provided to Service Provider.--A 
person who provides a statement pursuant to subsection (b) to an 
individual who provides cosmetology services shall include with the 
statement a publication of the Secretary, as designated by the 
Secretary, describing the tax obligations of independent contractors 
unless the publication was previously provided to the individual by the 
statement provider.
    ``(d) Method and Time for Providing Statement and Additional 
Information.--The written statement required by subsection (b) and the 
additional information, if any, required to be furnished under 
subsection (c) shall be furnished (either in person or in a statement 
mailed by first-class mail which includes adequate notice that the 
statement is enclosed) to the person on or before January 31 of the 
year following the calendar year for which the return under subsection 
(a) is to be made. Such statement shall be in such form as the 
Secretary may prescribe by regulations.
    ``(e) Lease.--For purposes of this section, the term `lease' 
include booth rentals and any other arrangements pursuant to which an 
individual provides cosmetology services, other than as an employee, on 
premises not owned by the service provider.
    ``(f) Exception for Services Provided by Proprietorships With 
Employees.--This section shall not apply to leases of premises with at 
least 3 work stations for providing cosmetology services.''.
    (b) Conforming Amendments.--
            (1) Section 6724(d)(1)(B) of such Code (relating to the 
        definition of information returns) is amended--
                    (A) by striking ``or'' at the end of clause (xiv),
                    (B) by adding a comma at the end of clause (xv),
                    (C) by striking ``; or'' at the end of clause (xvi) 
                and inserting a comma,
                    (D) by striking the period at the end of clause 
                (xvii) and inserting ``, or'', and
                    (E) by inserting after clause (xvii) the following 
                new clause:
                            ``(xviii) section 6050T (relating to 
                        returns by cosmetology service providers).''.
            (2) Section 6724(d)(2) of the Internal Revenue Code of 1986 
        is amended--
                    (A) by striking ``or'' at the end of subparagraph 
                (Z) and inserting a comma,
                    (B) by striking the period at the end of 
                subparagraph (AA) and inserting ``, or'', and
                    (C) by inserting after subparagraph (AA) the 
                following new subparagraph:
                    ``(BB) section 6050T(c) (relating to statements 
                from cosmetology service providers) even if the 
                recipient is not a payee.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.
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