1.This Act may be cited as the
Small Business Tax Equalization and
Compliance Act of 2011
.
2.Expansion of credit
for portion of social security taxes paid with respect to employee
tips
(a)Expansion of
credit to other lines of businessParagraph (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 businessIn 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 serviceSection 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)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)The amendments made by this section shall apply to tips
received for services performed after December 31, 2010.
3.Information
reporting and taxpayer education for providers of cosmetology services
(a)Subpart B of part III of subchapter A of chapter 61 of
the Internal Revenue Code of 1986 is amended by inserting after section 6050W
the following new section:
6050X.Returns
relating to cosmetology services and information to be provided to
cosmetologists
(a)Every person (referred to in this section as a
reporting person
) who—
(1)employs 1 or more
cosmetologists to provide any cosmetology service,
(2)rents a chair to 1
or more cosmetologists to provide any cosmetology service on at least 5
calendar days during a calendar year, or
(3)in connection with
its trade or business or rental activity, otherwise receives compensation from,
or pays compensation to, 1 or more cosmetologists for the right to provide
cosmetology services to, or for cosmetology services provided to, third-party
patrons,
shall
comply with the return requirements of subsection (b) and the taxpayer
education requirements of subsection (c).(b)The return requirements of this subsection are met
by a reporting person if the requirements of each of the following paragraphs
applicable to such person are met.
(1)In
the case of a reporting person who employs 1 or more cosmetologists to provide
cosmetology services, the requirements of this paragraph are met if such person
meets the requirements of sections 6051 (relating to receipts for employees)
and 6053(b) (relating to tip reporting) with respect to each such
employee.
(2)In the case of a reporting person who pays
compensation to 1 or more cosmetologists (other than as employees) for
cosmetology services provided to third-party patrons, the requirements of this
paragraph are met if such person meets the applicable requirements of section
6041 (relating to returns filed by persons making payments of $600 or more in
the course of a trade or business), section 6041A (relating to returns to be
filed by service-recipients who pay more than $600 in a calendar year for
services from a service provider), and each other provision of this subpart
that may be applicable to such compensation.
(3)
(A)In the case of a reporting person who receives rent or
other fees or compensation from 1 or more cosmetologists for use of a chair or
for rights to provide any cosmetology service at a salon or other similar
facility for more than 5 days in a calendar year, the requirements of this
paragraph are met if such person—
(i)makes a return,
according to the forms or regulations prescribed by the Secretary, setting
forth the name, address, and TIN of each such cosmetologist and the amount
received from each such cosmetologist, and
(ii)furnishes to each
cosmetologist whose name is required to be set forth on such return a written
statement showing—
(I)the name, address,
and phone number of the information contact of the reporting person,
(II)the amount
received from such cosmetologist, and
(III)a statement
informing such cosmetologist that (as required by this section), the reporting
person has advised the Internal Revenue Service that the cosmetologist provided
cosmetology services during the calendar year to which the statement
relates.
(B)Method and time
for providing statementThe written statement required by clause
(ii) of subparagraph (A) shall be furnished (either in person or by first-class
mail which includes adequate notice that the statement or information is
enclosed) to the person on or before January 31 of the year following the
calendar year for which the return under clause (i) of subparagraph (A) is to
be made.
(c)Taxpayer
education requirementsIn the case of a reporting person who is
required to provide a statement pursuant to subsection (b), the requirements of
this subsection are met if such person provides to each such cosmetologist
annually a publication, as designated by the Secretary, describing—
(1)in the case of an
employee, the tax and tip reporting obligations of employees, and
(2)in the case of a
cosmetologist who is not an employee of the reporting person, the tax
obligations of independent contractors or proprietorships.
The
publications shall be furnished either in person or by first-class mail which
includes adequate notice that the publication is enclosed.(d)For
purposes of this section—
(1)
(A)The term cosmetologist means an individual
who provides any cosmetology service.
(B)The Secretary may by regulation or ruling expand the term
cosmetologist to include any entity or arrangement if the
Secretary determines that entities are being formed to circumvent the reporting
requirements of this section.
(2)The term cosmetology service has the meaning
given to such term by section 45B(c).
(3)The
term chair includes a chair, booth, or other furniture or
equipment from which an individual provides a cosmetology service (determined
without regard to whether the cosmetologist is entitled to use a specific
chair, booth, or other similar furniture or equipment or has an exclusive right
to use any such chair, booth, or other similar furniture or equipment).
(e)Exceptions for
certain employeesSubsection (c) shall not apply to a reporting
person with respect to an employee who is employed in a capacity for which
tipping (or sharing tips) is not
customary.
.
(b)
(1)Section
6724(d)(1)(B) of such Code (relating to the definition of information returns)
is amended by striking or
at the end of clause (xxiv), by
striking and
at the end of clause (xxv) and inserting
or
, and by inserting after clause (xxv) the following new
clause:
(xvi)section 6050X(a)
(relating to returns by cosmetology service providers),
and
.
(2)Section 6724(d)(2)
of such Code is amended by striking or
at the end of
subparagraph (GG), by striking the period at the end of subparagraph (HH) and
inserting , or
, and by inserting after subparagraph (HH) the
following new subparagraph:
(II)subsections (b)(3)(A)(ii) and (c)
of section 6050X (relating to cosmetology service providers) even if the
recipient is not a
payee.
.
(3)The table of
sections for subpart B of part III of subchapter A of chapter 61 of such Code
is amended by adding after the item relating to section 6050W the following new
item:
Sec. 6050X. Returns relating to cosmetology services and
information to be provided to
cosmetologists.
.
(c)The amendments made by this section shall apply to calendar
years after 2010.