[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8401 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 8401

  To amend the Internal Revenue Code of 1986 to allow a credit for a 
portion of employer social security taxes paid with respect to service 
 charges paid by the employer to an employee in the form of wages, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 15, 2024

Mr. Blumenauer introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to allow a credit for a 
portion of employer social security taxes paid with respect to service 
 charges paid by the employer to an employee in the form of wages, and 
                          for other purposes.

    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 ``Restaurant Service Charge Fairness 
Act''.

SEC. 2. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID WITH 
              RESPECT TO SERVICE CHARGES.

    (a) In General.--Section 45B(b) of the Internal Revenue Code of 
1986 is amended--
            (1) in paragraph (1)--
                    (A) by striking ``with respect to tips received by 
                an employee'' and inserting ``with respect to either--
                    ``(A) tips received by an employee'',
                    (B) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii),
                    (C) by striking the period at the end and inserting 
                ``, or'', and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(B) service charges received by an employee 
                during any month, to the extent that such service 
                charges--
                            ``(i) are deemed to have been paid by the 
                        employer to the employee in the form of wages, 
                        and that such payment is only provided to non-
                        management employees, and
                            ``(ii) exceed the amount by which the wages 
                        (excluding payments from service charges) paid 
                        by the employer to the employee during such 
                        month are less than the total amount which 
                        would be payable (with respect to such 
                        employment) at the minimum wage rate applicable 
                        to such individual under section 6(a)(1) of the 
                        Fair Labor Standards Act of 1938 (determined 
                        without regard to section 3(m) of such Act).'',
            (2) in paragraph (2), by striking ``paragraph (1)'' and 
        inserting ``paragraph (1)(A)'', and
            (3) by adding at the end the following new paragraphs:
            ``(3) Only one category of excess employer social security 
        tax taken into account during the taxable year.--In applying 
        paragraph (1), an employer may elect to claim a credit with 
        respect to either tax paid with respect to tips described in 
        subparagraph (A) of such paragraph or tax paid with respect to 
        service charges described in subparagraph (B) of such 
        paragraph, but not both.
            ``(4) Limitation on service charges taken into account.--In 
        applying paragraph (1)(B), there shall be taken into account 
        only so much of the service charges as does not exceed 25 
        percent of the gross receipts of the employer for the taxable 
        year.
            ``(5) Non-management employee.--For purposes of this 
        section, the term `non-management employee' means any employee 
        who does not qualify for an exemption under section 13 of the 
        Fair Labor Standards Act of 1938 (29 U.S.C. 213).
            ``(6) Wages.--For purposes of this section, the term 
        `wages' has the meaning given such term in section 3121(a).''.
    (b) Conforming Amendments.--
            (1) Section 3102(c) of such Code is amended--
                    (A) in the heading, by inserting ``or Service 
                Charges'' after ``Tips'', and
                    (B) by striking ``tips'' each place it appears and 
                inserting ``tips or service charges''.
            (2) Section 6053 of such Code is amended by striking 
        ``tips'' each place it appears and inserting ``tips or service 
        charges''.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxes paid in taxable years beginning after December 31, 2024.
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