118 HR 8401 IH: Restaurant Service Charge Fairness Act U.S. House of Representatives 2024-05-15 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I118th CONGRESS2d SessionH. R. 8401IN THE HOUSE OF REPRESENTATIVESMay 15, 2024Mr. Blumenauer introduced the following bill; which was referred to the Committee on Ways and MeansA BILLTo 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.

1.

Short title

This Act may be cited as the Restaurant Service Charge Fairness Act.

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.