[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 45 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 45
To amend the Internal Revenue Code of 1986 to simplify reporting
requirements, promote tax compliance, and reduce tip reporting
compliance burdens in the beauty service industry.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 24 (legislative day, January 3), 2023
Mr. Cardin (for himself and Mr. Scott of South Carolina) 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 simplify reporting
requirements, promote tax compliance, and reduce tip reporting
compliance burdens in the beauty service industry.
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 ``Small Business Tax Fairness and
Compliance Simplification Act''.
SEC. 2. EXTENSION OF CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY
TAXES PAID WITH RESPECT TO EMPLOYEE TIPS TO BEAUTY
SERVICE ESTABLISHMENTS.
(a) Extension of Tip Credit to Beauty Service Business.--
(1) In general.--Section 45B(b)(2) 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 the
following services:
``(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.
``(B) The providing of beauty services to a
customer or client if the tipping of employees
providing such services is customary.''.
(2) Beauty service defined.--Section 45B of such Code is
amended by adding at the end the following new subsection:
``(e) Beauty Service.--For purposes of this section, the term
`beauty service' means any of the following:
``(1) Barbering and hair care.
``(2) Nail care.
``(3) Esthetics.
``(4) Body and spa treatments.''.
(b) Credit Determined With Respect to Minimum Wage in Effect.--
Section 45B(b)(1)(B) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``as in effect on January 1, 2007, and'';
and
(2) by inserting ``, and in the case of food or beverage
establishments, as in effect on January 1, 2007'' after
``without regard to section 3(m) of such Act''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
SEC. 3. EMPLOYER TIP REPORTING SAFE HARBOR.
(a) In General.--Section 3121(q) of the Internal Revenue Code of
1986 is amended--
(1) by striking so much as precedes ``of this chapter'' and
inserting the following:
``(q) Tips Included for Both Employee and Employer Taxes.--
``(1) In general.--For purposes''; and
(2) by adding at the end the following new paragraph:
``(2) Tip program safe harbor.--In the case of an employer
who employs one or more employees who receive tips in the
course of such employment which are attributable to the
performance of beauty services (as such term is defined in
section 45B) are considered remuneration for such employment
under this section, no IRS tip examination with respect to such
employer shall be initiated (except in the case of a tip
examination of a current or former employee) if the employer--
``(A) establishes an educational program regarding
applicable laws relating to proper reporting of tips
received by employees for--
``(i) new employees, which shall include
both verbal explanation and written materials,
and
``(ii) existing employees, which shall be
conducted quarterly,
``(B) establishes procedures for tipped employees
to provide monthly reporting of cash and charged
services and related tip income of at least $20 under
section 6053(a),
``(C) complies with all applicable Federal tax law
requirements applicable to employers for purposes of
filing returns, and collection and payment of taxes
imposed, with respect to tip income received by
employees, and
``(D) maintains employee records related to--
``(i) contact information for such
employees, and
``(ii) gross receipts from any services
subject to tipping, and charge receipts for
such services, for a period of not less than 4
calendar years after the calendar year to which
the records relate.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
SEC. 4. INFORMATION REPORTING OF INCOME FROM SPACE RENTALS IN THE
BEAUTY SERVICE INDUSTRY.
(a) In General.--Subpart B of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986, as amended by section 334(d)
of Public Law 117-328, is amended by adding at the end the following
new section:
``SEC. 6050AA. RETURNS RELATING TO INCOME FROM CERTAIN RENTALS OF SPACE
IN THE BEAUTY SERVICE INDUSTRY.
``(a) Requirement of Reporting.--Any person who, in the course of a
trade or business and for any calendar year, receives rental payments
from two or more individuals providing beauty services (as defined in
section 45B(e)) aggregating $600 or more each for the lease of space to
provide such services to third-party patrons shall make the return
described in subsection (b) with respect to each person from whom such
rent was so received at such time as the Secretary may by regulations
prescribe.
``(b) Return.--A return is described in this subsection if such
return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name, address, and TIN of each person
from whom a rental payment described in subsection (a)
was received during the calendar year,
``(B) the aggregate amount of such payments
received by such person during such calendar year and
the date and amount of each such payment, and
``(C) such other information as the Secretary may
require.
``(c) Statement To Be Furnished to Persons With Respect to Whom
Information Is Required.--
``(1) In general.--Every person required to make a return
under subsection (a) shall furnish to each person whose name is
required to be set forth in such return a written statement
showing--
``(A) the name, address, and phone number of the
information contact of the person required to make such
a return, and
``(B) the aggregate amount of payments to the
person required to be shown on the return.
``(2) Furnishing of information.--The written statement
required under paragraph (1) shall be furnished to the person
on or before January 31 of the year following the calendar year
for which the return under subsection (a) is required to be
made.
``(d) Regulations and Guidance.--The Secretary may prescribe such
regulations and other guidance as may be appropriate or necessary to
carry out the purpose of this subsection, including rules to prevent
duplicative reporting of transactions.''.
(b) Clerical Amendment.--The table of sections for subchapter A of
chapter 61 of such Code is amended by adding at the end the following
new item:
``Sec. 6050AA. Returns relating to income from certain rentals of space
in the beauty service industry.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments made after December 31, 2023.
SEC. 5. GAO STUDY.
Not later than 5 years after the date of enactment of this Act, the
Comptroller General shall conduct a study and submit to the Committee
on Small Business and Entrepreneurship of the Senate and the Committee
on Finance of the Senate a report detailing how the extension of the
employer social security credit under section 45B of the Internal
Revenue Code of 1986 (as amended by section 2 of this Act) has impacted
employers and employees with respect to Federal income tax compliance
and benefits.
<all>