[Congressional Record Volume 146, Number 132 (Thursday, October 19, 2000)]
[Senate]
[Pages S10806-S10807]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SANTORUM:
  S. 3225. 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; to the Committee on Finance.


          cosmetology tax fairness and compliance act of 2000

  Mr. SANTORUM. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 3225

       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

[[Page S10807]]

     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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