[Congressional Record Volume 155, Number 143 (Tuesday, October 6, 2009)]
[Extensions of Remarks]
[Page E2460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE SMALL BUSINESS TAX EQUALIZATION AND COMPLIANCE ACT

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                          HON. SHELLEY BERKLEY

                               of nevada

                    in the house of representatives

                        Tuesday, October 6, 2009

  Ms. BERKLEY. Madam Speaker, I am very pleased to re-introduce the 
Small Business Tax Equalization and Compliance Act, legislation that 
would extend the existing tip tax credit--the 45(b) credit--to 
employers in the salon industry and at the same time encourage tax 
compliance through education and improved tip reporting requirements. 
This legislation makes needed changes to the tax code to help support a 
vital and growing sector of America's economy, the salon industry.
  The salon industry is one of America's most diverse industries and 
home to a large number of entry-level jobs, but with room for 
advancement and opportunities that go far beyond minimum-wage. The 
industry is also a significant employer of women, particularly working 
mothers who need flexibility in their work schedules.
  In 1993, Congress formally recognized that employers should not be 
responsible for paying FICA taxes on income that was not paid by them, 
and granted the restaurant industry a dollar-for-dollar tax credit on 
the employer's share of FICA taxes paid on tip income above the minimum 
wage. Much like restaurants, salon employees receive a large portion of 
their income in the form of tips. As a matter of tax fairness, it is 
time to extend similar treatment to the salon industry.
  My bill also includes provisions to improve tip reporting to ensure 
that all salons--whether the traditional employer-employee model or the 
non-employer salons where independent contractors report their own 
tips--are fully complying with reporting requirements.
  I believe that small businesses are the backbone of the American 
economy, and salons are an important part of the small business 
community. Eighty-two percent of salon establishments have fewer than 
10 employees and 98 percent of salons are single-unit operations. 
Extending the tip tax credit to these small businesses would provide 
much needed tax relief, particularly in these challenging economic 
times, and allow them to reinvest in their businesses, employees, and 
communities.
  A strong economic recovery will depend on the health and strength of 
our small business sector. It is imperative that we work to ensure our 
tax rules governing this sector are fair, simple, and encourage 
compliance. I urge all of my colleagues to join me in supporting this 
legislation.

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