DelBene, LaHood Introduce Bill to Bring Tax Relief to Salon Owners and Beauty Professionals
Today, Representatives Suzan DelBene (WA-01) and Darin LaHood (IL-18) introduced the Small Business Tax Fairness and Compliance Simplification Act, bipartisan legislation that would provide greater tax relief and fairness to salon owners and beauty professionals by extending the Federal Insurance Contribution Act (FICA) tax tip credit to the beauty service industry. The credit helps ensure accurate reporting of tipped income and the legislation would also reimburse small businesses for implementing reporting systems.
Tips are paid as a gratuity by a client directly to the worker providing the service. Employers are required to pay FICA taxes on these tips even though they are the sole property of the worker and the employer is not involved in the tip transaction.
The beauty industry is predominantly comprised of small businesses, the majority of which are owned by women and people of color, and this legislation would provide them much-needed tax relief. Currently, over 80 percent of the 1.2 million beauty salon businesses in the U.S. employ fewer than ten workers.
“Workers in the beauty industry – predominantly women of color – rely heavily on tips to support their families. They should receive the same tax fairness as those in other industries that currently have a fairer and simpler administration system for tipped workers,” said DelBene. “This bipartisan bill would bring commonsense tax relief to beauty shops and their workers.”
“In the beauty industry, the majority of businesses are owned and operated by women and minorities and workers rely predominantly on tips. Our bipartisan bill will provide direct tax relief to thousands of small business owners and professionals, much like similar industries have benefitted from for decades,” said LaHood. “As small businesses continue to navigate the COVID-19 pandemic, our commonsense bill with provide fairness and support to the beauty industry and their workers.”
The tip credit is currently available to the foodservice industry. When the credit was made available to the food and beverage industry, it improved the reporting of tipped income. It’s time to provide parity to the beauty industry.
The text of the Small Business Tax Fairness and Compliance Simplification Act is available here.