Small Business Tax Equalization and Compliance Act of 2014 - Amends the Internal Revenue Code to extend the tax credit for social security taxes paid for employee cash tips to employers of cosmetologists.
Requires employers of cosmetologists to report income and tips of their cosmetology employees and to provide income and tip information to self-employed cosmetologists to whom they pay more than $600 in the taxable year. Imposes similar reporting requirements upon individuals who rent chairs to cosmetologists. Requires such employers to provide their cosmetology employees and self-employed cosmetologists with information on the tax and tip reporting obligations of employees and self-employed individuals.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5615 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5615
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 18, 2014
Mr. Sam Johnson of Texas introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
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.
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 Equalization and
Compliance Act of 2014''.
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 Service.--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 to tips received for services performed after December 31, 2013.
SEC. 3. INFORMATION REPORTING AND TAXPAYER EDUCATION FOR PROVIDERS OF
COSMETOLOGY SERVICES.
(a) In General.--Subpart B of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986 is amended by inserting after
section 6050W the following new section:
``SEC. 6050X. RETURNS RELATING TO COSMETOLOGY SERVICES AND INFORMATION
TO BE PROVIDED TO COSMETOLOGISTS.
``(a) In General.--Every person (referred to in this section as a
`reporting person') who--
``(1) employs 1 or more cosmetologists to provide any
cosmetology service,
``(2) rents a chair to 1 or more cosmetologists to provide
any cosmetology service on at least 5 calendar days during a
calendar year, or
``(3) in connection with its trade or business or rental
activity, otherwise receives compensation from, or pays
compensation to, 1 or more cosmetologists for the right to
provide cosmetology services to, or for cosmetology services
provided to, third-party patrons,
shall comply with the return requirements of subsection (b) and the
taxpayer education requirements of subsection (c).
``(b) Return Requirements.--The return requirements of this
subsection are met by a reporting person if the requirements of each of
the following paragraphs applicable to such person are met.
``(1) Employees.--In the case of a reporting person who
employs 1 or more cosmetologists to provide cosmetology
services, the requirements of this paragraph are met if such
person meets the requirements of sections 6051 (relating to
receipts for employees) and 6053(b) (relating to tip reporting)
with respect to each such employee.
``(2) Independent contractors.--In the case of a reporting
person who pays compensation to 1 or more cosmetologists (other
than as employees) for cosmetology services provided to third-
party patrons, the requirements of this paragraph are met if
such person meets the applicable requirements of section 6041
(relating to returns filed by persons making payments of $600
or more in the course of a trade or business), section 6041A
(relating to returns to be filed by service-recipients who pay
more than $600 in a calendar year for services from a service
provider), and each other provision of this subpart that may be
applicable to such compensation.
``(3) Chair renters.--
``(A) In general.--In the case of a reporting
person who receives rent or other fees or compensation
from 1 or more cosmetologists for use of a chair or for
rights to provide any cosmetology service at a salon or
other similar facility for more than 5 days in a
calendar year, the requirements of this paragraph are
met if such person--
``(i) makes a return, according to the
forms or regulations prescribed by the
Secretary, setting forth the name, address, and
TIN of each such cosmetologist and the amount
received from each such cosmetologist, and
``(ii) furnishes to each cosmetologist
whose name is required to be set forth on such
return a written statement showing--
``(I) the name, address, and phone
number of the information contact of
the reporting person,
``(II) the amount received from
such cosmetologist, and
``(III) a statement informing such
cosmetologist that (as required by this
section), the reporting person has
advised the Internal Revenue Service
that the cosmetologist provided
cosmetology services during the
calendar year to which the statement
relates.
``(B) Method and time for providing statement.--The
written statement required by clause (ii) of
subparagraph (A) shall be furnished (either in person
or by first-class mail which includes adequate notice
that the statement or information is enclosed) to the
person on or before January 31 of the year following
the calendar year for which the return under clause (i)
of subparagraph (A) is to be made.
``(c) Taxpayer Education Requirements.--In the case of a reporting
person who is required to provide a statement pursuant to subsection
(b), the requirements of this subsection are met if such person
provides to each such cosmetologist annually a publication, as
designated by the Secretary, describing--
``(1) in the case of an employee, the tax and tip reporting
obligations of employees, and
``(2) in the case of a cosmetologist who is not an employee
of the reporting person, the tax obligations of independent
contractors or proprietorships.
The publications shall be furnished either in person or by first-class
mail which includes adequate notice that the publication is enclosed.
``(d) Definitions.--For purposes of this section--
``(1) Cosmetologist.--
``(A) In general.--The term `cosmetologist' means
an individual who provides any cosmetology service.
``(B) Anti-avoidance rule.--The Secretary may by
regulation or ruling expand the term `cosmetologist' to
include any entity or arrangement if the Secretary
determines that entities are being formed to circumvent
the reporting requirements of this section.
``(2) Cosmetology service.--The term `cosmetology service'
has the meaning given to such term by section 45B(c).
``(3) Chair.--The term `chair' includes a chair, booth, or
other furniture or equipment from which an individual provides
a cosmetology service (determined without regard to whether the
cosmetologist is entitled to use a specific chair, booth, or
other similar furniture or equipment or has an exclusive right
to use any such chair, booth, or other similar furniture or
equipment).
``(e) Exceptions for Certain Employees.--Subsection (c) shall not
apply to a reporting person with respect to an employee who is employed
in a capacity for which tipping (or sharing tips) is not customary.''.
(b) Conforming Amendments.--
(1) Section 6724(d)(1)(B) of such Code (relating to the
definition of information returns) is amended by striking
``or'' at the end of clause (xxiv), by striking ``and'' at the
end of clause (xxv) and inserting ``or'', and by inserting
after clause (xxv) the following new clause:
``(xvi) section 6050X(a) (relating to
returns by cosmetology service providers),
and''.
(2) Section 6724(d)(2) of such Code is amended by striking
``or'' at the end of subparagraph (GG), by striking the period
at the end of subparagraph (HH) and inserting ``, or'', and by
inserting after subparagraph (HH) the following new
subparagraph:
``(II) subsections (b)(3)(A)(ii) and (c) of section
6050X (relating to cosmetology service providers) even
if the recipient is not a payee.''.
(3) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by adding
after the item relating to section 6050W the following new
item:
``Sec. 6050X. Returns relating to cosmetology services and information
to be provided to cosmetologists.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years after 2013.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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