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119-hr-2603119th CongressWALLET

Small Business Tax Fairness and Compliance Simplification Act

Sponsored By: Representative LaHood, Darin [R-IL-16]

Introduced

Summary

Extending the employer tip credit to beauty services while adding a tip-reporting safe harbor and new space-rental reporting to simplify tax compliance for salons and independent stylists.

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  • Beauty workers would benefit if employers claim the tip credit for barbering, hair care, nail care, esthetics, and body and spa treatments where tipping is customary. The credit for beauty services would apply only if tips counted exceed 15% of the business's beauty-service gross receipts.
  • Salon and spa employers could avoid IRS tip examinations for beauty-service tips by running employee education, providing quarterly training, requiring monthly tip reports of at least $20, complying with tax filing and payment rules, and keeping employee and receipts records for 4 years.
  • Businesses that pay two or more beauty providers $600 or more in a year for leased space would need to file an information return and give each recipient a statement by January 31 showing names, TINs, total payments, and payment dates.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 1 costs, 1 mixed.

Tip credit for salons with 15% rule

This bill would extend the employer tip credit to beauty services. It would only apply if yearly tips from beauty work are over 15% of that year’s beauty-service receipts. Beauty services would include barbering and hair care, nail care, esthetics, and body and spa treatments. The food and drink part would keep the January 1, 2007 minimum wage benchmark; the beauty-services credit would be based on the new rules. If enacted, this would start for tax years beginning after December 31, 2024.

IRS tip audit safe harbor for salons

This bill would create a safe harbor for beauty-service tips. If salon employers train new hires (verbal and written) and give quarterly training, collect monthly tip reports of at least $20, file and pay all taxes, and keep records for four years, the IRS would not start an employer tip exam for those tips. Exams of current or former employees could still happen. If enacted, this would apply to tax years beginning after December 31, 2025.

New reporting for salon booth rentals

This bill would require people who rent space to two or more beauty workers to file an information return if each pays $600 or more in a year. You would report each worker’s name, address, taxpayer ID, total paid, and payment dates. You would also give each worker a statement by January 31 of the next year. The IRS could set rules to prevent double reporting. If enacted, this would apply to payments made after December 31, 2025.

Sponsors & CoSponsors

Sponsor

LaHood, Darin [R-IL-16]

IL • R

Cosponsors

  • Rep. DelBene, Suzan K. [D-WA-1]

    WA • D

    Sponsored 4/2/2025

  • Rep. Carter, John R. [R-TX-31]

    TX • R

    Sponsored 4/14/2025

  • Rep. Cuellar, Henry [D-TX-28]

    TX • D

    Sponsored 4/24/2025

  • Rep. Kustoff, David [R-TN-8]

    TN • R

    Sponsored 4/28/2025

  • Rep. Bell, Wesley [D-MO-1]

    MO • D

    Sponsored 4/28/2025

  • Rep. Mrvan, Frank J. [D-IN-1]

    IN • D

    Sponsored 4/30/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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