,i #aacth ,,congress #ast ,session ,h4 ,r4 #cdh ,,in ,,the ,,house ,,of ,,representatives ,january #bb1 #bjac ,mr4 ,rangel 7for himself1 ,mr4 ,van ,hollen1 ,mr4 ,blumenauer1 and ,mr4 ,mc,dermott7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf and the ,social ,security ,act to provide for employment tax treatment of professional service businesses4 #a4 ,short title ,this ,act may be cited as the ,narrowing ,exceptions for ,withholding ,taxes ,act of #bjac4 #b4 ,employment tax treatment of professional service businesses 7a7 ,in general ,section #adjb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7m7 ,special rules for professional service businesses 7#a7 ,shareholders providing services to disqualified ,s corporations 7,a7 ,in general ,in the case of any disqualified ,s corporation1 each shareholder of such disqualified ,s corporation who provides substantial services with respect to the professional service business referred to in subparagraph 7,c7 shall take into account such shareholder's pro rata share of all items of income or loss described in section #acff which are attributable to such business in determining the shareholder's net earnings from self-employment4 7,b7 ,treatment of family members ,except as otherwise provided by the ,secretary1 the shareholder's pro rata share of items referred to in subparagraph 7,a7 shall be increased by the pro rata share of such items of each member of such shareholder's family 7within the meaning of section #cah7;a77#a77 who does not provide substantial services with respect to such professional service business4 7,c7 ,disqualified ,s corporation ,for purposes of this subsection1 the term disqualified ,s corporation means-- 7i7 any ,s corporation which is a partner in a partnership which is engaged in a professional service business if substantially all of the activities of such ,s corporation are performed in connection with such partnership1 and 7ii7 any other ,s corporation which is engaged in a professional service business if the principal asset of such business is the reputation and skill of #c or fewer employees4 7#b7 ,partners ,in the case of any partnership which is engaged in a professional service business1 subsection 7a77#ac7 shall not apply to any partner who provides substantial services with respect to such professional service business4 7#c7 ,professional service business ,for purposes of this subsection1 the term professional service business means any trade or business if substantially all of the activities of such trade or business involve providing services in the fields of health1 law1 lobbying1 engineering1 architecture1 accounting1 actuarial science1 performing arts1 consulting1 athletics1 investment advice or management1 or brokerage services4 7#d7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection1 including regulations which prevent the avoidance of the purposes of this subsection through tiered entities or otherwise4 7#e7 ,cross reference ,for employment tax treatment of wages paid to shareholders of ,s corporations1 see subtitle ,c4 4 7b7 ,conforming amendment ,section #baa of the ,social ,security ,act is amended by adding at the end the following new subsection3 7l7 ,special rules for professional service businesses 7#a7 ,shareholders providing services to disqualified ,s corporations 7,a7 ,in general ,in the case of any disqualified ,s corporation1 each shareholder of such disqualified ,s corporation who provides substantial services with respect to the professional service business referred to in subparagraph 7,c7 shall take into account such shareholder's pro rata share of all items of income or loss described in section #acff of the ,internal ,revenue ,code of #aihf which are attributable to such business in determining the shareholder's net earnings from self-employment4 7,b7 ,treatment of family members ,except as otherwise provided by the ,secretary of the ,treasury1 the shareholder's pro rata share of items referred to in subparagraph 7,a7 shall be increased by the pro rata share of such items of each member of such shareholder's family 7within the meaning of section #cah7;a77#a7 of the ,internal ,revenue ,code of #aihf7 who does not provide substantial services with respect to such professional service business4 7,c7 ,disqualified ,s corporation ,for purposes of this subsection1 the term disqualified ,s corporation means-- 7i7 any ,s corporation which is a partner in a partnership which is engaged in a professional service business if substantially all of the activities of such ,s corporation are performed in connection with such partnership1 and 7ii7 any other ,s corporation which is engaged in a professional service business if the principal asset of such business is the reputation and skill of #c or fewer employees4 7#b7 ,partners ,in the case of any partnership which is engaged in a professional service business1 subsection 7a77#ab7 shall not apply to any partner who provides substantial services with respect to such professional service business4 7#c7 ,professional service business ,for purposes of this subsection1 the term professional service business means any trade or business if substantially all of the activities of such trade or business involve providing services in the fields of health1 law1 lobbying1 engineering1 architecture1 accounting1 actuarial science1 performing arts1 consulting1 athletics1 investment advice or management1 or brokerage services4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4