,i #aacth ,,congress #b;d ,session ,h4 ,r4 #efae ,,in ,,the ,,house ,,of ,,representatives ,september #ah1 #bjad ,mr4 ,sam ,johnson of ,texas introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to expand the tip tax credit to employers of cosmetologists and to promote tax compliance in the cosmetology sector4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,tax ,equalization and ,compliance ,act of #bjad4 #b4 ,expansion of credit for portion of social security taxes paid with respect to employee tips 7a7 ,expansion of credit to other lines of business ,paragraph 7#b7 of section #de;,b7b7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7#b7 ,application only to certain lines of business ,in applying paragraph 7#a71 there shall be taken into account only tips received from customers or clients in connection with-- 7,a7 the providing1 delivering1 or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary1 or 7,b7 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 customary4 4 7b7 ,definition of cosmetology service ,section #de;,b of such ,code is amended by redesignating subsections 7c7 and 7d7 as subsections 7d7 and 7e71 respectively1 and by inserting after subsection 7b7 the following new subsection3 7c7 ,cosmetology service ,for purposes of this section1 the term cosmetology service means-- 7#a7 hairdressing1 7#b7 haircutting1 7#c7 manicures and pedicures1 7#d7 body waxing1 facials1 mud packs1 wraps1 and other similar skin treatments1 and 7#e7 any other beauty-related service provided at a facility at which a majority of the services provided 7as determined on the basis of gross revenue7 are described in paragraphs 7#a7 through 7#d74 4 7c7 ,effective date ,the amendments made by this section shall apply to tips received for services performed after ,december #ca1 #bjac4 #c4 ,information reporting and taxpayer education for providers of cosmetology services 7a7 ,in general ,subpart ,b of part ,,iii of subchapter ,a of chapter #fa of the ,internal ,revenue ,code of #aihf is amended by inserting after section #fjej,w the following new section3 #fjej,x4 ,returns relating to cosmetology services and information to be provided to cosmetologists 7a7 ,in general ,every person 7referred to in this section as a reporting person7 who-- 7#a7 employs #a or more cosmetologists to provide any cosmetology service1 7#b7 rents a chair to #a or more cosmetologists to provide any cosmetology service on at least #e calendar days during a calendar year1 or 7#c7 in connection with its trade or business or rental activity1 otherwise receives compensation from1 or pays compensation to1 #a or more cosmetologists for the right to provide cosmetology services to1 or for cosmetology services provided to1 third-party patrons1 shall comply with the return requirements of subsection 7b7 and the taxpayer education requirements of subsection 7c74 7b7 ,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 met4 7#a7 ,employees ,in the case of a reporting person who employs #a or more cosmetologists to provide cosmetology services1 the requirements of this paragraph are met if such person meets the requirements of sections #fjea 7relating to receipts for employees7 and #fjec7;b7 7relating to tip reporting7 with respect to each such employee4 7#b7 ,independent contractors ,in the case of a reporting person who pays compensation to #a or more cosmetologists 7other than as employees7 for cosmetology services provided to third-party patrons1 the requirements of this paragraph are met if such person meets the applicable requirements of section #fjda 7relating to returns filed by persons making payments of #fjj or more in the course of a trade or business71 section #fjda;,a 7relating to returns to be filed by service-recipients who pay more than #fjj in a calendar year for services from a service provider71 and each other provision of this subpart that may be applicable to such compensation4 7#c7 ,chair renters 7,a7 ,in general ,in the case of a reporting person who receives rent or other fees or compensation from #a 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 #e days in a calendar year1 the requirements of this paragraph are met if such person-- 7i7 makes a return1 according to the forms or regulations prescribed by the ,secretary1 setting forth the name1 address1 and ,,tin of each such cosmetologist and the amount received from each such cosmetologist1 and 7ii7 furnishes to each cosmetologist whose name is required to be set forth on such return a written statement showing-- 7,i7 the name1 address1 and phone number of the information contact of the reporting person1 7,,ii7 the amount received from such cosmetologist1 and 7,,iii7 a statement informing such cosmetologist that 7as required by this section71 the reporting person has advised the ,internal ,revenue ,service that the cosmetologist provided cosmetology services during the calendar year to which the statement relates4 7,b7 ,method and time for providing statement ,the written statement required by clause 7ii7 of subparagraph 7,a7 shall be furnished 7either in person or by first-class mail which includes adequate notice that the statement or information is enclosed7 to the person on or before ,january #ca of the year following the calendar year for which the return under clause 7i7 of subparagraph 7,a7 is to be made4 7c7 ,taxpayer education requirements ,in the case of a reporting person who is required to provide a statement pursuant to subsection 7b71 the requirements of this subsection are met if such person provides to each such cosmetologist annually a publication1 as designated by the ,secretary1 describing-- 7#a7 in the case of an employee1 the tax and tip reporting obligations of employees1 and 7#b7 in the case of a cosmetologist who is not an employee of the reporting person1 the tax obligations of independent contractors or proprietorships4 ,the publications shall be furnished either in person or by first-class mail which includes adequate notice that the publication is enclosed4 7d7 ,definitions ,for purposes of this section-- 7#a7 ,cosmetologist 7,a7 ,in general ,the term cosmetologist means an individual who provides any cosmetology service4 7,b7 ,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 section4 7#b7 ,cosmetology service ,the term cosmetology service has the meaning given to such term by section #de;,b7c74 7#c7 ,chair ,the term chair includes a chair1 booth1 or other furniture or equipment from which an individual provides a cosmetology service 7determined without regard to whether the cosmetologist is entitled to use a specific chair1 booth1 or other similar furniture or equipment or has an exclusive right to use any such chair1 booth1 or other similar furniture or equipment74 7e7 ,exceptions for certain employees ,subsection 7c7 shall not apply to a reporting person with respect to an employee who is employed in a capacity for which tipping 7or sharing tips7 is not customary4 4 7b7 ,conforming amendments 7#a7 ,section #fgbd7;d77#a77;,b7 of such ,code 7relating to the definition of information returns7 is amended by striking or at the end of clause 7xxiv71 by striking and at the end of clause 7xxv7 and inserting or1 and by inserting after clause 7xxv7 the following new clause3 7xvi7 section #fjej,x7a7 7relating to returns by cosmetology service providers71 and 4 7#b7 ,section #fgbd7;d77#b7 of such ,code is amended by striking or at the end of subparagraph 7,,gg71 by striking the period at the end of subparagraph 7,,hh7 and inserting 1 or1 and by inserting after subparagraph 7,,hh7 the following new subparagraph3 7,,ii7 subsections 7b77#c77;,a77ii7 and 7c7 of section #fjej,x 7relating to cosmetology service providers7 even if the recipient is not a payee4 4 7#c7 ,the table of sections for subpart ,b of part ,,iii of subchapter ,a of chapter #fa of such ,code is amended by adding after the item relating to section #fjej,w the following new item3 ,sec4 #fjej,x4 ,returns relating to cosmetology services and information to be provided to cosmetologists4 4 7c7 ,effective date ,the amendments made by this section shall apply to calendar years after #bjac4