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106th CONGRESS
2d Session
S. 3225
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 SENATE OF THE UNITED STATES
October 19 (legislative day, September 22), 2000
Mr. Santorum introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
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 ``Cosmetology Tax Fairness and
Compliance Act of 2000''.
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 Services.--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 with respect to taxes paid after December 31, 2000.
SEC. 3. INFORMATION REPORTING BY PROVIDERS OF COSMETOLOGY SERVICES.
(a) In General.--Chapter 61 of the Internal Revenue Code of 1986 is
amended by inserting after section 6050S the following new section:
``SEC. 6050T. RETURNS RELATING TO COSMETOLOGY SERVICES AND INFORMATION
TO BE PROVIDED TO COSMETOLOGISTS.
``(a) In General.--Every person who leases space to any individual
for use by the individual in providing cosmetology services (as defined
in section 45B(c)) on more than 5 calendar days during a calendar year
shall make a return, according to the forms or regulations prescribed
by the Secretary, setting forth the name, address, and TIN of each such
lessee.
``(b) Statement To Be Furnished to Individuals With Respect to Whom
Information Is Furnished.--Every person required to make a return under
subsection (a) shall furnish to each individual whose name is required
to be set forth on such return a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such return,
and
``(2) a statement informing the recipient that (as required
by this section), the provider of the notice has advised the
Internal Revenue Service that the recipient provided
cosmetology services during the calendar year to which the
statement relates.
``(c) Additional Information To Be Provided to Service Provider.--A
person who provides a statement pursuant to subsection (b) to an
individual who provides cosmetology services shall include with the
statement a publication of the Secretary, as designated by the
Secretary, describing the tax obligations of independent contractors
unless the publication was previously provided to the individual by the
statement provider.
``(d) Method and Time for Providing Statement and Additional
Information.--The written statement required by subsection (b) and the
additional information, if any, required to be furnished under
subsection (c) shall be furnished (either in person or in a statement
mailed by first-class mail which includes adequate notice that the
statement is enclosed) to the person on or before January 31 of the
year following the calendar year for which the return under subsection
(a) is to be made. Such statement shall be in such form as the
Secretary may prescribe by regulations.
``(e) Lease.--For purposes of this section, the term `lease'
include booth rentals and any other arrangements pursuant to which an
individual provides cosmetology services, other than as an employee, on
premises not owned by the service provider.
``(f) Exception for Services Provided by Proprietorships With
Employees.--This section shall not apply to leases of premises with at
least 3 work stations for providing cosmetology services.''.
(b) Conforming Amendments.--
(1) Section 6724(d)(1)(B) of such Code (relating to the
definition of information returns) is amended--
(A) by striking ``or'' at the end of clause (xiv),
(B) by adding a comma at the end of clause (xv),
(C) by striking ``; or'' at the end of clause (xvi)
and inserting a comma,
(D) by striking the period at the end of clause
(xvii) and inserting ``, or'', and
(E) by inserting after clause (xvii) the following
new clause:
``(xviii) section 6050T (relating to
returns by cosmetology service providers).''.
(2) Section 6724(d)(2) of the Internal Revenue Code of 1986
is amended--
(A) by striking ``or'' at the end of subparagraph
(Z) and inserting a comma,
(B) by striking the period at the end of
subparagraph (AA) and inserting ``, or'', and
(C) by inserting after subparagraph (AA) the
following new subparagraph:
``(BB) section 6050T(c) (relating to statements
from cosmetology service providers) even if the
recipient is not a payee.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years after 2000.
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