In my hometown of Peoria, Illinois, small businesses like Paola Hinton’s Five Senses Spa and Salon are part of the fabric of the community and helping to make Peoria an all-American city. Over the past year, small businesses like Five Senses Spa and Salon have gone to great lengths to comply with COVID-19 restrictions in order to stay open, provide services to the community, and survive the tough economic climate. of the pandemic.
Thanks to the bipartisan efforts of Congress last year under the Small Businesses Administration (SBA) Paycheck Protection Program and Loan Support Programs, many businesses and workers have been able to manage and endure the hardships. to COVID-19. However, more work in Congress is needed to ensure that small businesses and employees can thrive as our economy returns to pre-pandemic normal.
Over one million Americans in small towns, cities, rural communities, and urban neighborhoods are employed by barbershops, beauty salons, and barbershops. More than 80 percent of the 1.2 million businesses in the beauty industry have fewer than ten employees and are owned and operated primarily by women and minorities.
In the beauty industry, it is common for employees to receive tips from customers, as is the case in the restaurant industry. Unlike the restaurant industry, small businesses in the beauty industry are required to pay FICA taxes on tips, even if the employer is not involved in the tip transaction. This places unnecessary burdens on small business owners by requiring a significant investment of time and resources to comply with regulations – time that could be spent on hiring and training employees and growing and developing. improving their small business.
Since 2018, I joined Rep. Suzan DelBeneSuzan Kay DelBeneTech industry pushes for postponement of antitrust legislation Arguments for improving U.S. research and experimentation tax credit Democrats renew push for permanent expansion of children’s credit (D-Wash.) To help reduce this burden and defend HR 821 – the Small Business Tax Fairness and Compliance Simplification Act. Our bipartisan bill would extend the Federal Insurance Contributions Act (FICA) tax code tip credit – which is currently only available to the restaurant industry – to tens of thousands of beauty service establishments based on employers.
The FICA tip tax credit would be used as a reimbursement for the costs that employers incur in recording income from tips. By reducing the tax burden on these small businesses and improving the tip income reporting process, the Small Business Tax Fairness and Compliance Simplification Act would provide fair treatment to the beauty industry and enable these businesses to further support their businesses. employees and expand their businesses. Extending the FICA tip tax credit and creating parity with other tip industries is a common sense move to help the continued economic recovery after COVID-19.
Small businesses like Five Senses Spa and Salon and many others in my district are ready to get back to normal. As COVID-19 continues to decline and Americans resume their activities of daily living, it’s time for Congress to pass the Small Business Tax Fairness and Compliance Simplification Act, reduce the regulatory burden, and help millions of affected small businesses. across America.
LaHood represents Illinois’ 18th District and is a member of the House Ways and Means Committee.