I 

118TH CONGRESS 

2D SESSION H. R. 8401 

To amend the Internal Revenue Code of 1986 to allow a credit for a portion 

of employer social security taxes paid with respect to service charges 

paid by the employer to an employee in the form of wages, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 15, 2024 

Mr. BLUMENAUER introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

credit for a portion of employer social security taxes 

paid with respect to service charges paid by the employer 

to an employee in the form of wages, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Restaurant Service 

5 Charge Fairness Act’’. 


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1 SEC. 2. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECU2 RITY TAXES PAID WITH RESPECT TO SERVICE 

3 CHARGES. 

4 (a) IN GENERAL.—Section 45B(b) of the Internal 

5 Revenue Code of 1986 is amended— 

6 (1) in paragraph (1)— 

7 (A) by striking ‘‘with respect to tips re8 ceived by an employee’’ and inserting ‘‘with re9 spect to either— 

10 ‘‘(A) tips received by an employee’’, 

11 (B) by redesignating subparagraphs (A) 

12 and (B) as clauses (i) and (ii), 

13 (C) by striking the period at the end and 

14 inserting ‘‘, or’’, and 

15 (D) by adding at the end the following new 

16 subparagraph: 

17 ‘‘(B) service charges received by an em18 ployee during any month, to the extent that 

19 such service charges— 

20 ‘‘(i) are deemed to have been paid by 

21 the employer to the employee in the form 

22 of wages, and that such payment is only 

23 provided to non-management employees, 

24 and 

25 ‘‘(ii) exceed the amount by which the 

26 wages (excluding payments from service 


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1 charges) paid by the employer to the em2 ployee during such month are less than the 

3 total amount which would be payable (with 

4 respect to such employment) at the min5 imum wage rate applicable to such indi6 vidual under section 6(a)(1) of the Fair 

7 Labor Standards Act of 1938 (determined 

8 without regard to section 3(m) of such 

9 Act).’’, 

10 (2) in paragraph (2), by striking ‘‘paragraph 

11 (1)’’ and inserting ‘‘paragraph (1)(A)’’, and 

12 (3) by adding at the end the following new 

13 paragraphs: 

14 ‘‘(3) ONLY ONE CATEGORY OF EXCESS EM15 PLOYER SOCIAL SECURITY TAX TAKEN INTO AC16 COUNT DURING THE TAXABLE YEAR.—In applying 

17 paragraph (1), an employer may elect to claim a 

18 credit with respect to either tax paid with respect to 

19 tips described in subparagraph (A) of such para20 graph or tax paid with respect to service charges de21 scribed in subparagraph (B) of such paragraph, but 

22 not both. 

23 ‘‘(4) LIMITATION ON SERVICE CHARGES TAKEN

24 INTO ACCOUNT.—In applying paragraph (1)(B), 

25 there shall be taken into account only so much of 


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1 the service charges as does not exceed 25 percent of 

2 the gross receipts of the employer for the taxable 

3 year. 

4 ‘‘(5) NON-MANAGEMENT EMPLOYEE.—For pur5 poses of this section, the term ‘non-management em6 ployee’ means any employee who does not qualify for 

7 an exemption under section 13 of the Fair Labor 

8 Standards Act of 1938 (29 U.S.C. 213). 

9 ‘‘(6) WAGES.—For purposes of this section, the 

10 term ‘wages’ has the meaning given such term in 

11 section 3121(a).’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 3102(c) of such Code is amended— 

14 (A) in the heading, by inserting ‘‘OR SERV15 ICE CHARGES’’ after ‘‘TIPS’’, and 

16 (B) by striking ‘‘tips’’ each place it ap17 pears and inserting ‘‘tips or service charges’’. 

18 (2) Section 6053 of such Code is amended by 

19 striking ‘‘tips’’ each place it appears and inserting 

20 ‘‘tips or service charges’’. 

21 (c) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxes paid in taxable years be23 ginning after December 31, 2024. 

Æ 


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