‘‘(s) TIPS NOT TREATED AS WAGES.—For purposes 
of this chapter, the term ‘wages’ shall not include tips.’’. 
(d) EXCLUSION FROM WAGE WITHHOLDING.— 
(1) Paragraph (16) of section 3401(a) is 
amended to read as follows: 
‘‘(16) tips;’’. 
(2) Section 3401 is amended by striking sub-
section (f). 
(3) Section 3402 is amended by striking sub-
section (k). 
(e) TIPS DEFINED.—Subsection (a) of section 7701 
(relating to definitions) is amended by adding at the end 
the following new paragraph: 
‘‘(51) TIPS.—The term ‘tips’ includes any gra-
tuity provided to a salaried employee by a customer 
or client of the employer’s business.’’. 
(f) CONFORMING AMENDMENTS.— 
(1) Clause (i) of section 32(c)(2)(A) (defining 
earned income) is amended by striking ‘‘tips,’’. 
(2)(A) Section 45B (relating to credit for por-
tion of employer social security taxes paid with re-
spect to employee cash tips) is hereby repealed. 
(B) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by 
striking the item relating to section 45B. 
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(C) Subsection (b) of section 38 is amended by 
striking paragraph (11) and by redesignating the 
succeeding paragraphs accordingly. 
(D) Subsection (c) of section 196 is amended 
by striking paragraph (8) and by redesignating the 
succeeding paragraphs accordingly. 
(E) Subsection (m) of section 6501 is amended 
by striking ‘‘45B,’’. 
(3) Section 220(b)(4)(A) is amended by strik-
ing ‘‘tips,’’. 
(4) Section 451 is amended by striking sub-
section (c). 
(5) Section 6001 is amended by striking the 
last sentence. 
(6) Section 6041 is amended by striking sub-
section (e). 
(7) Subsection (c) of section 6041A is amended 
by striking ‘‘, 6052, or 6053’’ and inserting ‘‘or 
6052’’. 
(8) Subsection (a) of section 6051 is amended 
by striking ‘‘In the case of tips received by an em-
ployee in the course of his employment, the amounts 
required to be shown by paragraphs (3) and (5) 
shall include only such tips as are included in state-
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ments furnished to the employer pursuant to section 
6053(a).’’. 
(9) Section 6053 (relating to tip reporting) is 
hereby repealed. 
(10) The table of sections for subpart C of part 
III of subchapter A of chapter 61 is amended by 
striking the item relating to section 6053. 
(11) Section 6652 is amended by striking sub-
section (b) (relating to failure to report tips). 
(12) Section 6674 (relating to fraudulent state-
ment or failure to furnish statement to employee) is 
amended by striking ‘‘or 6053(b)’’ each place it ap-
pears. 
(13) Subparagraph (B) of section 6724(d)(1) is 
amended by striking clause (xvi) and redesignating 
the succeeding clauses accordingly. 
(14) Paragraph (2) of section 6724(d) is 
amended by striking subparagraph (X) and redesig-
nating the succeeding subparagraphs accordingly. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to tips received in calendar months 
beginning after the date of the enactment of this Act. 
Æ 
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