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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Restaurant Service 
Charge Fairness Act’’. 
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SEC. 2. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECU-
RITY TAXES PAID WITH RESPECT TO SERVICE 
CHARGES. 
(a) IN GENERAL.—Section 45B(b) of the Internal 
Revenue Code of 1986 is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘with respect to tips re-
ceived by an employee’’ and inserting ‘‘with re-
spect to either— 
‘‘(A) tips received by an employee’’, 
(B) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), 
(C) by striking the period at the end and 
inserting ‘‘, or’’, and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(B) service charges received by an em-
ployee during any month, to the extent that 
such service charges— 
‘‘(i) are deemed to have been paid by 
the employer to the employee in the form 
of wages, and that such payment is only 
provided to non-management employees, 
and 
‘‘(ii) exceed the amount by which the 
wages (excluding payments from service 
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charges) paid by the employer to the em-
ployee during such month are less than the 
total amount which would be payable (with 
respect to such employment) at the min-
imum wage rate applicable to such indi-
vidual under section 6(a)(1) of the Fair 
Labor Standards Act of 1938 (determined 
without regard to section 3(m) of such 
Act).’’, 
(2) in paragraph (2), by striking ‘‘paragraph 
(1)’’ and inserting ‘‘paragraph (1)(A)’’, and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(3) ONLY
ONE
CATEGORY
OF
EXCESS
EM-
PLOYER
SOCIAL
SECURITY
TAX
TAKEN
INTO
AC-
COUNT DURING THE TAXABLE YEAR.—In applying 
paragraph (1), an employer may elect to claim a 
credit with respect to either tax paid with respect to 
tips described in subparagraph (A) of such para-
graph or tax paid with respect to service charges de-
scribed in subparagraph (B) of such paragraph, but 
not both. 
‘‘(4) LIMITATION ON SERVICE CHARGES TAKEN 
INTO
ACCOUNT.—In applying paragraph (1)(B), 
there shall be taken into account only so much of 
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the service charges as does not exceed 25 percent of 
the gross receipts of the employer for the taxable 
year. 
‘‘(5) NON-MANAGEMENT EMPLOYEE.—For pur-
poses of this section, the term ‘non-management em-
ployee’ means any employee who does not qualify for 
an exemption under section 13 of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 213). 
‘‘(6) WAGES.—For purposes of this section, the 
term ‘wages’ has the meaning given such term in 
section 3121(a).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 3102(c) of such Code is amended— 
(A) in the heading, by inserting ‘‘OR SERV-
ICE CHARGES’’ after ‘‘TIPS’’, and 
(B) by striking ‘‘tips’’ each place it ap-
pears and inserting ‘‘tips or service charges’’. 
(2) Section 6053 of such Code is amended by 
striking ‘‘tips’’ each place it appears and inserting 
‘‘tips or service charges’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxes paid in taxable years be-
ginning after December 31, 2024. 
Æ 
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