I 
117TH CONGRESS 
1ST SESSION 
H. R. 821 
To amend the Internal Revenue Code of 1986 to simplify reporting require-
ments, promote tax compliance, and reduce tip reporting compliance 
burdens in the beauty service industry. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 4, 2021 
Mr. LAHOOD (for himself and Ms. DELBENE) 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 simplify 
reporting requirements, promote tax compliance, and re-
duce tip reporting compliance burdens in the beauty serv-
ice industry. 
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 ‘‘Small Business Tax 
Fairness and Compliance Simplification Act’’. 
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SEC. 2. EXTENSION OF CREDIT FOR PORTION OF EM-
PLOYER SOCIAL SECURITY TAXES PAID WITH 
RESPECT TO EMPLOYEE TIPS TO BEAUTY 
SERVICE ESTABLISHMENTS. 
(a) EXTENSION OF TIP CREDIT TO BEAUTY SERVICE 
BUSINESS.— 
(1) IN GENERAL.—Section 45B(b)(2) of such 
Code 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 cus-
tomers or clients in connection with the following 
services: 
‘‘(A) The providing, delivering, or serving 
of food or beverages for consumption, if the tip-
ping of employees delivering or serving food or 
beverages by customers is customary. 
‘‘(B) The providing of beauty services to a 
customer or client if the tipping of employees 
providing such services is customary.’’. 
(2) BEAUTY SERVICE DEFINED.—Section 45B 
of such Code is amended by adding at the end the 
following new subsection: 
‘‘(e) BEAUTY SERVICE.—For purposes of this sec-
tion, the term ‘beauty service’ means any of the following: 
‘‘(1) Barbering and hair care. 
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‘‘(2) Nail care. 
‘‘(3) Esthetics. 
‘‘(4) Body and spa treatments.’’. 
(b) CREDIT DETERMINED WITH RESPECT TO MIN-
IMUM WAGE IN EFFECT.—Section 45B(b)(1)(B) of the 
Internal Revenue Code of 1986, is amended— 
(1) by striking ‘‘as in effect on January 1, 
2007, and’’; and 
(2) by inserting ‘‘, and in the case of food or 
beverage establishments, as in effect on January 1, 
2007’’ after ‘‘without regard to section 3(m) of such 
Act’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2020. 
SEC. 3. EMPLOYER TIP REPORTING SAFE HARBOR. 
(a) IN GENERAL.—Section 3121(q) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking so much as precedes ‘‘of this 
chapter’’ and inserting the following: 
‘‘(q) TIPS INCLUDED FOR BOTH EMPLOYEE AND 
EMPLOYER TAXES.— 
‘‘(1) IN GENERAL.—For purposes’’; and 
(2) by adding at the end the following new 
paragraph: 
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‘‘(2) TIP PROGRAM SAFE HARBOR.—In the case 
of an employer who employs one or more employees 
who receive tips in the course of such employment 
which are attributable to the performance of beauty 
services (as such term is defined in section 45B) are 
considered remuneration for such employment under 
this section, no IRS tip examination with respect to 
such employer shall be initiated (except in the case 
of a tip examination of a current or former em-
ployee) if the employer— 
‘‘(A) establishes an educational program 
regarding applicable laws relating to proper re-
porting of tips received by employees for— 
‘‘(i) new employees, which shall in-
clude both verbal explanation and written 
materials, and 
‘‘(ii) existing employees, which shall 
be conducted quarterly, 
‘‘(B) establishes procedures for tipped em-
ployees to provide monthly reporting of cash 
and charged services and related tip income of 
at least $20 under section 6053(a), 
‘‘(C) complies with all applicable Federal 
tax law requirements applicable to employers 
for purposes of filing returns, and collection 
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and payment of taxes imposed, with respect to 
tip income received by employees, and 
‘‘(D) maintains employee records related 
to— 
‘‘(i) contact information for such em-
ployees, and 
‘‘(ii) gross receipts from any services 
subject to tipping, and charge receipts for 
such services, for a period of not less than 
4 calendar years after the calendar year to 
which the records relate.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 4. INFORMATION REPORTING OF INCOME FROM 
SPACE RENTALS IN THE BEAUTY SERVICE IN-
DUSTRY. 
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
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‘‘SEC. 6050Z. RETURNS RELATING TO INCOME FROM CER-
TAIN RENTALS OF SPACE IN THE BEAUTY 
SERVICE INDUSTRY. 
‘‘(a) REQUIREMENT
OF REPORTING.—Any person 
who, in the course of a trade or business and for any cal-
endar year, receives rental payments from two or more 
individuals providing beauty services (as defined in section 
45B(e)) aggregating $600 or more each for the lease of 
space to provide such services to third-party patrons shall 
make the return described in subsection (b) with respect 
to each person from whom such rent was so received at 
such time as the Secretary may by regulations prescribe. 
‘‘(b) RETURN.—A return is described in this sub-
section if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
‘‘(A) the name, address, and TIN of each 
person from whom a rental payment described 
in subsection (a) was received during the cal-
endar year, 
‘‘(B) the aggregate amount of such pay-
ments received by such person during such cal-
endar year and the date and amount of each 
such payment, and 
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‘‘(C) such other information as the Sec-
retary may require. 
‘‘(c) STATEMENT TO BE FURNISHED TO PERSONS 
WITH RESPECT TO WHOM INFORMATION IS REQUIRED.— 
‘‘(1) IN GENERAL.—Every person required to 
make a return under subsection (a) shall furnish to 
each person whose name is required to be set forth 
in such return a written statement showing— 
‘‘(A) the name, address, and phone num-
ber of the information contact of the person re-
quired to make such a return, and 
‘‘(B) the aggregate amount of payments to 
the person required to be shown on the return. 
‘‘(2) 
FURNISHING
OF
INFORMATION.—The 
written statement required under paragraph (1) 
shall be furnished to the person on or before Janu-
ary 31 of the year following the calendar year for 
which the return under subsection (a) is required to 
be made. 
‘‘(d) REGULATIONS AND GUIDANCE.—The Secretary 
may prescribe such regulations and other guidance as may 
be appropriate or necessary to carry out the purpose of 
this subsection, including rules to prevent duplicative re-
porting of transactions.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter A of chapter 61 of such Code is amended 
by adding at the end the following new item: 
‘‘Sec. 6050Z. Returns relating to income from certain rentals of space in the 
beauty service industry.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made after December 
31, 2021. 
Æ 
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