WASHINGTON, D.C. – U.S. Senate Committee on Small Business and Entrepreneurship Ranking Member Olympia J. Snowe (R-Maine) and Chair Mary L. Landrieu (D-La.) last evening introduced S. 3430, the Small Business Tax Equalization and Compliance Act, to allow the salon industry to have the same tax rules on tips paid to employees as is permitted in the restaurant industry. 

“Salons are quintessential small businesses on Main Streets across America, and by extending the tip tax credit to salon owners we would be allowing them to reinvest in their businesses and employees and create new jobs,” said Senator Snowe.  “Furthermore, since 84 percent of the workforce in the salon industry is female, this issue has special relevance for women.  Our legislation would increase compliance with payroll tax obligations and will make sure that the women who work in the salon industry earn all the Social Security retirement and disability benefits that should available to them.”

“The salon industry is a vital and growing sector of America's economy,” said Senator Landrieu. “Not only will extending the tip tax credit to salon owners allow them to reinvest in their businesses and employees, but it will also grant new economic and employment opportunities in local communities and put the professional beauty industry back on equal footing with the restaurant industry.”

The tax credit contained in the Snowe-Landrieu bill is designed for employers to offset the matching Social Security and Medicare taxes that the salon pays on the tips that employees receive from customers.  The bill would also help to make more even-handed IRS enforcement of laws on payroll and income taxes. 

The Small Business Tax Equalization and Compliance Act is supported by the Professional Beauty Association, the largest association in the professional beauty industry, which is comprised of salon and spa owners, manufacturers and distributors of salon and spa products, and individual licensed cosmetologists.