Bills · S 1998
IN COMMITTEE· 119TH CONGRESS
Senate BillS 1998Taxation
Small Business Tax Fairness and Compliance Simplification Act
INTRO JUN 9· LAST ACTION JUN 9
READING
6MIN
COSPONSORS
2BIPARTISAN
READER REACTIONS0 TOTAL
NO VOTES YET · BE THE FIRST
- Introduced only
LEGISLATIVE PROGRESS
STEP 2 / 8Introduced
In Committee
Reported
Passed Senate
Passed House
Conference
To President
Became Law
WHAT THE BILL DOES
AI-writtenThis bill matters to voters because it could significantly change how beauty service businesses operate and manage their taxes. For businesses, the new tax credit on employee tips means they could save money, potentially helping them grow or offer better wages. The 'safe harbor' provision could reduce their administrative burden and fear of IRS audits, allowing them to focus more on their services rather than complex tip compliance.
For independent beauty professionals, the new reporting requirement for space rentals means their income from these rentals will be more transparent to the IRS. While it could lead to better tracking of income for tax purposes, it also means new paperwork for the businesses renting out the space. Overall, the bill aims to level the playing field for beauty businesses with other service industries regarding tip credits, and to clarify and simplify tip reporting and rental income tracking, which could either be seen as a welcome simplification or an added layer of administrative task.
KEY PROVISIONS
4AI-extractedPROVISION 01
Extends the FICA tip credit to beauty service establishments, allowing them to claim a tax credit for a portion of the Social Security and Medicare taxes paid on employee tips.
This provision provides a new tax benefit for beauty businesses, reducing their payroll tax burden and putting them on par with food and beverage establishments that already receive this credit.
PROVISION 02
Changes the calculation basis for the FICA tip credit for beauty service businesses to use the current federal minimum wage, rather than the 2007 minimum wage that still applies to food and beverage businesses.
This ensures the tax credit for beauty services is based on a more up-to-date and higher wage floor, potentially making the credit more valuable to these employers.
PROVISION 03
Creates a 'safe harbor' for beauty service employers, preventing the IRS from initiating an audit on their tip reporting if they implement specific employee education, monthly reporting procedures, and maintain records.
This offers beauty businesses protection from tip-related IRS audits, reducing compliance stress and administrative costs, provided they meet the specified conditions.
PROVISION 04
Requires businesses that rent space to two or more independent beauty service providers, where each pays $600 or more annually, to report these rental payments to the IRS and provide a statement to the renter.
This introduces new information reporting requirements, ensuring that rental income received by beauty professionals who lease space is formally reported to the IRS, similar to other forms of independent contractor income.
SPONSORSHIP
1 + 2
R· South Carolina
YRS IN OFFICE
15
BILLS LED
63
COSPONSOR BREAKDOWNBIPARTISAN · 100%
DEM 1 REP 1 IND 0
ACTION TIMELINE
2 EVENTSJUN 9
Introduced in Senate
JUN 9
Read twice and referred to the Committee on Finance.
BILL INFO
TypeSenate Bill
NumberS 1998
Congress119th
StatusIn Committee
IntroducedJun 9, 2025
Last actionJun 9, 2025
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IN COMMITTEE· 119TH CONGRESS · FINANCE COMMITTEE · INTRODUCED JUN 9, 2025
Senate BillS 1998Taxation
Small Business Tax Fairness and Compliance Simplification Act
INTRODUCED JUN 9, 2025· LAST ACTION JUN 9, 2025
PASSAGE CHANCES
—%
READING
6 min
COSPONSORS
2
COMPLEXITY
Moderate
