[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8401 Introduced in House (IH)]
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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.
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IN THE HOUSE OF REPRESENTATIVES
May 15, 2024
Mr. Blumenauer introduced the following bill; which was referred to the
Committee on Ways and Means
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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 Representatives 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''.
SEC. 2. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY 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 received by
an employee'' and inserting ``with respect 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 employee
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 charges) paid
by the employer to the employee during such
month are less than the total amount which
would be payable (with respect to such
employment) at the minimum wage rate applicable
to such individual 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 employer social security
tax taken into account 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 paragraph or tax paid with respect to
service charges described 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 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 purposes of this
section, the term `non-management employee' 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 Service
Charges'' after ``Tips'', and
(B) by striking ``tips'' each place it appears 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 beginning after December 31, 2024.
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