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For more than a decade, salon owners have been traveling to Washington D.C. once a year to lobby in support of the 45B FICA Tax Credit on tips for the professional beauty industry.
This year, as part of the Alliance for Tax Equity, ICA members, along with salon owners and Professional Beauty Association (PBA) members visited offices of their members of Congress to share their personal stories.
“Each beauty advocate participating in meetings expressed how they would reinvest the credit back into their business and how the funds would benefit the hardworking licensed professionals they employ,” says Myra Irizarry Reddy, director of government affairs at the PBA.
Scott Buchanan, ICA first vice president, virtually visited his congressman, U.S. Representative Jerry Nadler, and was met with success.
“We got a lot more traction this year and a lot more people said ‘yes’ faster,” Buchanan says. “Jerry Nadler gave us a ‘yes’ on the spot when we met with him. This has never happened in my 20 years going to the hill.”
What Are H.R. 45 and S.45?
If passed, the Small Business Tax Fairness and Compliance Simplification Act (H.R. 45) and the Small Business Tax Fairness and Compliance Simplification Act (S.45) would allow beauty industry employers access to the existing FICA tax credit on tips, which the restaurant industry has benefited from for the past 30 years.
Once taxes are paid on all reportable income, restaurant owners are able to submit a form along with their traditional tax filings, allowing for a dollar-to-dollar credit on the employer portion of FICA taxes on tips.
ICA believes salon owners should be able to do the same.
“We are the voice of salon owners,” says Buchanan. “Passing this act will help many salon owners put more money into their business and pass savings on to employees.”
Reddy adds, “As the second-highest tipped industry, we need access to this credit we were left out of when it was created.”
The Cosmetology Compact
The FICA Tax Credit on Tips isn’t the only legislation ICA is fighting to get passed.
The Cosmetology Compact is a legislative agreement between states that allows licensees to move freely between member states for employment. Other professions that benefit from a compact include nurses, doctors, physical therapists, occupational therapists and more.
The compact becomes active when seven states pass legislation, which other states can then continue to join.
“The Cosmetology Compact would benefit everyone in the long run,” says Sheila Zaricor-Wilson, ICA President. “Stylists could go from state to state and not be forced to go back to school, which often leads to them cutting hair in their basement rather than getting relicensed in another state.”
The Cosmetology Compact also reduces the risk of deregulation in the industry as complex legislative agreements between states make this more difficult.
“The Cosmetology Compact is so important to our industry,” says Zaricor-Wilson. “It will benefit everyone if we can come together to be a part of it.”
Get Educated, Get Involved
Want to learn more about the grassroots campaign to get the bill signed to gain access to 45.B tax credit on tips? Click here. Join your fellow ICA members and industry colleagues to make a difference.
“As an organization, ICA has power and a voice for salon owners,” says Zaricor-Wilson. “We are invested in what’s happening in our industry, and will continue to be involved.”
Learn more about becoming an ICA member here.