ISBN is working hard to help members—and all salon business owners—earn a long overdue tax credit. Board member Frank Zona, co-owner of Boston-area Zona Salons, and member Phil Horvath, President and COO of Hair Cuttery, were part of a salon industry coalition that met with congresspeople and their staffs in Washington, D.C. on October 23-24 to emphasize the importance of the FICA Tip Tax Credit to salon, spa and barber businesses of all sizes throughout the country.
This coordinated effort encouraged support of bills H.R. 1349 and helped push forward the recently introduced S.2634, known officially as the Small Business Tax Fairness and Compliance Simplification Act. This legislation would extend a dollar-for-dollar tip tax credit to owners of salons, spas and barbershops—the same credit granted to restaurant owners in 1993.
Like the restaurant industry, salon, spa and barbering professionals receive a significant amount of their income through tips, which by law must be reported as income. Owners do not receive any of this tip income yet are required to pay the 7.65% FICA (Social Security and Medicare) taxes on all employee income, including customer-paid tips. So, for every $50 in tips a salon business accepts for a stylist, the business owner pays $3.83 to the government, on revenue never actually seen by or benefiting the business.
ISBN has been a consistently strong advocate, industry collaborator and financial supporter of initiatives to move the FICA Tip Tax Credit forward, with the understanding it would provide significant savings for each and every ISBN member while benefiting the professional beauty industry overall. At a board meeting October 25, ISBN pledged an additional $20,000 to fund lobbying efforts, especially to help S.2634 move through the Senate.
ISBN Government Relations Chair Rhoda Olsen of Great Clips, Inc says members can help by:
- reaching out to their own representatives
- encouraging other multi-unit salon, spa and barber businesses to join ISBN’s ranks
- donating directly to ISBN’s FICA Tip Tax Campaign on a one-time or monthly basis
Many ISBN members are committing incremental donations of $500 or more, knowing that approval of the Tax Tip Credit would pay long-term dividends and immediate ROI.
“I was thrilled to be part of a group of fellow salon business owners and executives spending the day in the U.S. Capitol building support and co-sponsorship,” Horvath says. “We can all benefit from a tax credit to reinvest in growing our businesses.”
Zona, who is also on the ISBN Government Relations Committee and is a career-long advocate for salon professionals and related legislation, says he is encouraged that industry-wide perseverance appears to be paying off, with the bill being introduced to the Senate. “Members of Congress were commenting during our meetings that `it’s wrong this credit hasn’t been moved forward already.’”
Find out more about the FICA Tip Tax Credit and donate to ISBN’s campaign to support it now.
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