LEGISLATIVE UPDATES IN THE U . S .
FICA TAX CREDIT
EARLIER THIS SUMMER , Myra Reddy , director of government affairs for the Professional Beauty Association ( PBA ), spoke with ISPA members about the FICA “ tax on tips ” legislation that , she said , “ will impact all of your members .”
Saying the proposed legislation is “ about tax parity and tax equity ,” Reddy reviewed the threedecade history of discussion about employers ’ tax liability for tips their employees receive . “ Congress understood back in 1993 ” that existing tax policy was flawed , she said . But , while new rules were enacted to benefit the restaurant industry , similar policies were never implemented for other industries — including wellness and beauty treatment providers .
“ The 45B tip tax credit legislation currently in Congress is asking Congress to recognize there is a tax inequity by only allowing the restaurant industry access to this credit ,” Reddy shared with ISPA members . “ What about us ? What about the spas , what about the salons , what about the barber shops ? We are the second-highest tipped industry in the U . S ., right behind the restaurants . … But they ’ re treated very differently . And it is unfair , it is a tax issue . The tax code was meant to be applied equally , it was meant to be transparent , it was meant to be fair . So now , we have a 30-year-long issue of unfairness .”
A video of Reddy ’ s full update on the FICA Tax Credit is available to view here : https :// bit . ly / ispa-fica-update
“ There is a tax inequity by only allowing the restaurant industry access to this credit . What about us ? What about the spas , what about the salons ?”
— MYRA REDDY , Professional Beauty Association
INTERSTATE COMPACTS
THE COUNCIL OF STATE GOVERNMENTS ’ National Center for Interstate Compacts manages and / or advises the drafting , development and implementation of professional licensure interstate compact programs for many industries . Two current licensure compacts with special relevance to the spa industry include : l Interstate Massage Compact ( IMpact ): “ The Council of State Governments ( CSG ) is partnering with the Department of Defense ( DoD ) and the Federation of State Massage Therapy Boards ( FSMTB ) to support the mobility of licensed massage therapists .” | massagecompact . org l Cosmetology Licensure Compact : “ CSG is partnering with DoD and the Future of the Beauty Industry Coalition to support the mobility of licensed cosmetologists ." | cosmetologycompact . org
Saying “ occupational licensure compacts represent the gold standard of policy options for states to improve licensure portability ,” CSG supports these additional licensing pathways because they “ will create reciprocity among participant states and reduce the barriers to license
What is an interstate compact ?
From the Council of State Governments ( CSG ): “ An interstate compact is a legally binding agreement between two or more states . Similar to a contract , a compact establishes a formal , legal relationship among states to address common problems or promote a common agenda .”
CSG identifies compacts as “ powerful , durable and adaptive tools for promoting and ensuring cooperative action among states ” and lists several benefits of compacts : l Provide state-developed solutions to shared and complex public policy l Settle interstate disputes l Respond to national priorities in consultation or partnership with the federal government l Help states maintain sovereignty in matters traditionally reserved for the states in place of federal inaction or inflexible and unfunded mandates l Create economies of scale to reduce administrative costs l Address regional issues that affect multiple states l Prevent the need for a state to act unilaterally portability and employment .” n
10 PULSE n AUGUST / SEPTEMBER 2023