Sec. 3. Employer tip reporting safe harbor
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Section 3121(q) of the Internal Revenue Code of 1986 is amended— by striking so much as precedes of this chapter and inserting the following: For purposes ; and by adding at the end the following new paragraph: In the case of an employer who employs one or more employees who receive tips in the course of such employment which are attributable to the performance of beauty services (as such term is defined in section 45B) are considered remuneration for such employment under this section, no IRS tip examination with respect to such employer shall be initiated (except in the case of a tip examination of a current or former employee) if the employer— establishes an educational program regarding applicable laws relating to proper reporting of tips received by employees for— new employees, which shall include both verbal explanation and written materials, and existing employees, which shall be conducted quarterly, establishes procedures for tipped employees to provide monthly reporting of cash and charged services and related tip income of at least $20 under section 6053(a), complies with all applicable Federal tax law requirements applicable to employers for purposes of filing returns, and collection and payment of taxes imposed, with respect to tip income received by employees, and maintains employee records related to— contact information for such employees, and gross receipts from any services subject to tipping, and charge receipts for such services, for a period of not less than 4 calendar years after the calendar year to which the records relate. .
The amendments made by this section shall apply to taxable years beginning after December 31, 2023.