SCOTTSDALE, Ariz., July 30, 2020 /PRNewswire/ -- As lawmakers struggle to come to a stimulus package agreement, the salon industry is coming to a collapse under the weight of the current economic crisis. The 45B FICA Tax Tip Credit would give this burdened industry a lifeline -- if only it was included in the stimulus package. As of today, it's not.
There are over 1.2 million salons in the United States, but now, due to the COVID-19 pandemic, hundreds of thousands of salon owners and stylists are out of work. For those who are still operating, revenue is down over 50% in the first half of 2020. Between February and April 2020, the number of jobs at employment-based salons dropped by 84 percent, according to data from the Bureau of Labor Statistics. Only 93,000 people were on payroll at employment-based salons in April – down from 569,000 in February. This represents the fewest number of salon jobs in well over five decades.
Eighty-three percent of salon businesses have fewer than 10 employees. These small businesses, owned 60% by women and 34% by minorities, employed a workforce of roughly 1.3 million professionals. Salons are the hardest hit, and last to reopen. With the newly released Commerce Department's initial estimate of the 2nd quarter US gross domestic product having the steepest drop in more than 70 years, these numbers are sure to vastly increase.
We are watching the collapse of the beauty industry right in front of our very eyes; but there is a solution to help give it a much needed lifeline -- by allowing access to an existing credit in the IRS tax code, the 45B FICA Tax Tip Credit, which the Professional Beauty Association (PBA), the industry's largest and most inclusive trade association, is aggressively and desperately lobbying for to be included in the new stimulus package, which as of today, it is not.
The immediate solution of implementing the 45B FICA Tax Tip Credit in the economic stimulus package is an impactful one. Congress passed this credit in 1993 allowing restaurants to claim a dollar for dollar tax tip credit on the employer portion of FICA taxes paid on tips. A temporary retroactive application of this credit would provide immediate liquidity to struggling salons across our country.
The inclusion of the 45B FICA Tax Tip Provision in the second stimulus package will reimburse salon owners for taxes they have already paid on tips, creating immediate liquidity and a solution to garnering immediate financial resources. Resources to pay rent, employees, insurance, and other necessary payables to help keep the salon alive through this unprecedented time.
PBA needs this provision to have visibility in order to make it into the stimulus package. To take action to support the PBA's letter to congress requesting inclusion of the 45B FICA Tax Tip Credit, click on the link: https://p2a.co/f3AYIL1.
SOURCE Professional Beauty Association