The Chamber

More than a dozen PBA members and executives from beauty companies across the U.S. joined forces on Capitol Hill Thursday, October 13, for the 2011 PBA Lobby Day. The team split up into multiple groups for a full day of non-stop meetings with members of Congress and their staffs to discuss the importance of the Small Business Tax Equalization and Compliance Act, commonly known as the FICA Tip Tax Credit, for the professional beauty industry.

The Tip Tax Credit, if passed by Congress, would provide employers a dollar-for-dollar credit on FICA taxes paid on employee tip income.

Every salon/spa professional, including practitioners and salon/spa owners, is required by federal law to report tips as part of their income. Compliant beauty professionals not only report tip income but also pay the required FICA (social security and Medicare) taxes on those tips.

This legislation has been at the top of PBA’s political agenda for several years and many advances have been made. [Read More]

Join PBA Lobby Day!
Come to Washington, DC and join fellow professional beauty supporters as we visit Capitol Hill.

On Thursday, October 13, 2011 members of the professional beauty industry will visit congressional offices to ask for their member's support of the Small Business Tax Equalization and Compliance Act. This legislation will provide a dollar-for-dollar tip tax credit on FICA taxes paid on employee tips. The restaurant industry has enjoyed this tax credit for years, it's time the professional beauty industry is included too!

Share your story about your business and the professional beauty industry. Please click here and complete the form to participate.

Have questions? Contact Myra Irizarry at 800.468.2274 ext. 3451 or by emailing Myra Irizarry.

PBA Issue Advocacy Fund
PBA's Issue Advocacy Fund launched at PBA Beauy Week in Las Vegas! The Fund was created to help finance advocacy and issue campaigns on legislative and regulatory matters important to the industry. It supports the interests of its members, including manufacturers, distributors, salon/spa owners, and beauty professionals. We need your support to make sure that we have the financial ability to be proactive on issues that can affect our industry.

Click here to learn more about the new PBA Issue Advocacy Fund!

Have questions? Contact Myra Irizarry at 800.468.2274 ext. 3451 or by emailing Myra Irizarry.

Support the FICA Tip Tax Credit
The Small Business Tax Equalization and Compliance Act has been introduced in Congress. The Act will provide a dollar for dollar credit on FICA taxes paid on employee tips in the salon/beauty industry.

In 1988, Congress required employers to pay the employer FICA tax on all tips. Congress reasoned that, since employees earned a substantial portion of their income from tips, that income should be accounted for in the employee’s Social Security wage histories and related withholdings.

In 1993, Congress granted the restaurant industry a dollar-for-dollar tax credit – now known as the 45(b) tax credit – on the employer’s share of FICA taxes paid on tip income. This policy was instituted because Congress recognized that tips are a gratuity paid to wait staff by the customer, and employers should not be responsible for paying FICA taxes on income that was not paid by them.

Employers in the salon industry are not currently eligible to receive the 45(b) tax credit, even though their employees, like the restaurant industry, earn a large portion of their income through tips.

The Small Business Tax Equalization and Compliance Act will provide the salon/beauty industry with a dollar-for-dollar tax credit on the employer’s share of FICA taxes paid on tip income. This credit will allow salon owners to reinvest funding into their salons for training, education, hiring of additional staff, and promotes tax fairness.

To sign onto our letter to Congress please click here.

To view the text of the bill introduced by Senator Olympia Snowe and Congressman Sam Johnson click below.

S. 974
H.R. 1957

For more information please contact Myra Irizarry.

Message to Congress: Oppose Tax Proposal
New VOC standards for the state of Indiana will go into effect on June 1, 2011. Indiana adopted changes to their rule regarding emissions of volatile organic compounds (VOC) for consumer and commercial products.

The following are a few of the products listed in the state of Indiana rule:

These products cannot exceed the VOC standard specified in the rule.

Products manufactured prior to June 1, 2011 may be sold after the effective date of the new rule as long as the product meets the date code requirement which is enforced by the product date stamp.

Click here to view the new rule and VOC standards for Indiana.

Have questions? Contact Myra Irizarry at 800.468.2274 ext. 3451 or Myra Irizarry.

Message to Congress: Oppose Tax Proposal
The Professional Beauty Association, along with twenty-seven trade organizations, joined the S-CORP Association letter to the congressional tax-writing committee leaders expressing opposition to a tax reform plan that will have a negative impact on small businesses. Considerations for corporate tax reform may alter how S corporations pay taxes.

Many small businesses are struggling to make ends meet under current economic conditions. Raising taxes on small business would be another hurdle to overcome and would discourage job growth. Businesses structured as S corporations, partnerships, LLCs, and sole proprietorships could potentially suffer a loss of current accelerated depreciation benefits. The ability to raise capital and increase staffing would become more difficult.

The letter addressees the value of all employers and encourages the committees to consider the impact tax reform proposals will have on small business throughout the U.S. Click here to read the letter sent to the congressional tax writing committee leaders.

Have questions? Contact Myra Irizarry at 800.468.2274 ext. 3451 or Myra Irizarry.

1099 Repeal Passes House and Senate, Signed by President
The 1099 reporting requirement, which would have taken effect in 2012, has been a major concern for small business owners already facing a slow economic recovery and limited business resources. The 1099 mandate would have been a costly and time consuming measure, making it necessary to file a 1099 tax form for every purchase over $600. Small businesses, including thousands of salons and spas and licensed beauty contractors, would have been required to invest in new software and collect additional information for each vendor. In an effort to comply with the mandate, small businesses would have been faced with more paperwork and reports every year, which would have increased accounting costs and expose small businesses to costly and unjustified audits by the IRS.

Through a successful grassroots effort, PBA and its members played a role in encouraging Congress to repeal the 1099 reporting mandate. Professionals from across the U.S. joined together to be part of PBA’s advocacy campaign against the 1099 mandate and made their voices heard by sending letters to Congress asking for the repeal. In addition, PBA signed onto coalition letters from the US Chamber of Commerce in support of its ongoing effort on behalf of small businesses everywhere.

The work has proven to be successful. H.R. 4 repealing the 1099 mandate passed both the House and Senate and was signed by President Obama in April.

OSHA Alert
The Occupational Safety and Health Administration has issued a hazard alert regarding hair smoothing products that could release formaldehyde into the air. Salons that use products that emit formaldehyde must follow OSHA’s existing formaldehyde standards. Some of the requirements include air monitoring, proper ventilation, employee training, and protective equipment.

According to an OSHA news release on April 11, 2011 a hazard alert to hair salon owners has been posted on OSHA’s website. Click here to view the hazard alert.

Click here to access OSHA’s existing Formaldehyde standard for employers that use products that contain or release formaldehyde.

Have questions? Contact Myra Irizarry at 800.468.2274 ext. 3451 or Myra Irizarry.

Deregulation of the cosmetology industry in the state of New Hampshire has successfully been prevented. Thanks to an overwhelming grassroots effort responsible for sending over 3,200 letters in opposition of the legislation, House Bill 446 has been stopped in committee.

House Bill 446 sought to repeal the regulatory boards and authority for licensure or certification for the cosmetology, esthetics, and barbering fields. Passage of the Bill would have a severely detrimental impact on thousands of employed licensed professionals and more than 3,016 salon/spa establishments in New Hampshire, as well as potentially putting consumers at risk.

The beauty industry rallied together and thousands of voices were heard through PBA’s action alert targeting the members of the New Hampshire legislature. Through the support of those in the industry we sent a clear message to stop deregulation in New Hampshire.

The Professional Beauty Association sent out an advisory in February alerting our membership of possible legislation that may involve the deregulation of the cosmetology industry in Florida. The proposed deregulation legislation in Florida does not include cosmetology, barbering, or nail specialists.

PBA is will continue to work with both the Florida Cosmetology Association and FAB to monitor any future threats to the industry.

The Professional Beauty Association is committed to providing relevant and timely information to our members as well as the industry at large. In response to the growing questions surrounding the contents and use of professional keratin hair smoothing products PBA has produced a FAQs document to help answer your questions.

Online at probeauty.org/keratin PBA members and the industry have the opportunity to download the Professional Keratin Hair Smoothing Products FAQs. In addition, the latest news update, a copy of PBA’s letter to the Cosmetic Ingredient Review panel, and a listing of industry resources are available via the PBA Keratin page.

Have questions? Contact your PBA|NCA Government Affairs Manager Myra Irizarry at 800.468.2274 ext. 3451 or Myra Irizarry.

February 2011

File Your Taxes for Free

The IRS allows you to file your federal tax return for free on their website via Free File if you have a 2010 adjusted gross income of $58,000 or less. Free File is a free, federal income tax prep and electronic filing program for eligible taxpayers, developed through a partnership between the IRS and the Free File Alliance. Taxpayers can do their federal income tax returns using commercial online software provided by the Free File Alliance companies. You must go to IRS.gov to access Free File. This year, you have until April 18, 2011 to file and pay your taxes or request an extension.

Individual company offers may be limited by adjusted gross income, geographic location, specific states and include other criteria, so it's important to review the criteria before you choose. Or use the "Help Me Select a Company" tool on the IRS Free File website to help find a program that works best for you. Visit IRS Free File to begin filing your tax return for free!

ALERT: Deregulation of the Cosmetology Industry in New Hampshire! Take Action Now!

Send a letter to the New Hampshire State Legislature and ask them to oppose House Bill 466-FN. HB 446-FN would repeal the regulatory boards and authority for licensure and certification of cosmetology, esthetics, nail technology, and barbering. Let the members of the legislature know that you oppose the deregulation of the cosmetology industry, ask them to vote NO on HB 446. Send a letter and voice your opposition! Click here to send a letter and voice your opposition to HB 446 or visit www.probeauty.org/advocacy and click on Take Action Now.

Florida Industry Advisory
Florida Governor Rick Scott is seeking ways to reduce the size of government and review current business and professional regulations. As part of the governor's efforts, there is a possibility that he may eventually propose the deregulation of several industries - including the cosmetology profession.

PBA is actively working with Florida's salon community, including the Florida Association of Beauty Professionals, to track and respond to any potential threat to the industry. PBA opposes attempts to completely deregulate the cosmetology profession at the state level. Complete deregulation would have a severe impact on not only salon owners and licensed professionals, but also poses a real threat to the health and safety of the public. PBA | NCA supports professionals in the beauty industry by advocating for the ongoing licensure of all salon professionals. In addition we strongly encourage state regulations to promote safety and sanitation in the salon. We believe it is necessary that regulations reflect the standards demanded by today's consumer and that professionals in the industry are proficient, knowledgeable, and skillful in a way that ensures consumer safety.

Your government affairs team is monitoring Florida and other states where potential changes in state law could eliminate or discourage standards that PBA | NCA supports on behalf of our members. We remain committed to working cooperatively with government agencies to achieve our common goals of protecting consumers and ensuring the integrity of the salon profession.

Have questions? Contact your PBA|NCA Government Affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

January 2011

Beauty, Taxes, and You...New Laws Take Effect

In the final hours of 2010, Congress approved many tax provisions that are likely to impact beauty professionals and employers throughout the U.S.

Several highlights of the $858 billion tax package include:

The extension of the Bush-era tax cuts means the lowest tax rate remains at 10% followed by 15%, 25%, 28%, 33%, and the top tax of 35%. The tax rate on capital gains and qualified corporate dividends remains at 15%.

Individual employees will take home a little bit more in their paychecks starting this month. In 2011, employees and the self-employed will benefit from a 2% reduction in Social Security (FICA) payroll taxes - which means employers will now only withhold 4.2%. This is an adjustment on the employee's FICA taxes and does not affect the employer side of FICA.

Business owners will appreciate the investment incentives which include an extension of bonus depreciation and first-year expensing. The so-called "bonus depreciation" rules, which allow businesses to expense part or all of their purchases of new assets immediately, rather than depreciating them over many years, have been extended and expanded. For the rest of 2010 and through 2011, bonus depreciation is set at 100 percent; in 2012, the bonus depreciation goes back to 50 percent, and, after that, it's slated to disappear.

At the same time, the amount of property that small businesses can write off under Section 179, which permits them to expense rather than depreciate certain assets, has been increased to $500,000 in 2010 and 2011. It will revert to lower levels after that date. Unlike bonus depreciation, which businesses of any size can choose, the Section 179 rules apply only to small businesses.

The Alternative Minimum Tax (AMT) patch is extended for two more years. The 2010 AMT exemption amounts are increased for 2010 to $47,450 for individuals and $72,450 for married couples. In 2011 the exemption increase is even greater, $48,450 for individuals and $74,450 for married couples filing jointly.

The $1,000 Child Tax Credit is extended as well as a $2,500 the annual college tax credit which has been granted a two year extension.

Because Congress approved tax legislation so late in the year, the IRS has said they need some time to reprogram their processing systems. You may need to wait until February to file your taxes if you plan to take advantage of the following tax deductions: state and local sales tax deduction, higher education tuition and fees deduction (up to $4,000 of tuition and fees paid to a post-secondary institution), educator expenses deduction (kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250), and if you choose to itemize deductions (including mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes) on Form 1040 Schedule A.

Click here for an interactive map to find out what the tax cuts mean to you in your state.

For more information please contact PBA's government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

December 2010 Amendment to “Grandfathered” Health Plans-

The Departments of Health and Human Services, Labor, and Treasury amended the interim final regulations for “Grandfathered” Health Plans to allow a group health plan to enter into a new policy, certificate, or contract of insurance without ceasing to be a grandfathered plan, provided that no other changes are made that would cause the plan to lose grandfathered status. The amendment became effective November 15, 2010 and does not apply retroactively to changes to group health insurance coverage effective prior to November 15, 2010. The date the new coverage becomes effective is the operative date, not the date a contract for a new policy, certificate, or contract of insurance is entered into. The amendment affects insured group health plans.

Click here to review the U.S. Department of Health & Human Services’ information regarding the Amendment to Regulation on “Grandfathered” Health Plans under the Affordable Care Act.

For more information please contact PBA’s government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

Virginia Court Strikes Individual Mandate in Health Care Reform-

U.S. District Judge Henry Hudson ruled that the Health Care Reform’s provision requiring most Americans to acquire insurance or pay a penalty "exceeds the constitutional boundaries of congressional power."

In the first legal setback for Health Care Reform, Judge Hudson explained that requiring Americans to purchase insurance "would invite unbridled exercise of federal police powers," and "At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate." The Virginia federal court did not issue an injunction to prevent implementation of the Health Care Reform law. The provision Judge Hudson ruled on will likely be appealed to the Supreme Court, a process that could take years.

The health care reform laws are designed to provide insurance coverage to 32 million Americans. If the individual mandate provision is not upheld 16 million Americans may remain uninsured according to the Obama administration. As many as twenty states have filed lawsuits attempting to reject the Health Care Reform Act, cases are pending. Click here to download the full text of the court ruling.

For more information please contact PBA’s government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

The Safe Cosmetics Act of 2010, H.R. 5786 introduced by Representative Janice Schakowsky of Illinois, will amend title VI of the Federal Food, Drug, and Cosmetic Act. Currently H.R. 5786 has been introduced in the 111th Congress and referred to both the Committee on Energy and Commerce as well as the Committee on Education and Labor.

Why should you be concerned about this pending legislation? Key provisions of the Safe Cosmetics Act will have a direct impact upon the professional beauty industry. These changes could impact you and your salon, distributorship or manufacturing company. For more information regarding the Safe Cosmetics Act please click here or contact PBA government affairs at 800.468.2274 ext. 3451 or Myra Irizarry.

As a result of somewhat softer sales and customer traffic levels in the third quarter, the Professional Beauty Association’s (PBA) Salon/Spa Performance Index stood at 103.3 in the third quarter, down 0.3 percent from the record high of 103.6 registered in the second quarter.

The Salon/Spa Performance Index, a quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry, is based on the responses to PBA’s Salon/Spa Tracking Survey, which is fielded quarterly among salon/spa owners nationwide. The Salon/Spa Performance Index is constructed so that the health of the salon/spa industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

The full SSPI and Salon/Spa Tracking Survey Report can be found at http://www.probeauty.org/research/. For more information please contact PBA’s government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

The U.S. Department of Education has proposed new regulations. The regulations are based on the Higher Education Act (HEA). Career education programs that receive federal student aid must “prepare students for gainful employment in a recognized occupation.” The proposed rule defines gainful employment so that the law can be enforced.

The Department of Education’s proposed regulations regarding gainful employment include:

For more information please contact PBA’s government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.

The use of Brazilian hair straighteners has become increasingly popular over the last several years. Some experts are concerned about the possible inhalation of formaldehyde in unsafe quantities – both on the part of salon industry professionals and consumers.

Commonly used as a preservative, formaldehyde is found in everyday household objects such as glue and particle board. However, acute exposure can be highly irritating and may cause severe allergic reactions of the skin, eyes and respiratory tract. It is also a suspected human carcinogen. Individual reactions to different levels of formaldehyde (as with most environmental stimuli) can vary greatly based on hereditary and lifestyle factors.

The independent Cosmetic Ingredient Review (CIR) Expert Panel completed an extensive review of formaldehyde in 1984, and listed it as “safe as used” in cosmetics within certain specifications. The CIR has listed formaldehyde as safe for use in cosmetics in quantities of point two percent (0.2%) or less. CIR also advises that “Formaldehyde should not be used in products intended to be aerosolized.” When a product like the Brazilian straightener is applied to the hair and is heated with a flat iron, formaldehyde vaporizes and is released into the air.

PBA strongly encourages our members to educate themselves on these products and to ask pertinent questions regarding product ingredients, appropriate handling, application techniques and any safety or allergy warnings that should be shared with consumers.

Product safety can be established though firm adherence to the principles of Quality Assurance and Good Manufacturing Practices. It is especially important to follow the directions on the product label to ensure that the product performs as intended and to prevent irritation to the skin.

For more information please contact PBA government affairs at 800.468.2274 ext. 3451.

Useful Links:
Cosmetic Ingredient Review (CIR) Website
FDA Office of Cosmetics and Colors
OSHA Standards
Dept. of Health and Human Services FAQs

The Internal Revenue Service will not require employers to report the cost of employer-sponsored group health coverage on W-2 forms issued for 2011.

Health Care Reform includes the requirement of employers to report the applicable costs of employer-sponsored coverage on W-2 forms.

The IRS released a statement which explained that the reporting requirement is not mandatory for W-2 forms issued for 2011.

The reporting requirement is intended for informational purposes only, the amounts reportable are not taxable.

The IRS will publish additional guidance on the new requirement later this year.

Draft Form W-2
http://www.irs.gov/pub/irs-utl/draft_w-2.pdf

For more information please contact PBA’s government affairs team at 800.468.2274 ext. 3451 or Myra Irizarry.