Internal Revenue Code:Sec. 45B. Credit for portion of employer social security taxes paid with respect to employee cash tips

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter A - Determination of Tax Liability
         PART IV - CREDITS AGAINST TAX
          Subpart D - Business Related Credits
        

Statute

    Sec. 45B. Credit for portion of employer social security taxes paid
        with respect to employee cash tips
 
    (a) General rule
      For purposes of section 38, the employer social security credit
    determined under this section for the taxable year is an amount
    equal to the excess employer social security tax paid or incurred
    by the taxpayer during the taxable year.
    (b) Excess employer social security tax
      For purposes of this section -
      (1) In general
        The term ''excess employer social security tax'' means any tax
      paid by an employer under section 3111 with respect to tips
      received by an employee during any month, to the extent such tips
      -
          (A) are deemed to have been paid by the employer to the
        employee pursuant to section 3121(q) (without regard to whether
        such tips are reported under section 6053), and
          (B) exceed the amount by which the wages (excluding tips)
        paid by the employer to the employee during such month are less
        than the total amount which would be payable (with respect to
        such employment) at the minimum wage rate applicable to such
        individual under section 6(a)(1) of the Fair Labor Standards
        Act of 1938 (as in effect on January 1, 2007, and determined 
        without regard to section 3(m) of such Act).
      (2) Only tips received for food or beverages taken into account
        In applying paragraph (1), there shall be taken into account
      only tips received from customers in connection with the
      providing, delivering, or serving of food or beverages for
      consumption if the tipping of employees delivering or serving
      food or beverages by customers is customary.
    (c) Denial of double benefit
      No deduction shall be allowed under this chapter for any amount
    taken into account in determining the credit under this section.
    (d) Election not to claim credit
      This section shall not apply to a taxpayer for any taxable year
    if such taxpayer elects to have this section not apply for such
    taxable year.
 

Sources

    (Added Pub. L. 103-66, title XIII, Sec. 13443(a), Aug. 10, 1993,
    107 Stat. 568; amended Pub. L. 104-188, title I, Sec. 1112(a)(1),
    (b)(1), Aug. 20, 1996, 110 Stat. 1759.)
 

References in Text

                             REFERENCES IN TEXT
      Sections 3(m) and 6(a)(1) of the Fair Labor Standards Act of
    1938, referred to in subsec. (b)(1)(B), are classified to sections
    203(m) and 206(a)(1), respectively, of Title 29, Labor.
 

Miscellaneous

                                 AMENDMENTS

2007 - PL 110-28
SEC. 8213. DETERMINATION OF CREDIT FOR CERTAIN TAXES PAID WITH RESPECT 
            TO EMPLOYEE CASH TIPS.
    (a) In General.--Subparagraph (B) of section 45B(b)(1) <<NOTE: 26 
USC 45B.>>  is amended by inserting ``as in effect on January 1, 2007, 
and'' before ``determined without regard to''.

      1996 - Subsec. (b)(1)(A). Pub. L. 104-188, Sec. 1112(a)(1),
    inserted ''(without regard to whether such tips are reported under
    section 6053)'' after ''section 3121(q)''.
      Subsec. (b)(2). Pub. L. 104-188, Sec. 1112(b)(1), amended par.
    (2) generally.  Prior to amendment, par. (2) read as follows:
    ''Only tips received at food and beverage establishments taken into
    account. - In applying paragraph (1), there shall be taken into
    account only tips received from customers in connection with the
    provision of food or beverages for consumption on the premises of
    an establishment with respect to which the tipping of employees
    serving food or beverages by customers is customary.''

                      EFFECTIVE DATE OF 2007 AMENDMENT
2007 - PL 110-28
SEC. 8213. DETERMINATION OF CREDIT FOR CERTAIN TAXES PAID WITH RESPECT 
            TO EMPLOYEE CASH TIPS.
    (b) <<NOTE: 26 USC 45B note.>>  Effective Date.--The amendment made 
by this section shall apply to tips received for services performed 
after December 31, 2006.
 
                      EFFECTIVE DATE OF 1996 AMENDMENT
      Section 1112(a)(3) of Pub. L. 104-188 provided that: ''The
    amendments made by this subsection (amending this section and
    provisions set out as a note under section 38 of this title) shall
    take effect as if included in the amendments made by, and the
    provisions of, section 13443 of the Revenue Reconciliation Act of
    1993 (Pub. L. 103-66).''
      Section 1112(b)(2) of Pub. L. 104-188 provided that: ''The
    amendment made by paragraph (1) (amending this section) shall apply
    to tips received for services performed after December 31, 1996.''
                               EFFECTIVE DATE
      Section applicable with respect to taxes paid after Dec. 31,
    1993, with respect to services performed before, on, or after such
    date, see section 13443(d) of Pub. L. 103-66, as amended, set out
    as an Effective Date of 1993 Amendment note under section 38 of
    this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 38, 39, 196, 6501 of this
    title.