With the December 2017 Tax Bill that was signed into law, Five Senses Spa, Salon & Barbershop celebrated with a $10,000 Surprise Team Bonus!

Each employee received $500 in cash, and the priceless moment was all caught on video.

The story was picked up by the Chicago Tribune, and Paola found herself and her company on the front page and business section of the Sunday, January 28, 2018 Chicago Tribune issue.

Staff on the United States House Committee on Ways and Means conducted an interview with Paola about the $10,000 Surprise Team Bonus and the FICA Tip Tax.

Reps. LaHood and DelBene Introduce Legislation Aimed to Empower Beauty-Based Business by Extending Tip Tax Credit

~ Press Release: Rep. LaHood Holds Roundtable to Discuss Importance of Extending Tip Tax Credit to Salon Industry.

See “MEETINGS” section for additional TV and Article links.

Article: Salon owner, PBA Member and beauty industry advocate Paola Hinton is single-handedly transforming important decision makers’ views of the current FICA Tax Tip legislation affecting the beauty industry. FICA, officially known as the Small Business Tax Fairness and Compliance Act, H.R. 1349, would extend the current 45(b) FICA tax tip credit to salon and spa owners (a credit granted to restaurant owners in 1993).

Like restaurants, salon and spa employees receive a significant amount of their income through customer tips. The salon business owner is required to pay income taxes on those gratuities, although they don’t receive any of this income for the business. Employers are required to pay 7.65% FICA (Social Security and Medicare) taxes on all employee income, including those tips.

A powerful voice for the beauty community, Paola is taking the FICA Tip Tax initiative by storm and is actively educating the beauty community and government officials about the effect of tax credits on salon businesses.

Through live stage presentations, meetings with government officials like United States Representative Darin LaHood (R-IL) and online discussions on her FICA Tax Tip Facebook group, Paola is transforming legal concepts into understandable and relatable realities so her audience can understand the impact of tax credits for beauty businesses.

“I go through the progression of what these tips look like. What is the life cycle of a $20 tip? I explain the progression and cost of facilitating tips in visual terms.” Using PDFs and PowerPoints, Paula’s presentation punchline takes one $20 tip and broadens the scope to the effect of $20,000… which is how much it cost her business, Five Senses Spa and Salon in Peoria, Illinois, to manage the total tips her employees received in 2018. “It cost me almost $20,000 to facilitate $179,000 of gratuities received. Imagine what I could do for my salon with that $20,000 instead?”

Paula invites others to consider the impact that an extra $20,000 would have across the entire country. “We’re not reinventing the wheel. The restaurant industry has had this in place since 1993. There aren’t large margins in the beauty industry. When you basically pay the customer to come in, paying to facilitate their tips is almost unethical.”

When people ask why she’s so passionate about educating the industry and government officials about FICA, Paola shares that the value of $20,000 to facilitate one year of tips might not seem like much for one salon, but put in perspective of the whole country, it puzzles her why the government might hinder the beauty industry from using that revenue for valuable staff benefits like training and education, tools and equipment, and hiring new talent.

For more information about the FICA Tip Tax, visit probeauty.org/FICA.

Do you know how much you're paying in taxes on the tips coming through your salon business?

Tax talk might not be sexy, but it's important! Tune in today as Paola Hinton shares her passion for helping salons overcome the FICA tax burden.

You have to learn how to save your a$$ets or you could lose on your bottom line! Listen here: http://www.beyondthetechnique.com/interact

Chris Sulimay and John Palmieri's Shop Talk Podcast helps educate our industry of the FICA Tip Tax Unfairness legislation.

Take action to change unfair tip tax that is costing salon owners millions. We all have a voice, but it's our choice to use it or lost it!

Unfortunately on many important issues, most people feel like they really can not effect change. But not Illinois salon owner Paola Hinton. In the past few years, she has decided to take on lawmakers head to head and change a FICA tax that has cost salon owners hundreds of millions of dollars through the years.

This federal tax directly affects every salon owner in every state. If you own a salon, that means you!

Struggling Salons Seek Tax Parity With Pandemic-Hit Restaurants by Kaustuv Basu

Paola Hinton, the owner of Five Senses Spa, Salon & Barbershop, in Peoria, Ill., has been part of the campaign to have tax parity with the restaurant industry.

“Our industry, we always thought it was recession proof. But there’s one thing that can stump that. And that’s when you get shut down by the government,” Hinton said.

In effort to stand up for fellow Illinoisans, Paola Hinton has joined other business leaders across the state to educate our communities. Paola is grateful for the Peoria Journal Star who ran the op-ed article against the "Fair Tax" amendment.

Please educate yourself before voting! Amending the Illinois constitution should not be taken lightly by anyone - especially since it will impact each of us individually along with the families, friends and neighbors that live in the state of Illinois.

Help devastated small businesses by expanding tax tip credit to salons and barbershops by Paola Hinton

When the pandemic hit, salons were hit harder than any other industry, were the last to reopen, and will likely be the first to close again. Many establishments will never reopen. Between February and April, the number of jobs at employment-based salons dropped by 84%, hitting every Main Street and shopping mall in the United States. 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.

A solution to provide salons, barbershops, and spas with the immediate cash infusion they need to keep their businesses afloat would be to allow access to an existing credit in the IRS tax code, the 45B FICA Tax Tip Credit. Please help our industry be included in the fourth COVID stimulus package.

A Day on Capitol Hill for The Alliance for Tax Equity by Myra Irizarry Reddy, Professional Beauty Association

Salons and barbershops are being taxed unfairly by Paola Hinton and Bill Riiff

The defining question in any presidential election is “Are you better off today than you were four years ago?” Sadly, many salons, barbershops and spas are not.

The beauty industry, where we both work, was hit hard by the pandemic. We were the first to be shut down and last allowed to reopen. Too many of our fellow small business owners didn’t survive, and those of us still going face continued challenges.

Responding to the hurdles created by the pandemic is challenging enough, but salons, barbershops and spas continue to wrestle with additional tax burdens that aren’t faced by other industries whose employees receive tips.

In 1993, Congress passed legislation allowing restaurants to claim a dollar-for-dollar tip tax credit on the required employer portion of FICA taxes on the tip amounts that employees receive from customers. Just behind restaurants, the beauty industry is the second-highest tipped industry, yet we continue to be treated unequally in the tax code.

We and our fellow small business owners are keenly watching this year’s election as politicians trot out campaign slogans like “no taxes on tips.” Capitol Hill will no doubt debate the merits of such a policy next year, especially as addressing expiring tax cuts is one of the few guaranteed pieces of legislation to be voted on. Meanwhile, salon, barbershop and spa owners continue to scratch their heads as to why members of Congress aren’t acting on an existing bill that would make a real difference for tens of thousands of small businesses across the country.

The Small Business Tax Fairness and Compliance Simplification Act is bipartisan legislation that directly helps women, minorities and small business owners while shrinking the tax gap and increasing compliance in tip reporting. It would finally put the beauty industry on equal tax footing with restaurants. We are proud that our members of Congress, Rep. Darin LaHood (R-Ill.) and Rep. Lloyd Smucker (R-Pa.), are strong advocates for righting this 30-year wrong, as they understand the importance of the beauty industry to the economy and to our communities.

While it may not seem like much at first, this additional tax burden adds up quickly. For example, a $20 tip for a haircut will end up costing the salon owner an additional $2 after federal payroll tax (7.65 percent) and state unemployment taxes are applied and credit card fees accounted for. Those taxes and fees are on income that the business never receives, as the tips are paid to the employees.

Multiply the additional dollars paid by the salon owner by thousands of haircuts each year, and you can see the unfair burden placed by the current policy on the more than 100,000 salons, barbershops and spas nationwide, of which more than 80 percent employ under 10 workers.

Fixing this unfair exclusion for salons, barbershops and spas puts money back into their accounts and allows them to hire more people, provide benefits like 401Ks, buy new equipment or make improvements to their businesses.

The beauty industry is a vital engine for economic activity and we are a special part of our communities. We employ 1.3 million professionals, of which 85 percent are women and 40 percent are Black, Hispanic or Asian. In addition to the skilled stylists, barbers, cosmetologists, nail technicians, estheticians and massage therapists, what makes our industry special are the life-long relationships and personal bonds that are created with clients over years of service and the many stages of life.

While we greatly appreciate the leadership of LaHood and Smucker and more than 50 cosponsors of this legislation in the House and Senate, we need all members to stand up for small businesses. We are not asking for special treatment — just the same treatment as the restaurant industry.

In today’s political climate, bipartisan wins are few and far between. It is time for Congress to treat tip-based industries fairly by passing the Small Business Tax Fairness and Compliance Simplification Act.

Paola Hinton is the owner of Five Senses Spa, Salon & Barbershop in Peoria, Ill. Bill Riiff is a team leader with Sports Clips in East Petersburg, Pa.

A New Year, A New Administration and the Industry's Strongest Opportunity to Gain the 45B Tax Credit

• Article

• Video

Rep. Darin LaHood's Chief of Staff, Steve Pfrang, and Legislative Director, Ashley Antoskiewicz, met with Paola to learn more about the $10,000 Surprise Team Bonus that she distributed among her employees.

Paola took the opportunity to discuss the FICA Tip Tax and the challenges it presents to the entire beauty industry across the US.

Congressman Darin LaHood stood in the same spot where the $10,000 Surprise Team Bonus was distributed by Paola. Rep. Darin LaHood heard first hand from employees about the memorable day and what the employees did with the money.

Paola had the opportunity to present the Tip Tax issue that impacts the entire industry across the US in depth to Rep. Darin LaHood. He was able to fully understand the burden that Five Senses encounters by showing him the amount collected in tips over the course of a year and how the Tip Tax impacts her business.

In coordination with Rep. LaHood's local office, a Roundtable Discussion was held on October 10, 2018 at Five Senses Spa, Salon & Barbershop. Local and surrounding area business owners within this industry were present along with Congressman Darin LaHood.

~ Press Release: Rep. LaHood Holds Roundtable to Discuss Importance of Extending Tip Tax Credit to Salon Industry

~ Peoria Journal Star: U.S. Rep. Darin LaHood picks up tips for tip-tax bill, by Steve Tarter

~ WMBD-TV: Beauty industry seeks lawmakers help to qualify for FICA Tax Tip credit, by Rebecca Brumfield Article

~ WYZZ-TV: Rep. LaHood hears from local small business salon owners regarding tip tax legislation

~ Salon Today: Rethinking the Tip Tax Credit, by Stacey Soble

Paola Hinton is grateful for Rep. Darin LaHood who listened and introduced H.R. 1349 on behalf of our entire industry, which is also accompanied by Senate Bill S. 2634.

White House, American's for Tax Reform, House Ways & Means and Senate Finance Offices

~ Meeting at the White House with Special Assistant to the President for Legislative Affairs, Paul Teller.

~ Presented at Americans for Tax Reform where Grover Norquist welcomed me to present to 150 people at his invite only meeting.

~ Educated numerous House Ways & Means and Senate Finance offices asking for their co-sponsorship of the bills.

American political advocate appointed by President Ronald Regan, Grover Norquist, invited Paola Hinton to speak at the Americans For Tax Reform (ATR) Gala in Washington, DC about the $10,000 Surprise Team Bonus.

U.S. Sen. Ted Cruz (R-Texas) along with fellow Republican colleagues in the House, and a small business owner from Illinois participated in a press conference hosted by Grover Norquist, president of Americans for Tax Reform.

The following participants also spoke at the press conference.

1. U.S. Rep. Cathy McMorris Rodgers (R – Wash.) Chair House Republican Conference
2. U.S. Rep. Peter Roskam (R – Ill.) Ways and Means Committee Member
3. U.S. Rep. Erik Paulsen (R – Minn.) Chairman of the Joint Economic Committee Ways and Means Committee Member
4. U.S. Rep. Mike Kelly (R – Pa.) Ways and Means Committee Member
5. U.S. Rep. Jim Renacci (R – Ohio) Ways and Means Committee Member
6. U.S. Rep. Kristi Noem (R – S.D.) Ways and Means Committee Member
7. U.S. Rep. David Schweikert (R – Ariz.) Ways and Means Committee Member
8. U.S. Rep. Mike Bishop (R – Mich.) Ways and Means Committee Member
9. U.S. Rep. Darin LaHood (R – Ill.) Ways and Means Committee Member
10. U.S. Rep. Rodney Davis (R – Ill.)
11. U.S. Rep. David Kustoff (R – Tenn.) Financial Services Committee Member
12. U.S. Rep. Rod Blum (R – Iowa) House Committee on Small Business
13. Paola Hinton Owner of Five Senses Spa, Salon & Barbershop in Peoria, Illinois
14. Grover Norquist President, Americans for Tax Reform

The $10,000 Surprise Team Bonus has been celebrated and recognized several times since a cash bonus was handed out to a room full of employees! Paola spoke at a press conference in Washington, DC where she explained how the tax reform gave her the opportunity to give back with a $500 bonus to each employee!

It was a privilege for Paola to introduce Rep. Darin LaHood at the press conference, where Congressman LaHood spoke about his visit to Five Senses Spa, Salon & Barbershop where he heard first hand what it was like to receive a surprise $500 bonus, and what the employees did with the money.

Paola spoke at a conference in Atlanta, GA presented by Modern Salon, where she continued to educate the industry, asking for support by sending a message to Congress through the Professional Beauty Association's (PBA) website.

Serious Business is an annual national beauty industry conference that brings approximately 2000 owners and professionals together to learn, grow and elevate our industry. Paola had the opportunity to present on the main stage to educate and seek help from fellow salon and spa owners regarding the FICA Tax Tip Legislation that impacts our industry.

Paola presented to the Aveda network of salon owners across the country. The call allowed Paola to continue her grassroots efforts of educating the industry and encouraging owners to contact their representative through the Professional Beauty Association's (PBA) website.

Paola had the opportunity to speak at and invite only at Americans For Tax Reform meeting. Paola continues to educate people within the industry and outside the industry in support of small businesses across the US.

Paola grateful of Grover Norquist's support of our beauty industry. Paola continues to educate and advocate for the beauty industry at Grover's invite only at Americans For Tax Reform meeting.

Serious Business is an annual national beauty industry conference that brings approximately 2000 owners and professionals together to learn, grow and elevate our industry. Paola had the opportunity to present on the main stage to educate and seek help from fellow salon and spa owners regarding the FICA Tax Tip Legislation that impacts our industry.

Paola has worked with WebAppClouds and SalonClouds+ since 2015 and appreciative that they support of our beauty industry. Paola was invited to educate and advocate for the beauty industry at SalonClouds+ Education Day that was attended by various salon owners.

Paola was invited to speak at the Tri-County briefing on May 27, 2020 on behalf of the beauty/personal care industry at the Peoria Health Department.

Paola was given 5 minutes to speak about "what you're doing at the salon to make sure that the public health guidelines are adhered to and your customers feel safe." Paola provided perspective into the precautions being made in the beauty industry from 3:05 till 8:00 and Q&A till 15:40.

The following safety video that was referenced in the press conference, is what a Five Senses Spa, Salon & Barbershop guest is to expect for their appointment.

In a Peoria Journal Star article, "Peoria massage parlors get a closer look" written by Phil Luciano (Posted Feb 3, 2018 at 5:32 PM), Peoria's City Manager Patrick Urich is quoted as follows. Currently, Peoria’s massage ordinances essentially defer to state law, which focuses on licensing individuals. The new language addresses the actual businesses, says City Manager Patrick Urich. “We’re trying to provide framework,” Urich says. “The legitimate business out there won’t have to worry.”


Paola Hinton respects the intentions of the Bodywork Ordinance that the City of Peoria has put forth. Rules are often made to address general issues, however there are instances where the rules are “punishing” the honest people and/or businesses – leading to financial burden and a lot of time to comply with the rules and regulations. Paola has met with various city officals, The Center of Prevention of Abuse, a state legal firm in Chicago and a federal legal firm in Washington DC in order to help define legitimate businesses and allow her business and fellow legitimate business owners in the industry to be excluded from the bodyworks ordinance.

--> Paola Hinton speaks at Peoria City Council Meeting on Tuesday, 7/28/2020 (timestamp 1:13:40 to 1:17:23)

--> WMBD TV "Peoria spa owner challenging City to exempt legitimate massage establishments from ordinance" by Matt Sheehan on Friday, 7/31/2020

Paola created this video so that our industry can have a better understanding about the bill, what needs to be done and how everyone can help.

Bill information and materials with Five Senses 2018 tip numbers to illustrate the impact of the taxes on tips.

The Small Business Tax Fairness and Compliance Simplification Act, known commonly in the beauty industry as the FICA Tax Tip Fairness legislation, would extend the current 45B FICA tax tip credit to salon and spa owners - a credit granted to restaurant owners in 1993 - providing equality and compliance simplification for America's small businesses in the salon and spa industry.

Like the restaurant industry, salon and spa professionals receive a significant amount of their income through tips, which by law must be reported as income. Salon and spa owners do NOT receive any of this tip income yet are required to pay taxes on it: Beauty industry employers are responsible for paying the 7.65% FICA (Social Security and Medicare) taxes on all employee income, including customer-paid tips.

While the restaurant and salon and spa industries share tip reporting burdens, salon owners continue to shoulder the added burden of paying FICA taxes on the tip income of their employees. Along with ensuring tax fairness, the FICA credit could help offset administrative costs associated with ensuring employee compliance on reporting tips and allow business owners to reinvest in their business and employees.

Our industry is appreciative of the gratuities that guests leave for service providers. The materials visually calculates what happens when a $20 tip is paid through payroll. Since tips are considered wages the following taxes and fees take place.

Guest tips Service Provider 1. The service provider is taxed at 7.65% for FICA (Social Security & Medicare).

Business facilitates and pays the tip to the Service Provider. The business does not get any money from the tip. Instead, it costs the business money to facilitate tips on behalf of the service providers. 1. The business is taxed at 7.65% for FICA (Social Security & Medicare). 2. The business is taxed at 0.53%+ for IL State Unemployment Tax. 3. The business is charged 3%+ in transaction percentages and fees.

When a tip is all paid for, it grows to a larger transaction amount than what the tip started at. Multiply this by the number of employees that work throughout the year, and it becomes a very large cost that the business is held responsible to pay. Also note, that a business can not even budget for the unfair cost since they do not know how generous a guest will be from appointment to appointment.

The professional beauty industry has been overlooked and significantly impacted by the economic crisis resulting from the Coronavirus pandemic. Between February and April 2020, the number of jobs at employment-based salons dropped by 84%, 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.

A solution to provide funding to salons now is to allow access to an existing credit in the IRS tax code, the 45B FICA Tax Tip Credit. Congress passed the 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.

Providing this temporary retroactive existing 45B FICA Tax Tip Credit to salon business owners is an existing way to ensure that small businesses salons make it through this unprecedented emergency. As states are now reconsidering another temporary shutdown, small business salons are in desperate need of help. Nearly 20,000 salons included in just this letter, on behalf of an industry in crisis, are asking you to please include the 45B FICA Tax Tip provision in the next COVID Relief package.