www.probeauty.org/advocacy

Health Care Reform & You

2009-12-17T15:50:00.002-07:00

As the debate on comprehensive health care reform reaches a climax in the U.S. Senate - salon/spa industry employers and professionals have been trying to make sense of it all. PBA has developed a few easy-to-read resources to help our members navigate the current proposals.

While it is important to note that this debate is still very much in flux - these resources will hopefully provide some level of understanding of what is being proposed and the potential impact on employers.

Helpful Information

Snapshot of House & Senate Health Care Proposals

Summary of House & Senate Language

Worksheet to Calculate New Employer Responsibility

Sharing Your Thoughts

Although the House has already approved a health care bill - the Senate is still at work on their version. In the end, the bills are likely to contain different provisions. So, it will be necessary for the House and Senate to meet in "conference committee" to hash out compromises. Of course, in the end, it's entirely possible that comprehensive health care reform will fail to materialize.

PBA has created a Contact Your Elected Officials page so that you can easily share your thoughts with your Members of Congress. Click Here.

California Safe Cosmetics Act Reporting System Goes Live

2009-11-16T17:20:00.000-07:00

The California Department of Public Health (DPH) recently launched an online reporting system to implement the California Safe Cosmetics Act – better known as “SB 484”.

The new law requires cosmetic manufacturers (and/or distributors or packers whose name appears on the label) to report to the DPH if any of their products sold in California contain a chemical ingredient suspected of causing cancer or reproductive toxicity. Such ingredients must be reported even if used at very low levels and even if a determination has been made by government agencies or scientific panels that the ingredient is safe as used in the cosmetic product.

The reporting must be done online, using DPH’s electronic reporting system. Failure to report as required could lead to civil penalties, criminal fines, or even jail. Companies can sign on and create their login name and password at https://www.safecosmeticsact.org/SafeCosmetics/Login.aspx.

The reporting deadline announced by DPH was October 14, 2009. During an October meeting with the beauty industry, the Department noted that it may be prepared to be flexible with respect to the deadline – provided that companies are demonstrating a good faith effort to comply with the law (i.e. have created accounts to log onto the online reporting system). Companies are strongly encouraged to consult with their own legal counsel in determining how best to comply with the requirements of SB 484.

PBA has prepared a detailed memorandum on the SB 484 reporting deadline. This memorandum is available to PBA members only by contacting Sam Leyvas, director of government affairs at 800.468.2274 x3437.

Beauty Industry Outlook Remains Positive Q3; Salon/Spa Owners Report Net Increase in Service Sales

2009-11-16T16:15:00.010-07:00

The outlook for the salon/spa industry remained positive in the third quarter, as the Professional Beauty Association’s (PBA) Salon/Spa Performance Index (SSPI) rose for the second consecutive quarter.

The SSPI – a quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry – stood at 101.9 in the third quarter, up 0.1 percent from its second quarter level. The SSPI 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.

Salon/Spa Performance Index

The beauty industry outlook remains positive in the 3rd quarter as the Salon/Spa Performance Index shows modest gain.

For the first time in 2009, salon/spa owners report net increase in service sales.
Retail sales remain soft.

Fully seven out of 10 salon/spa owners said they expect to have higher service sales in six months.

61 percent are also much more optimistic about stronger retail sales in the months ahead.

Salon/Spa Tracking Survey

Sales performances differed across sales categories in Q3.

57 percent of salon/spa owners in the $500,000-$999,999 sales category reported higher service sales in Q3.

In contrast, just 30 percent of owners with sales of $2 million or more reported higher service sales in Q3.

42 percent of owners with annual sales of less than $250,000 reported lower sales in Q3.

Salon/spa owners continued to report lower retail sales volume in Q3 with 47 percent reporting lower retail sales.

Owners in the highest sales volume category reported the softest retail sales in Q3.

47 percent of owners in the $1 million - $1.9 million sales category reported higher retail sales in Q3, while 40 percent reported lower sales.

Salon/spa owners reported a reduction in customer traffic levels in Q3.

Owners reported slightly higher staffing levels for the second consecutive quarter.

The also reported a decline in the average workweek of their employees.

Top challenge for salon/spa owners: “building and maintaining sales volume”.

The full SSPI and second quarter Salon/Spa Tracking Survey Report can be found at probeauty.org/businesstools/research

Beauty Industry Talks Taxes; School Support with Congress

2009-11-16T14:59:00.009-07:00

More than 600 members of Congress and their key staffers enjoyed haircuts, mini-manicures, makeup applications and hand and neck massages, as they learned about the professional beauty industry during the Professional Beauty Federations (PBF’s) 10th Annual Welcome to Our World. Welcome to Our World has become the most popular event on Capitol Hill, because of the unique way it combines learning with a fun and rewarding event for all.

Two issues of immediate importance to the professional beauty industry are fairness in taxation and access to cosmetology education. H.R. 3724, the Small Business Tax Equalization and Compliance Act, would make it possible for salon owners to claim a tax credit for the FICA taxes they must now pay on their employees’ tips, a benefit that restaurant owners already receive. The legislation will also improve income reporting within the industry.

The Professional Beauty Association’s Serena Chreky of Andre Chreky, the salon
spa, and Bruce Selan, chair of PBA’s Board of Directors and vice president of
Zotos, greet Congresswoman Shelley Berkley (in pink), representing Nevada’s 1st
district, and the sponsor of H.R. 3724, the Small Business Tax Equalization and
Compliance Act.

Click here for more photos

In regards to education, the PBF supports recent Congressional efforts to promote and expand access to postsecondary education and enhance students' ability to choose the type of educational program that best meets their own individual, professional career & employment goals. In a $60 billion a year industry where job market demand for qualified applicants exceeds supply by more than three-to-one, it is vitally important to the PBF that Congress preserve a student's ability to enroll in cosmetology institutions of higher education, receive the benefits of a quality postsecondary education, and are prepared to enter the ranks of our professional workforce.

“This important event brings an entire $60 billion industry to Capitol Hill in just one day,” explains Eric Schwartz, president of the PBF. “It provides the perfect forum for our legislators to learn about important small-business and education issues that affect millions of their constituents, while they enjoy the services that are performed by 1.6 million licensed professionals hundreds of times a day in hundreds of salons in each of their districts.”

Founded in 1999, the PBF represents the political interests of the Professional Beauty Industry. Members include the American Association of Cosmetology Schools (AACS), the International Salon/Spa Business Network (ISBN), the Professional Beauty Association (PBA), OPI Products, Inc., JCPenney Salons and Regis Corporation. Visit www.probeautyfederation.org.

H1N1 Toolkit Launched for Salons/Spas

2009-11-16T14:10:00.011-07:00

The Professional Beauty Association (PBA) and Barbicide® announced today that they are working together to create an industry response program that addresses the H1N1 influenza virus that has impacted the United States, and countries across the globe.

“King Research, the makers of Barbicide® is a strong supporter and member of the Professional Beauty Association, and it is critical that we support the salon/spa industry as it looks for tools and information on preventing the spread of the H1N1 virus,” said Alan Murphy, President of King Research. “Our contagious disease experts and in-house researchers are key contributors to the tools and programs King Research has launched and we want to share that information with the beauty industry.”

While the initial wave of the H1N1 flu this past spring was relatively moderate - President Obama recently declared a national emergency to deal with the "rapid increase in illness" from the H1N1 influenza virus. For small businesses – particularly salons/spas – employee absenteeism from the flu can be very disruptive to business operations. Federal and state authorities have been urging small businesses to be proactive in flu prevention and preparedness.

probeauty.org/flu

“We have seen an increased demand for H1N1 resources and information from salon/spa owners across the country,” said Executive Director of PBA, Steve Sleeper. “The Professional Beauty Association is committed to providing timely and relevant resources to the beauty industry and we are excited to be working with one of our valued members. Their expertise on salon/spa sanitation and disinfection is an invaluable resource as we develop resources and information for the beauty industry.”

The H1N1 education and preparedness effort kicked off with the launch of probeauty.org/flu -a robust online toolkit featuring information and resources geared specifically towards the salon/spa environment. In addition to the online toolkit, the effort will also include a webinar on salon/spa sanitation and disinfection best practices and several workshops during the International Salon & Spa Expo in Long Beach, California January 30 – February 1, 2010.

10th Annual Welcome to Our World

2009-08-10T12:50:00.014-07:00

Wednesday, October 14, 2009
5:00 pm - 8:00 pm
Capitol Hill - Washington, DC

What's it all About?

WTOW has become the most popular event on Capitol Hill and an annual tradition in Washington. Salon industry professionals from around the country converge on the Capitol to share an evening with Members of Congress, professional and personal staff, and those interested in learning more about a committed group of individuals representing a dynamic industry.

With complimentary haircuts, mini-manicures, and neck-and-shoulder massages, guests get to personally experience the skills and services of the country's professional beauty industry, while learning more about the issues important our industry.

Who Should Attend?

The success of Welcome to Our World has always been possible because of the generosity of salon industry professionals like you! Salon owners, licensed professionals, distributors, and manufacturers are all invited to participate in this annual event.

To learn more, visit http://www.probeautyfederation.org/

Industry Outlook Improved as the Salon/Spa Performance Index Rose in the Second Quarter 2009

2009-08-10T12:21:00.005-07:00

[Values Greater than 100 = Expansion; Values Less than 100 = Contraction]

The outlook for the salon/spa industry improved in the second quarter, as the Professional Beauty Association’s (PBA) comprehensive index of salon/spa activity registered a solid gain. The Association’s Salon/Spa Performance Index (SSPI) – a new quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry – stood at 101.8 in the second quarter, up 0.7 percent from its first quarter level.

“The SSPI rose in the second quarter, and stood above 100, which is a positive sign for the overall health of our industry,” said Steve Sleeper, executive director of PBA. “Salon/spa owners reported a positive six-month economic outlook for both sales and the overall economy, while capital spending plans held relatively steady.”

The Salon/Spa Performance Index is based on the responses to PBA’s Salon/Spa Industry Tracking Survey, which is fielded quarterly among salon/spa owners nationwide on a variety of indicators including service and retail sales, customer traffic, employee/hours and capital expenditures. The Index consists of two components – the Current Situation Index and the Expectations Index.

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 Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), stood at 99.7 in the second quarter – up 0.9 percent from its first quarter level of 98.8. However, the Current Situation Index remained below 100 in the second quarter, which signifies contraction in the current situation indicators.

Salon/spa owners reported an improvement in service sales in the second quarter. Thirty-nine percent of salon/spa owners reported an increase in same-store service sales between the second quarters of 2008 and 2009, up from 35 percent who reported a sales gain in the first quarter. Thirty-nine percent of salon/spa owners reported a same-store service sales decline in the second quarter, down from 44 who reported lower sales in the first quarter.

Although the overall retail sales picture improved somewhat in the second quarter, salon/spa owners continued to report lower retail sales volume. Thirty-three percent of salon/spa owners reported higher retail sales between the second quarters of 2008 and 2009, up from 26 percent who reported a retail sales gain in the first quarter. Forty-four percent of salon/spa owners reported lower retail sales in the second quarter, down from 49 percent who reported similarly in the first quarter.

Salon/spa owners are also decidedly upbeat about the direction of the overall economy. Sixty-three percent of salon/spa owners said they expect economic conditions to improve in six months, while only six percent expect to see worse economic conditions in six months. This sentiment was relatively unchanged from first quarter levels.

“The Professional Beauty Association continues to supply the beauty industry with timely and relevant economic data to help our members and the industry at large make successful and strategic business decisions” said Steve Sleeper “doing so is a core mission of the PBA.”

View, Print, and Share full SSPI:

PBA Salon-Spa Performance Index - 2009 Q2

“Card Check” Legislation on Defensive; Salon Industry Voices Concerns

2009-08-10T12:07:00.003-07:00

The "Employee Free Choice Act"--better known as the Card Check bill--is a proposed law that would change how unions are allowed to organize workers in the United States. Card check would make it cheaper, faster and easier to unionize Main Street businesses and small retail establishments by eliminating the secret ballot.

The Professional Beauty Industry (PBA) joined with several hundred other trade associations to oppose card check – and salon industry professionals from across the country have sent over 1,000 letters to members of Congress opposing this legislation.

Because of the overwhelming response from small business owners and workers, card check legislation appears to have stalled in Congress. As reported in a recent article by the New York Times, moderate Democrats in the Senate were becoming increasingly alarmed by the overwhelming number of letters and phone calls from constituents opposed to card check - and essentially put the brakes on the legislation for now.

While this is welcome news for the business community – including the salon industry – making your voice heard on this issue continues to be very important. You can learn more about this issue and send a letter to Congress by visiting PBA’s Advocacy Center at www.probeauty.org/advocacy.

Watch YouTube Video on Card Check

View, Print, and Share Background Document:
Card Check and the Salon Industry Background

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Business Alert: New COBRA Rules for Employers

2009-02-19T13:49:00.004-07:00

On February 17, 2009, President Obama signed the Economic Stimulus Bill into law. This legislation includes provisions affecting the continuation of health insurance coverage (“continuation coverage”) covered employers must make available to certain former employees and their families under provisions of the “Consolidated Omnibus Budget Reconciliation Act of 1985” (COBRA).

PBA has prepared a snapshot of the key provisions of the Stimulus Bill that touch COBRA continuation coverage, and how employers may be affected.

With the March 1st effective date just around the corner, read, share, and download the following document:

PBA Business Alert on COBRA Feb 2009

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Stimulus & You: Small Business Tax Breaks

2009-02-17T11:44:00.003-07:00

President Barack Obama will sign the $787 billion federal stimulus package into law in Denver on Tuesday. The legislation includes billions of dollars in spending on items including infrastructure, education, tax breaks for individuals and businesses, help for unemployed workers and aid for state governments.

Below is a snapshot of some of the small business tax breaks included in the Stimulus bill:

Extension of Accelerated Depreciation

Businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. Last year, Congress temporarily allowed businesses to recover the costs of capital expenditures made in 2008 faster than the ordinary depreciation schedule would allow by permitting these businesses to immediately write-off fifty percent of the cost of depreciable property (e.g., equipment, tractors, wind turbines, solar panels, and computers) acquired in 2008 for use in the United States.

How you might benefit: The bill would extend this temporary benefit for capital expenditures incurred in 2009. PBA previously reported on how the salon industry can take advantage of this provision. Click here to see a detailed example.
Extension of Enhanced Small Business Expensing

In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers may elect to write-off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Until the end of 2010, small business taxpayers are allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation).

How you might benefit: Last year, Congress temporarily increased the amount that small businesses could write-off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The bill would extend these temporary increases for capital expenditures incurred in 2009. PBA previously reported on how the salon industry can take advantage of this provision. Click here to see a detailed example.
5-Year Carryback of Net Operating Losses for Small Businesses

A net operating loss occurs when a taxpayer's business deductions exceed business income. Under current law, net operating losses (“NOLs”) may be carried back to the two taxable years before the year that the loss arises (the “NOL carryback period”) and carried forward to each of the succeeding twenty taxable years after the year that the loss arises. For 2008, the bill would extend the maximum NOL carryback period from two years to five years for small businesses with gross receipts of $15 million or less.

How you might benefit: The procedure of turning net operating losses into cash is the net operating loss carryback. A carryback is more complicated than a carryover because it involves prior years' tax returns. If a 2008 net operating loss is carried back to 2006, the deduction will decrease the amount of tax due for 2006, and the excess taxes are refunded. The refund puts immediate cash in the hands of the struggling business owner. Unlike a loan, a tax refund does not have to be repaid because it represents an overpayment of tax rather than a liability. In contrast to a carryback, a carryover saves taxes in future years, which does not provide the relief needed immediately. Click here for a more detailed explanation on NOLs.
Temporary Small Business Estimated Tax Payment Relief

The bill reduces the 2009 required estimated tax payments for certain small businesses.
Under present law, the income tax system is designed to ensure that taxpayers pay taxes throughout the year based on their income and deductions. To the extent that tax is not collected through withholding, taxpayers are required to make quarterly estimated payments of tax. The required annual payment is the lesser of 90% of the tax shown on the return or 100% of the tax shown on the return for the prior taxable year (110% if the adjusted gross income for the preceding year exceeded $150,000).

How you might benefit: This bill provides that the required annual estimated tax payments (of a qualified individuals) for taxable years beginning in 2009 is not greater than 90 % of the tax liability shown on the tax return for the preceding year.
Incentives to Hire Unemployed Veterans and Disconnected Youth

Under current law, businesses are allowed to claim a work opportunity tax credit equal to 40 percent of the first $6,000 of wages paid to employees of one of nine targeted groups. The bill would create two new targeted groups of prospective employees: (1) unemployed veterans; and (2) disconnected youth.

How you might benefit: An individual would qualify as an unemployed veteran if they were discharged or released from active duty from the Armed Forces during the five-year period prior to hiring and received unemployment compensation for more than four weeks during the year before being hired. An individual qualifies as a disconnected youth if they are between the ages of 16 and 25 and have not been regularly employed or attended school in the past 6 months. The credit is available to an employer for qualified wages paid to members of all targeted groups. Click here to learn more.

For a more detailed summary of business tax breaks included in the Stimulus bill, please contact Sam Leyvas, PBA's director of government affairs, at 800.468.2274 x3437 or sam@probeauty.org.

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Stimulus & You: Individual Tax Breaks

2009-02-17T10:12:00.003-07:00

Below is a snapshot of some of the individual tax breaks included in the Stimulus bill:

“Making Work Pay” Tax Credit

The Stimulus bill cuts taxes for more than 95% of working families in the United States. For 2009 and 2010, the bill would provide a refundable tax credit of up to $400 for working individuals and $800 for working families.

How you might benefit: About $116 billion would help people who make less than $75,000 a year (twice that for couples) and who have taxes withheld. Individuals will get $400; couples, $800. Individual beneficiaries will start to see about $15 extra per week in their paychecks starting in July. Next year, the $400-per-person benefit will be spread over 52 weeks, so the extra per paycheck will be closer to $7.50.
Extension of AMT relief for 2009

Each year, Congress creates a temporary fix to keep millions of people from paying the alternative minimum tax (AMT). This bill provides more than 26 million families with tax relief in 2009 by extending AMT relief for nonrefundable personal credits and increasing the AMT exemption amount by $70,950 for joint filers and $46,700 for individuals.

How you might benefit: It is not applicable to 2008 taxes due on April 15. Those with 2009 earnings from $200,000 to $500,000 will get about $4,800 in 2010. For incomes of $75,000 to $100,000, the 2010 tax savings will be $500.
Car Buyer Tax Deduction

The bill provides all taxpayers with a deduction for State and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009. This deduction is subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return).

How you might benefit: For the rest of 2009, you’ll be able to deduct the state and local sales and excise taxes you pay on the purchase of a new (not used) car, light truck, recreational vehicle or motorcycle. This will be an “above-the-line deduction” – which means that you can take it regardless of whether you itemize other deductions on your tax return. The deduction does not apply on spending above $49,500.
“American Opportunity” Education Tax Credit

The bill provides financial assistance for individuals seeking a college education. For 2009 and 2010, the bill would provide taxpayers with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year.

How you might benefit: Under this new tax credit, taxpayers will receive a tax credit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000 of tuition and related expenses paid during the taxable year. Forty percent (40%) of the credit would be refundable. This tax credit will be subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly).
Refundable First-time Home Buyer Credit

Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).

How you might benefit: The new law eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and extends the availability of the credit for homes purchased before December 1, 2009. You forfeit the credit if you sell the house within three years.

For a more detailed summary of individual tax breaks included in the Stimulus bill, please contact Sam Leyvas, PBA's director of government affairs, at 800.468.2274 x3437 or sam@probeauty.org.

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PBA's 2008-2009 National Profile of the Salon Industry

2009-02-09T15:37:00.007-07:00

The U.S. economy is currently in the midst of its most challenging period since the early 1990s. The economy lost 760,000 jobs during the first nine months of 2008, and national gross domestic product likely contracted during the second half of the year. Add in the turmoil in the global financial markets, and it is likely that an economic recovery will not gain a firm footing until well into 2009.

Recessions are nothing new for the country, and indeed the national economy experienced a downturn as recently as the beginning of this decade. But the difference between the current economy and the last recession is that many consumers in the early 2000s were able to tap into the equity of their homes to bridge the gap during the downturn. As a result, consumer spending continued to grow, even though the overall economy contracted. With falling home prices and the difficulty obtaining credit, that is simply not an option for many consumers today.

The current perfect storm of declining wealth, elevated food and energy prices and stagnant wages have all combined to put consumers in a precarious position. Consumer spending plunged 3.1% in the third quarter on an inflation-adjusted annualized basis-its first decline since 1991 and its largest drop since 1980.

During periods such as this, the economy is typically propped up by Main Street sectors-businesses that are the cornerstones of their local communities. Businesses that provide products and services like the local restaurant, market or salon are essential to the day-to-day lives of Americans.

The Professional Beauty Association's new "National Profile of the Salon Industry" illustrates how the American salon industry is an engine of growth for Main Street, even during times of economic uncertainty.

The U.S. salon industry registered steady growth in recent years. Although much of the growth in salon establishments was driven by substantial increases in the number of non-employer establishments, there were also steady gains in the number of employment-based salon locations. Between 2001 and 2006, the number of employment-based salon establishments in the U.S. increased 10%, according to the Bureau of Labor Statistics. During the same five-year period, the number of employment-based businesses in all industries also grew 10%, which illustrates the consistent contribution to the economy of employment-based salons.

Visit probeauty.org/resources and log in with your section password to download the complete 2008-09 edition of the "National Profile of the Salon Industry". The profile is complimentary for all PBA members and $149 for non-members.

Is Nail Polish Safe? Answers to Common Consumer Questions

2009-02-09T15:31:00.009-07:00

Is nail polish safe? Are nail technicians who use nail polish safe? As consumer demand for information continues to grow, PBA's Nail Manufacturers Council (NMC) and the International Nail Technicians Association (INTA) recently launched a co-branded education program for nail salons, technicians, and consumers to help answer common questions about nail polish products.

"We get calls all the time from salon owners asking for information to help them respond to questions from clients", said Steve Sleeper, executive director of PBA. "We always refer our owners to the NMC publications...and continually get rave reviews about how well written and consumer friendly they are".

Facts About Salon Nail Polish Products for Consumers and What to Look Out for in a Nail Salon are available now for download at www.probeauty.org/nmc.

PBA's Nail Manufacturers Council is made up of companies that produce nail care products. One of the Council's overarching goals is to educate nail industry professionals and consumers about issues affecting nail care products and services.

To learn more, visit www.probeauty.org/nmc

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Labor Unions and the Salon Industry

2009-02-09T15:11:00.012-07:00

The so-called Employee Free Choice Act, also known as "Card Check", is likely the biggest legislative threat you've never heard of.

The nation's labor unions are aggressively pushing a far-reaching and radical agenda to, in its own words, "take back the economy." Headlining the agenda is legislation to make it cheaper, faster and easier to unionize Main Street businesses and small retail establishments.

Under existing law, employees are allowed to vote for union representation through secret ballot elections. To begin organizing workers, a union must solicit employee signatures on union authorization cards. Once the union has collected signatures from enough employees-a minimum of 30 percent-then the union can request an election. If a majority of workers-expressing their choice in the privacy of the voting booth-support the union, then the employer must begin bargaining with the union. If most workers vote against the union, then it does not represent them and must cease its organizing activities. Unions win recognition in over 60 percent of these elections.

Under the proposed Card Check legislation, an employee's right to vote by secret ballot is effectively eliminated. The law would require employers to recognize a union- without an election-once organizers collect signatures on authorization cards from a majority of employees. Under the proposed law, holding a secret ballot election once unions collect cards from a majority of workers would become illegal. Critics charge that without a secret balloting process, workers are open to undue pressure and coercion from union organizers.

Card Check would make it cheaper, faster and easier to unionize Main Street businesses, small service and retail establishments and industries that have never experienced unionization before - including the professional salon industry. For example, in a business with 10 employees, union organizers would need only 6 signatures to force the business to recognize and bargain with the union. Employers may not even realize they are being targeted.

"A business owner can go home on Friday thinking everything is OK and come back on Monday and find out that the union had gotten employees to sign the card over the course of a weekend without the employer having any idea that there was an effort under way," said Sam Leyvas, PBA's director of government affairs. He adds, "Small businesses are particularly vulnerable because they may not have the legal resources needed to withstand a unionizing campaign."

There is strong support for Card Check legislation by some Members of Congress and the Obama Administration. Labor Unions are expected to make a very public push this year to get Card Check legislation on Congress’s agenda. However, concerns over the state of the economy is likely to push Card Check off the table for the time being.

Watch YouTube Video on Card Check

View, Print, and Share Background Document:
Card Check and the Salon Industry Background

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TSA to Relax “3-1-1” Regulations

2009-02-09T14:48:00.002-07:00

The Transportation Security Administration (TSA) has said it expects to lift restrictions that limit passengers to carrying 3-ounce bottles of liquids, gels and aerosols in airplane cabins. The organization says it expects the current regulations will be relaxed by the end of 2009, allowing passengers to carry normal-sized shampoo bottles, skin care products and other larger personal care items on board - but still in separate bags. Passengers would still have to remove liquids from carry-on bags at airport checkpoints and put them through X-ray machines separately.

The changes are expected because better technology will enable checkpoint X-ray machines to spot dangerous liquids. X-ray machines currently can't tell the difference between harmless fluids and explosives. According to the TSA, that forces them to limit passengers to 3 ounces of liquid or less as a precautionary measure.

TSA says that by the end of 2010, the widespread use of new X-ray technology will mean that there will be no restrictions to carrying liquids on board aircraft.
The restrictions are also likely to be eased in airports of other countries that adopted similar liquid restrictions several years ago after authorities disrupted an alleged plot to bomb trans-Atlantic flights with liquid-based explosives.

Initially, airport security regulations in other countries introduced total bans on taking liquids aboard flights – later relaxing the regulations to allow smaller liquid containers. Personal care and beauty companies indicated that the initial ban and the ensuing confusion impacted sales of duty-free products.

In 2008, the Professional Beauty Association (PBA) wrote to Rep. Zoe Lofgren (D-California) – a senior member of the Committee on Homeland Security – to share concerns about problems associated with enforcement of the so-called “3-1-1” rule by TSA and its impact on the beauty industry.

In response to increased demand for smaller-sized personal care products, suppliers have created packaging and related items that can help beauty and personal care companies answer the needs of on-the-go customers.

| The Politics of Beauty: Obama & The New Congress

2008-12-15T16:34:00.004-07:00

With President-elect Obama set to take office along with control of the U.S. Congress held by one poltical party, the professional beauty industry in can expect politics to play an increasing role in how the industry conducts business. As the “voice” of the industry, the Professional Beauty Association (PBA) aims to keep its membership of salons, spas, manufacturers and distributors actively engaged in legislative matters that will impact their businesses. Some of the key issues PBA has identified include:

New Beauty & Cosmetic Regulations: Cosmetic manufacturers that export - take note! The Food & Drug Administration (FDA) Globalization Act of 2008 will likely see more intense action in 2009. This proposed act includes mandatory registration of “any facility engaged in manufacturing, processing, packaging or holding cosmetics in the U.S. or for import” into the United States. Registration is required on an annual basis and facilities will be subject to a $2,000 registration fee. Other provisions include mandatory adverse reporting, mandatory facility inspections and an annual registration fee of $10,000 for imports. PBA is concerned that the current language is overly ambiguous and a burden on small businesses.

“Card Check” Law (Employee Free Choice Act): This law could have a significant impact on the beauty industry and many other Main Street businesses. Card Check would make it cost effective for unions to target Main Street businesses, such as beauty/nail salons, spas, restaurants and other retail establishments, which have never experienced unionization before. The law would eliminate the secret ballot process currently used for unionization in the workplace and replace it with a Card Check system. Once a union persuades more than half of workers to simply sign membership cards, the union would automatically be certified. Without the secret ballot process, employees would be exposed to intimidation and bullying tactics from union organizers and ultimately deprived of their right to vote in private. From large-scale beauty manufacturers to individual beauty professionals, this is a law that could have serious consequences for the beauty industry.

FICA Tax Credit for Salons/Spas: This proposed legislation has actively been supported by PBA for the last several years. The bill’s principal sponsor, Rep. Shelley Berkeley of Nevada, has retained her seat in the U.S. House and is poised to keep this issue a priority. Additionally, 2009-2010 are likely to be years in which we will see a flurry of tax legislation in Congress – giving our industry newfound opportunities to advocate for a FICA tax credit. The FICA Tax Credit would give salon/spa owners a dollar-for-dollar tax credit on the FICA taxes paid on employee’s tip-income (employer’s currently do not share that income but are taxed on it) – putting the professional beauty industry on equal footing with the restaurant industry. This legislation would significantly help small and large salons and spas to lower their tax liability and allow them to further invest in their businesses.

Credit Card “Interchange Fees”: For years, small businesses like salons and spas, restaurants and other merchants have been waging a quiet war with the credit card companies over “interchange fees” – the hidden costs of processing credit and debit card transactions that can gobble up a store’s profits while earning banks a pretty penny. With a new Congress set to take power in January, we’re likely to see the resurrection of the “Credit Card Fair Fee Act” – federal legislation that would require credit card companies with “substantial market power” to negotiate with merchants and retailers on terms for fees paid when processing card transactions. “Interchange” is a percentage of each transaction that credit card companies collect from merchants every time a credit/debit card is used to pay for a purchase. The fee varies with type of card, size of merchant and other factors, but as much as $2 of every $100 consumers spend goes to card issuers

State-by-State Cosmetology License: At the state level, PBA is working on raising awareness with state legislatures about license mobility. Salon professionals can sometimes face state regulations that limit their ability to practice their craft and conduct business when moving across state lines. License mobility allows a licensed professional in good standing – whose documentation in education and experience is substantial – to qualify for licensure from one state to another without further examination. To sign the petition and support other stylists across the nation, visit probeauty.org/licensemobility.

"In order for the entire professional beauty industry to move forward, we must have a unified voice and actively engage government officials on the issues that have an impact on our livelihoods, our employee's livelihoods and the future prosperity of the industry as a whole. I urge everyone to become active with PBA's government affairs efforts and do your part for the betterment of our industry," states Lee Rizzuto Jr, Chair of PBA's Board of Directors and Senior Vice President of Conair.

For more on PBA and other legislative matters, visit: probeauty.org/advocacy.

| QUIZ: Are You Missing Valuable Year-End Tax Breaks?

2008-12-15T16:10:00.011-07:00

Beauty industry tax guru Larry Kopsa CPA, of Kopsa Otte CPAs & Advisors, can sum it up in two words- Tax Planning! According to Kopsa, while people normally associate April 15th with tax planning, they really should be thinking about it before December 31st.

The end of the year is the deadline to take advantage of some of the most valuable planning opportunities. And proactive tax planning is the key to minimizing your tax and can make all the difference between a pocket full of cash and a pocket full of lint.

Here is a quick quiz to help you decide if you need to see your accountant for year-end tax planning.

In 2008 or in 2009, did you or will you:

__Increase or decrease your business income

__Need asset protection - by setting up a corporation or LLC

__Paying too much Self Employment Tax

__Buy or lease business equipment

__Considering fringe benefits for employees

__Want to transfer income to children or parents

__Hire contractors or employees for your business

__Start using your home for business

__Close or sell a business

__ Start or invest in a new business

__Start using your car for business (other than driving to or from work)

__Sell business assets

__Harvest tax losses

__ Have large capital gains or losses

__Marry or divorce

__Have a baby or adopt a child

__Buy or sell your home

__Make gifts of more than $12,000 ($13,000 in 2009) to any one person

__Start estate planning

__Buy, sell, or exchange investment real estate

Did you answer “yes” to any of the questions? If so, then you can profit from year-end tax planning. Consider calling your accountant prior to December 31st.

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Larry Kopsa CPA is a partner in Kopsa Otte CPAs. Larry is a frequent speaker at beauty industry programs.Disclaimer: The information provided does not constitute legal, tax, accounting, or financial advice and is offered as an information service only. Those seeking specific advice should contact a professional advisor. No liability whatsoever is assumed in connection with the use of this information.

Did You Remodel or Invest in New Equipment in 2008? You'll Like This...

2008-12-15T15:56:00.006-07:00

NEW in 2009! Stimulus bill includes provisions to extend both accelerated depreciation and Section 179 write-offs as detailed below. Click here for latest update.

There was more to the Economic Stimulus Act than those tax rebate checks earlier this year. Included in the Economic Stimulus Act were two provisions to help small businesses. So far, these opportunities are only available in 2008, so be sure to check with your tax professional to see if you qualify.

These provisions did not receive as much press as the rebates did. But, overlooking these provisions could be a costly mistake. Here is what you need to know to take advantage of the new law.

Leasehold Improvements

If you made any leasehold improvements for your salon/spa or distributor retail store this year, you may be eligible to take advantage of some sizeable benefits.

Before the Stimulus Act, leasehold improvements were depreciated and deducted over 39 years regardless of the term of the lease. Here is the new law. For 2008, and 2008 only, the taxpayer can deduct 50% of the cost in 2008.

A couple of examples will show how important this can be for your business.

Example 1: Normal Law

Hairball Beauty spent $78,000 for a major remodel (not including fixtures and equipment). Under the normal laws, Hairball Beauty will be able to deduct $2,000/year ($78,000 ÷ 39 years). Assuming a 33% tax bracket, Hairball Beauty will save a measly $660 per year for 39 years.

Example 2: Stimulus Act

Same facts as Example 1, except that Hairball Beauty did the remodel in 2008. Because of the Economic Stimulus Act, Hairball Beauty can deduct 50% in 2008, plus normal depreciation on the remaining 50%. So in 2008, Hairball Beauty has a write-off of $39,000 (78,000 x .50) + $1,000 (39,000 ÷ 39 years). This causes a tax savings of $13,200, plus $330 for the next 38 years.

There are some specific rules that must be followed, so make sure you check with your tax advisor for the best advice.

Fast Write-off of Equipment

Another Stimulus Act enhancement enacted by Congress is a higher deduction if you purchased equipment. This is commonly referred to as a "Section 179 Deduction." The deduction allowed in the pre-stimulus law was quite generous, so this may or may not impact your business.

Under the pre-stimulus law, if you purchased equipment you could elect to write off up to $128,000 of business equipment in the year that you placed the equipment in service, versus depreciating the equipment over 5 to 7 years. The Stimulus Act increases this amount to $250,000 for 2008.

If you made some major equipment purchases in 2008, this could provide you with a large tax write-off.

Once again, there are some detailed rules that you must focus on, so contact your tax advisor to see how this fits your fact pattern.

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Larry Kopsa CPA is a partner in Kopsa Otte CPAs. Larry is a frequent speaker at beauty industry programs.

Disclaimer: The information provided does not constitute legal, tax, accounting, or financial advice and is offered as an information service only. Those seeking specific advice should contact a professional advisor. No liability whatsoever is assumed in connection with the use of this information.

| Gov. Schwarzenegger Promises to Veto Health Care Tax

2007-08-28T16:19:00.001-07:00

California Governor Arnold Schwarzenegger has publicly stated that he will veto legislation to require business owners to use a percentage of their payroll to pay for employee health care.

The legislation (AB 8) proposed by Assembly Speaker Fabian Nunez (D-Los Angeles) would require employers in the state to earmark at least the equivalent of 7.5% of their payroll for their employees' heath care.

National research suggests that the 7.5% payroll tax would have a significant impact on California's small businesses. Some projections estimate a loss of 249,000 jobs within the first five years of enactment.

For his part, Gov. Schwarzenegger has proposed a competing plan to deal with the state's health care concerns. Under the governor's plan, employers would have the option of either providing their workers health insurance, or paying into a state fund that would offer it to uninsured workers.

To pay for his program, the governor proposes a 4% "provider tax" on hospital revenues, 2% on doctor revenues, and 4% on employers with at least 10 workers if they do not provide health insurance.

For more information, please contact Sam Leyvas at 800.468.2274 x118.
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www.probeauty.org/advocacy

posted: sam leyvas
professional beauty association

| Individual Alternative Minimum Tax (AMT)...What's the Buzz All About?

2007-08-28T16:07:00.001-07:00

Dr. Martin Regalia: ECON 101
First in a two-part series

The talk on Capitol Hill about the alternative minimum tax, or AMT, has become very lively this year-perhaps more so than in previous years. What's it all about?

The AMT comes in two flavors-individual and corporate. Most of the recent talk involves the individual AMT, which is levied on individuals, estates, and trusts. While it can, therefore, affect businesses whose taxes are imposed on form 1040-including sole proprietors and those with S corporation, partnership, or LLC interests-having reportable business activity is not a prerequisite.

The AMT was enacted to ensure that high-income taxpayers pay some tax. Through the extensive use of tax incentives, some high-income taxpayers can greatly reduce or eliminate their income tax liabilities. The problem is that the AMT does not accomplish what it was designed to do.

Before we get into why the AMT misses the mark, let's take a look at how it works.

Tax benefits realized through certain tax deductions and exemptions are designated "tax preference items" and, together with certain "tax adjustment items," are added back to regular taxable income in arriving at alternative minimum taxable income (AMTI).

For individual taxpayers, AMTI is then reduced by an exemption. For 2006, this was $62,550 for married filing jointly or qualifying widow or widower, $42,500 for single or head of household, and $31,275 for married filing separately.

This recomputed income is the base upon which the AMT is calculated. It is subject to a two-tier tax rate structure. The first tier taxes the first $175,000 ($87,500 for married filing separately) of AMTI in excess of the exemption amount at a 26% rate. The second tier subjects additional AMTI to a 28% rate. However, special rates apply to net long-term capital gains and qualified dividends, and certain tax credits are allowed.

The AMT is then paid to the extent that it exceeds the regularly computed income tax liability.

While these tax preferences and adjustment items can include some portion of business-related deductions, many taxpayers are threatened with AMT because of non-business-related items. The irony is that much of the public was led to believe that the AMT's purpose is to get rich businesspeople to pay some taxes when they may not otherwise.

The AMT is a paperwork nightmare. The 2006 AMT form for individuals is a 55-line, 2-page document with 10 pages of instructions. It has 26 income adjustment lines for computing the AMTI. Many of these adjustments require their own side computations. Numerous taxpayers have to sink considerable time and effort into completing the calculations (or pay their return preparers to do so), only to find that they owe no AMT. This exercise illustrates the vagaries of our Internal Revenue Code and the AMT as a "tax system within a tax system." Think about having to do tax planning for both the regular income tax and the AMT!

How do you go about planning to avoid or minimize your potential AMT liability? It's based largely on conjecture, as Congress has adjusted the AMT calculation on an annual basis for several years running. And guess what? The 2007 adjustments have not been enacted yet. The House and Senate have very different ideas about what changes should be made this year. Maybe they'll get it done by the end of the year, leaving you little or no time to plan to reduce your 2007 tax liability.

Congress feels it must adjust the AMT calculation this year for a very simple reason: The AMT is being avoided by the wealthy and, instead, is ensnaring taxpayers it never intended to target-the middle class. Many wealthy taxpayers have the wherewithal to procure effective tax planning and to structure their affairs to avoid the AMT. But there are additional reasons why this tax is missing its target.

First, the "tax preferences" and other adjustment items used to calculate the AMT don't effectively target the tax minimization schemes or tax attributes of the tax-avoiding wealthy. On average, the two biggest AMT-producing adjustments are for state and local tax deductions and personal exemptions for oneself, spouse, and dependents-things a lot of ordinary people have.

Second, the tax code fails to include an inflation adjustment for the AMT exemption. The original exemption amount was adequate in holding the AMT at bay for the middle class. With time, the value of the exemption has gradually eroded, exposing more taxpayers to AMT.

Finally, the Bush tax cuts-especially the 2001 and 2003 legislation-reduced individuals' regular income tax liability, in many cases lower than the AMT, thus triggering it. The administration most likely knew this would happen but was unable to fix the problem without substantially raising the "cost" of the cuts and jeopardizing their passage.

The AMT, if not modified, is projected to be levied on 23 million taxpayers in 2007, rising to 31 million in 2010 and 36 million in 2017. This would be very disruptive, if not chaotic, to the taxpaying public, exacting a heavy toll in time and in additional tax liability. So, what to do?

Since 2001, the legislative and administrative branches have taken the modest step of slowing the reach of the AMT by annually raising the exemption. While this plugs the dike for the time being, new annual plugs are getting more and more costly. Many, therefore, advocate a longer-term or permanent solution, but how we get there is a point of great contention.

The 10-year cost to outright repeal the AMT is projected to be in the neighborhood of $800 billion if the Bush tax cuts are not extended-ballooning to $1.3 trillion if they are.

With the PAYGO (pay as you go) rules revived in the 110th Congress, cuts to or repeal of the AMT must be paid for with some combination of tax increases and spending cuts. The recent inability of Congress and the administration to enact meaningful spending cuts means that painful tax increases will likely be the result of an AMT fix.

Some members of Congress argue that AMT reform shouldn't be offset by tax increases or spending cuts because Congress never counted on AMT being the revenue raiser it is today. They contend that leaving out an inflation adjustment was an oversight by Congress. If that argument is accepted, we tack on another trillion dollars in debt, give or take a few hundred billion, and gut the PAYGO rules. This probably won't fly.

Some folks support reworking the AMT to lift the burden off the middle class and put it on the wealthy. Others see the AMT "crisis" as an opportunity to segue into comprehensive fundamental tax reform- not a bad idea, perhaps. The Internal Revenue Code really does need a long-overdue tune-up.

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www.probeauty.org/advocacy

posted: sam leyvas
professional beauty association

Originally published July 2007. Reprinted by permission, uschamber.com, August 2007. Copyright 2007 U.S. Chamber of Commerce - All Rights Reserved.

| Beauty Industry to take Capitol Hill by Storm

2007-08-28T15:35:00.001-07:00

Each year, PBA and other members of the Professional Beauty Federation (PBF) invite Capitol Hill to share an evening with important members of the small business community – salon owners and licensed professionals.

During this year's 8th Annual Welcome to Our World event, the salon industry will ‘make over’ Congress. And as Congressional representatives and their staffs experience haircuts, manicures and massages, PBA members take the time to explain the issues that are critical to their success as small business owners: health care, the potential of a Tip Tax Credit, the labor shortage and
cosmetology education.

“This annual event brings a $60-billion industry to Capitol Hill in just one night,” explains Eric Schwartz, president of the Professional Beauty Federation. “Our message is that the entire industry stands united in asking for support of these important issues.”

This year's Welcome to Our World is scheduled for October 16, 2007 in Washington, DC. Nail technicians, hair stylists, and greeters are still needed. For more information on how to volunteer, please contact Sam Leyvas at 800.368.5242 x118 or Samantha Alvis at x117.

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www.probeauty.org/advocacy

posted: sam leyvas
professional beauty association

| Is Nail Polish Safe? Answers to Common Consumer Questions

2007-08-28T14:47:00.001-07:00

"We get calls all the time from salon owners asking for information to help them respond to questions from clients", said Jim Garnett, PBA's membership director. "We always refer our owners to the NMC publications...and continually get rave reviews about how well written and consumer friendly they are".

Facts About Salon Nail Polish Products for Consumers and What to Look Out for in a Nail Salon are available now for download at www.probeauty.org/nmc.

PBA's Nail Manufacturers Council is made up of companies that produce nail care products. One of the Council's overarching goals is to educate nail industry professionals and consumers about issues affecting nail care products and services.

For more information, please contact NMC Co-chairs Doug Schoon, Creative Nail Design at dschoon@cox.net or Eric Schwartz, OPI Products Inc. at erics@opi.com.

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www.probeauty.org/advocacy

posted: sam leyvas

professional beauty association

| PBA Secures Major Victory with Small Business Administration

2007-08-27T14:45:00.001-07:00

In a major victory for the Professional Beauty Association and the salon industry, the Small Business Administration (SBA) recently issued a ruling that preserves the small business designation for hundreds of salon/spa businesses nationwide.

When Congress first created the SBA, one of the basic questions was what numerical definition should be used to define small businesses -- industry by industry -- to determine what businesses were eligible for SBA benefits. In 2004, the SBA considered changing how the federal government defined a “small business” for many industries – including the salon industry. Specifically, the proposed change would have shifted the designation for salons from a $6 million in annual sales maximum threshold, to a new size standard of 50 employees maximum threshold.

In addition to resulting in the loss of small business status for hundreds of salon businesses – and with it their eligibility for SBA programs and assistance – the change would have placed a tremendous administrative recordkeeping burden on the thousands of salons that would still qualify as a small business.

In addition to submitting formal testimony detailing the negative impact that SBA’s proposal would have had on the salon industry, PBA members also testified at three public hearings sponsored by SBA in Los Angeles, St. Louis and New York. “We were extremely aggressive on this issue from the beginning”, said Steve Sleeper, PBA's executive director.

Ultimately, the combined efforts of PBA and its members were instrumental in convincing SBA that this proposal was not in the best interests of the salon industry. As a result, in the July 27, 2007 issue of the Federal Register, SBA formally announced that they would not convert any industries from a receipts-based size standard to a standard that is based on the number of employees.

“This victory demonstrates the growing influence of PBA and the salon industry
among policy makers and regulatory agencies”, said John Heffner, chair of PBA’s governing council. “Hopefully, this helps sets the stage for continued success in the future”.

For more information, please contact Sam Leyvas at 800.468-2274 x118 or sam@probeauty.org.

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www.probeauty.org/advocacy

posted: sam leyvas
professional beauty association

| Beauty Industry Alert: Employer "No Match" Letters

2007-08-27T14:18:00.001-07:00

In a move that will likely impact employers in all industries -- including manufacturers, distributors, and salons/spas -- the Department of Homeland Security this month issued a regulation that set forth procedures for employers who receive a “no-match” letter from the Social Security Administration (SSA).

These “no-match” letters are nothing new, and are sent to thousands of employers each year by SSA when employees’ names and corresponding Social Security numbers provided on W-2 forms do not match SSA’s records. However, the new DHS regulations require no-match letters issued by SSA to be accompanied by a letter from U.S. Immigration and Customs Enforcement (ICE) which informs employers on how to respond to the no-match letter so they are compliant with U.S. immigration laws.

"If employers receive a no-match letter, it's critical that they closely follow the specific steps outlined in the letters from SSA and ICE", said Steve Sleeper, PBA's executive director. "It's also important that employers do not assume that a Social Security mismatch is the result of wrongdoing on the part of their employee".

More regulations are expected in the months ahead, including a reduction in the number of documents that employers must accept to confirm the identity and work eligibility of their employees. Currently, 29 categories of documents can be used to establish identity and work eligibility, so a reduction in this number could potentially ease the burden on employers. PBA will stay on the top of this issue, and keep uppdated as additional information is released.

For more information, contact PBA's government affairs department at 800.468.2274 x118.

Fact Sheet on "No Match" Letters

Sample "No Match" Letter from DHS

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www.probeauty.org/advocacy

posted: sam leyvas
professional beauty association

| PBA Concerned that Elimination of LIFO Accounting Bad for Distributors & Manufacturers

2007-07-09T11:30:00.003-07:00

In late April of last year, the U.S. Senate proposed a permanent repeal of the use of the "Last-In, First-Out" (LIFO) inventory accounting method-an action that would translate into a massive tax increase for hundreds of thousands of American businesses. LIFO is an inventory accounting method used by companies throughout the U.S. economy to determine both book income and tax liability. Book income is the amount of earnings shown on business financial statements. Tax liability is the amount of income tax owed to the government.

The restricted use or outright repeal of LIFO is likely to have far-reaching and potentially damaging effects on any company within the professional beauty industry that relies on effective inventory management to remain profitable. Distributors, which by definition hold and maintain extensive inventories, could be seriously impacted by a loss of revenue through a largely increased tax burden.

LIFO repeal was apparently proposed in part due to a mistaken belief that LIFO is a “tax loophole” or that it is set to disappear from use. In fact, LIFO is an established, widely-accepted inventory accounting method that has been used by large and small companies throughout the U.S. economy since the 1930s.

Although the proposed repeal of LIFO was defeated last year, it is very likely that this topic will resurface – particularly given the increased pressure from Congress to close the federal "tax gap".

Background Information on LIFO Accounting

PBA is very interested in knowing how many of our member-companies use LIFO inventory accounting. Please contact Sam Leyvas, PBA's Government Affairs Director at 800-468-2274 x118.

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association

| Congress Considering Mandatory Paid Sick-Leave for Small Businesses

2007-07-09T11:30:00.002-07:00

Sen. Edward Kennedy (D-Mass.) and Rep. Rosa DeLauro (D-Conn.) have reintroduced the "Healthy Families Act" (S.910/H.R.1542), which would require small businesses that employ 15 or more workers to provide each employee with seven days of paid sick leave. Both bills are currently being considered in committee, and Congress is expected to act on them later in 2007.

The legislation would require employers to provide paid sick leave for full-time employees to take care of themselves, a family member, or anyone else whose close association with the employee is the equivalent of a family relationship. The legislation would apply to employees who work 30 hours or more per week, but would also require prorated leave for part-time employees working between 20 and 30 hours per week.

Small-business owners worry that such legislation can be expensive, extremely rigid and in a lot of cases, unnecessary. According to an NFIB Research Foundation Small-Business Poll, small-business owners often successfully compete for employees on the flexibility they allow their workers. Moreover, a recent survey of salon/spa owners published by the Professional Beauty Association identifies employee recruitment and retention as the industry’s top challenge. This suggests that market pressures ensure that employers will continue to offer leave regardless of any legislative action.

Paid leave legislation is also being considered at the state level and is currently pending in Massachusetts, Maine, Minnesota, New Jersey and North Carolina. Similar legislation was defeated in Connecticut, Florida, Maryland and Minnesota.

PBA Salon/Spa Section's 10th Anniversary Survey Report

PBA members can email their elected officials on this issue by visiting PBA’s new online Advocacy Center.

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association

| Supreme Court Eases Barriers on Manufacturer Price Maintenance Agreements

2007-07-09T11:25:00.001-07:00

On June 28th, the Supreme Court issued a ruling that now permits manufacturers to adopt so-called “resale price maintenance agreements”. The ruling has essentially reshaped a 96-year-old ban on manufacturers, distributors, and retailers setting price floors for products. In a 5-4 decision, the Supreme Court said that agreements on minimum prices are legal if they promote competition.

The Supreme Court ruled in 1911 that although manufacturers could suggest a retail price, federal anti-trust laws prohibited them from requiring minimum pricing agreements.

The Court’s latest decision was based on an appeal brought by Leegin Creative Leather, a luxury leather goods company in California. The company had been ordered by a lower court to pay close to $4 million in damages after it stopped shipping handbags to a Dallas-area retailer. Leegin’s stopped sending products to the retailer after it repeatedly discounted a popular line of handbags by as much as 20 percent. The retailer sued Leegin, arguing that he discounted the handbags to stay competitive and that losing the line – its best selling product – caused “permanent” damage to his business.

However, Leegin Creative Leather argued that a complete ban on minimum pricing agreements is out of step with modern economics. Leegin’s owner argued that his ability to set a minimum price is one of the few ways his company can actually establish its brand – particularly when compared with much larger corporations.

The Supreme Court, in it its traditional conservative and liberal split, agreed with Leegin’s arguments. With its ruling, the Court replaced the old antitrust standard that automatically assumed that minimum pricing agreements were illegal. Instead, the opinion authored by Justice Anthony Kennedy, creates a new rule that requires courts to do a case-by-case analysis on whether pricing agreements for a particular product violates federal antitrust laws. “Vertical agreements establishing minimum resale prices can have either procompetitive or anticompetitive effects, depending upon the circumstances in which they are formed”, Kennedy said.

The case is Leegin v. PSKS.

For more information, contact PBA's government affairs department at 800.468.2274 x118 or visit us online at http://www.probeauty.org/advocacy

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association

| Nail Manufacturers Council Educating Salon Professionals and Consumers

2007-07-09T11:04:00.001-07:00

PBA's Nail Manufacturers Council recently published a comprehensive series of brochures aimed at educating consumers and professionals alike on health and safety issues. The brochues have been translated into several languages and are available online at www.probeauty.org/nmc.

The Nail Manufacturers Council (NMC), a subset of the Professional Beauty Association's manufacturer section, is made up of companies that produce nail care products. The NMC seeks to educate nail industry professionals and consumers about issues affecting nail care products and services.

For more information, please contact NMC Co-chairs Doug Schoon, Creative Nail Design at dschoon@cox.net or Eric Schwartz, OPI Products Inc. at erics@opi.com.

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association

| State & Federal Lawmakers Considering Action on Merchant Credit Card Fees

2007-07-09T10:33:00.001-07:00

Nine states have introduced a total of 15 bills concerning the credit card interchange fees that cost U.S. merchants and consumers $36 billion last year, according to a survey of state legislative activity compiled by the Merchants Payments Coalition. Legislative proposals range from those that would prohibit card-issuing banks from charging interchange fees on the sales tax portion of a retail transaction to requirements that credit card companies fully disclose their rules and policies to merchants and consumers.

The interchange fee is a percentage of each transaction that credit card companies collect from merchants every time a credit or signature debit card is used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to two percent for most transactions. Visa and MasterCard interchange fees totaled $36 billion in 2006, up 17 percent from 2005 and 117 percent since 2001, according to some estimates. Visa and MasterCard do not disclose interchange fees on monthly statements, and their operating rules prohibit retailers from showing the charge on sales receipts.

Bills to ban interchange fees on the sales tax portion of transactions have been introduced in Florida, Kansas, Nevada, New York and Washington. Kentucky, Nebraska and Texas have introduced bills requiring credit card companies and issuing banks to be more transparent in disclosing rules and fees. Proposed legislation in Tennessee would cap interchange rates at 0.75 percent.

The U.S. House Judiciary Committee’s Antitrust Task Force is expected to hold a hearing on interchange fees this month. Members of Congress are expected to use the hearing to examine the impact of interchange fees on consumers and businesses as well as the antitrust law implications of the interchange fee system.

The hearing would be the fourth congressional session this year to examine credit card fees and the first to focus specifically on interchange fees. Last year, the Senate Judiciary Committee and a House Energy and Commerce Subcommittee held major hearings on whether interchange practices violate federal antitrust laws and the consumer protection impacts of the fees.

PBA members concerned about this issue can email their state and federal representatives using PBA's new "Find Your Elected Officials" page.

For more information, please contact Sam Leyvas, PBA's Government Affairs Director at 800.468.2274 x118.

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association

| PBA Scores on Capitol Hill; FICA Tax Bill Gains Powerful Allies

2007-07-09T10:00:00.001-07:00

Rep. Shelley Berkley (D-Nev.) and Sen. Blanche Lincoln (D-Ark.) - two very influential members of Congress's tax writing committees - have agreed to champion the Small Business Tax Equalization & Compliance Act on behalf of the professional beauty industry. If adopted, the legislation would give salon and spa owners a dollar-for-dollar tax credit on the 7.65% FICA taxes paid on employee tips. The legislation would also help ensure the IRS's enforcement efforts focus on those who do not pay taxes, rather than on those who do.

"Rep. Berkley and Sen. Lincoln are longtime supporters of small business and our industry," said Steve Sleeper, PBA executive director. "Having them as primary sponsors bodes very well for our industry."

A small group of industry leaders from around the country recently met with key members of the House and Senate tax writing committees to garner support for the FICA Tax Credit bill. "These meetings come at a very strategic time," said Frank Zona, chairman of PBA's government affairs committee. "With so many new faces in Washington, it's extremely important that we educate policymakers on the importance and timeliness of this issue."

"This was my first time on Capitol Hill," said Scott J. Buchanan, owner of New York's Scott J. Salons & Spas. "My message to Rep. Charlie Rangel and others from New York was that this is a common sense issue that's long overdue." PBA members Kris Carpenter, Daired Ogle, Regina Webb, Andrew & Frank Zona, Serena Chreky and Scott J. Buchanan also met with Sen. Max Baucus (MT), chairman of the Senate Finance Committee, and Rep. Ron Lewis (KY) and Rep. Sam Johnson (TX), both of the House Ways & Means Committee, among others.

The timing and strategic focus of these Capitol Hill meetings are a part of PBA's larger emphasis on a stronger and more comprehensive government affairs effort. PBA members are encouraged to contact their members of Congress to ask them to sign on as co-sponsors of the Small Business Tax Equalization & Compliance Act.

Photo Gallery

To learn how you can get involved in future Capitol Hill visits, or for more information on this issue, visit PBA’s new online Advocacy Center or contact Sam Leyvas at 800-468-2274 x118 or sam@probeauty.org.

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http://www.probeauty.org/

posted: sam leyvas
professional beauty association