IRS Gearing Up to Crack Down on Tips

Remember the time Biden claimed that the new IRS agent army he was looking to recruit would only target billionaires? It’s good times. If that’s the case, somebody should check to see if Bill Gates and Elon Musk have taken some side gigs slinging hash at a diner somewhere. (Of course, in Musk’s case It may be possible. if he can’t get 10 million more people to sign up for Twitter Blue.) It turns out that the Tax Man is launching an entirely new program. Take a hard look at tips Staff in the food and drink industry. That’s right. According to the IRS, waiters are taking in too much money as gratuities. Uncle Sam is determined to get his share of the action. (Fox News)

The Internal Revenue Service proposed a revenue procedure this week cracking down on service industry’s reporting of tips.

According to Monday’s announcement, the so-called Service Industry Tip Compliance Agreement program (SITCA), would be a voluntary tip reporting mechanism in which the IRS and service sector companies collaborate. The proposal includes the following: The IRS will provide the public with information You have until May 1st to give feedback before the program is implemented.

“Those 87,000 new IRS agents that you were promised would only target the rich…” Mike Palicz is the federal affairs manager for Americans for Tax Reform. “They’re coming after waitresses’ tips now.”

The IRS isn’t even trying to deny this. They actually put it there You can find it right here.

This is, for the time at least, what the agency calls a “research and development” “voluntary reporting system.” But, how long are you going to expect anything to do the IRS for? “voluntary?” If you take a closer look at the details, it sounds quite sinister. They’re describing something that results in the “monitoring of employer compliance based on actual annual tip revenue and charge tip data from an employer’s point-of-sale system.”

So it sounds like the IRS would basically be hosing up cash register data and counting all of the charges that are tallied as tips above and beyond the customer’s actual bill. They’re also offering assurances that they aren’t going to be coming after the employers. You can forget about it. They’re just going to make sure that the wait staff is faithfully listing all of their tips on their tax forms.

Since I can recall, this question has been a source of contention. This issue has never been resolved by the courts. The old belief was that tips were given out by customers depending on the quality of food and service they received. Long ago, it was believed that waiters and waitresses were paid less than other workers. The law actually allows waitstaff owners to pay them. You can earn as low as $2.13 an hr If the tip and base pay add up to the minimum federal wage. The best servers will be able to make up the difference by serving tips and earning more per hour than the federal minimum wage.

The entire concept of an “income tax” The compensation received by an employee is the basis of their salary. The wait staff’s tips shouldn’t be taxed at all because the patrons are not their employers and are under no obligation to tip them. It’s really more of a gift given in appreciation for good service.

But that probably won’t stop the IRS from doing this. And it’s policies like these that have made me develop a habit of always tipping in cash when we dine out, even if we pay for the meal with a debit card. My wife says I am a bit too generous with my tipping, but my experience shows that regular customers who tip well tend to get better service. It’s a pleasure to see the smiles on hardworking servers’ faces when they discover twenty-dollar bills they can put in their pockets and wait for them. As far as I’m concerned, owners of bars and restaurants should tell the IRS to keep its nose out of their employees’ tips.

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