LAS VEGAS (KLAS) — The Internal Revenue Service is proposing a voluntary tip reporting program aimed at employers in the service industry that it says would take advantage of technology and improve reporting compliance.
The program, which the agency is calling SITCA (Service Industry Tip Compliance Agreement), would decrease burdens on taxpayers and administrative stress on the agency and provide more transparency to certain taxpayers, according to a news release from the IRS.
The proposed program does not include tip reporting for employees and employers in the gaming industry, which has an existing program called GITCA (Gaming Industry Tip Compliance Agreement).
Under the program, employers would use their point-of-sale system to report actual tip revenue and be allowed adjustments for year-to-year tipping practices, the release said.
Participating employers would submit an annual report after the close of the calendar year which would reduce the need for compliance reviews by the IRS.
Employers would receive protection from liability under rules that define tips as part of an employee’s pay for calendar years in which they remain compliant with program requirements and also have flexibility to implement employee tip reporting policies that are best suited for their employees and their business model, the release said.
The agency said it is asking for public comment on the program, which would replace three compliance programs in place in the service industry (all for employers) — Tip Rate Determination Agreement (TRDA), Tip Reporting Alternative Commitment (TRAC) and employer designed TRAC (EmTRAC).
Deadline for public comment is May 7 and may be submitted by mail, CC:PA:LPD:PR (Notice 2023-13), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044, or electronically via the Federal eRulemaking Portal, www.regulations.gov.