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If your employees earn tips, beware new audits this fall

by on
in Human Resources

Count on the IRS to resume a controversial audit program aimed at businesses that flagrantly violate tip-reporting rules. It is set to restart on Oct. 1.

In addition, the IRS is allowing more employers to enter into voluntary tip compliance agreements. (IRS Notice 2000-21) Under these so-called Tip Reporting Alternative Commitment (TRAC) agreements, the IRS works with employers to determine the amount of tips workers generally receive. The employers agree to educate their employees and comply with the rules. In exchange, the IRS promises not to initiate "tip audits."

In the past, only the gaming, food and beverage, cosmetology and barber industries were able to make these deals. Now the IRS is expanding the program to include taxicab, limousine, airport skycap and car wash companies.

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