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As a restaurant owner, you are doing your business a disservice if you:
- Don't pay adequate attention to tax law tip reporting rules.
- Fail to document tips properly.
- Simply ignore the situation and hope it will go away.
Tip reporting requires diligence. In fact, if anything, the IRS is becoming more vigilant in tracking down restaurants and other establishments that don’t comply with the rules.
In fact, the IRS recently established a new pilot tip reporting program to be used by restaurants and taxpayers in the food and beverage industries. It is called the "Attributed Tip Income Program" and is designed to promote compliance with tax law requirements, reduce disputes on audit, and avoid onerous filing and recordkeeping burdens. (IRS Revenue Procedure 2006-30)
Generally speaking, a business is required to file Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, for each establishment if:
 Food or beverage is provided for consumption on the premises.
Tipping is a customary practice.
More than ten full-time employees are employed on a typical business day.
The term "employee" here isn’t limited to waiters and waitresses. It comprises everyone on the payroll, from cooks to dishwashers to musicians.
It is clearly in your best interests to encourage employees to accurately report tip income. Otherwise, the IRS can hold your business responsible, resulting in audits and deficiency notices.
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ASAP's professionals know the tip reporting rules inside and out. Give us a call if you have questions concerning your responsibilities or the IRS Attributed Tip Income Program.
www.businessASAP.com |
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