Posted on 02/08/2023 8:43:05 PM PST by SeekAndFind
Remember when we were told that the army of new IRS agents Biden wants to hire was only going to go after billionaires? 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 come to that if he can’t get 10 million more people to sign up for Twitter Blue.) As it turns out, the Tax Man is launching a new program to crack down on tips received by wait staff in the food and beverage industry. That’s right. The IRS thinks that waiters and waitresses are pocketing too much money in gratuities, and Uncle Sam plans on getting his piece of the action. (Fox News)
The Internal Revenue Service (IRS) proposed a revenue procedure this week cracking down on service industry’s reporting of tips.
The so-called Service Industry Tip Compliance Agreement (SITCA) program would be a voluntary tip reporting system in which the IRS and service industry companies cooperate, according to the announcement Monday. As part of the proposal, the IRS will give the public until early May to provide feedback on the program before implementing it.
“Those 87,000 new IRS agents that you were promised would only target the rich…” Mike Palicz, the federal affairs manager at Americans for Tax Reform, tweeted. “They’re coming after waitresses’ tips now.”
The IRS isn’t even trying to deny this. In fact, they put it right on their website.
At least for the moment, the agency is describing this as a “voluntary reporting system.” But how long do you expect anything to do with the IRS to be “voluntary?” The description of the reporting system sounds pretty sinister when you look into the details. 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. Perish the thought. They’re just going to make sure that the wait staff is faithfully listing all of their tips on their tax forms.
This question has been a bone of contention for as long as I can remember. The courts have never satisfactorily ruled on the issue, either. The traditional understanding used to be that tips were offered by consumers based on the quality of the food and the service they received. It was long assumed that waiters and waitresses earned less than other workers. In fact, the law allows owners to pay the wait staff as little as $2.13 per hour if the base pay plus the tips add up to at least the federal minimum wage. But the really good servers could make up for that difference with tips and even bring home significantly more than the minimum hourly wage would pay.
The whole concept of an “income tax” is based on the compensation a person is paid by their employer. 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. I tend to be a bit of an exorbitant tipper (at least according to my wife) but regular customers who tip well generally wind up getting much better service in my experience. And I enjoy the looks on the faces of hard-working servers when they find some twenty-dollar bills that they can just stick in their pockets waiting 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.
Jeez, and I thought 87,000 rich people were getting their own personal IRS agent. /s
Yeah, no kidding. That’s why they want 87k new IRS agents.
Zelensky needs more money.
“IRS looks to crack down on tips earned by waiters and waitresses: So much for going after the rich”
Based on 25% tips now being demanded (at least per my credit card slips), the price of restaurant food doubling in the past few years (so causing tips to double, even before the 25% crap), plus now being paid $15/hr minimum, I think one can reasonably classify waiters and waitresses as ‘the rich’, and so I’m fine with making them feel a bit of pain.
“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.”
If that is the writer’s stance, then anytime they go to a restaurant, bar or have a pizza delivered, they should pay in cash.
If they are not paying cash and tipping in cash for every service worker transaction, their belief that tips should not be taxed is absolute nonsense.
and elimination of cash.
Uncle Sam hates having to rely on an honor system to rob you of what it claims you owe it.
The point is to make it so difficult for the workers that they quite, restaurants go out of business and joey has MORE people on UNIVERSAL INCOME. Then the dems can control them. Just a way of buying votes.
I think everyone has always known the 87K were hired to go after the blue colored workers.
Quite=QUIT
Except that a lot of people get paid 4-5 dollars an hour
because Tips are expected to make the difference.
Therefore it becomes taxable Wages/Compensation.
Federal wage laws say the above scenario is acceptable.
Bottom line is all income is taxable. Some are specifically excluded, but not much.
The problem is we allowed the Federal government to do it in the first place in 1913 with the passage of the 16th Amendment. America as founded did not allow income tax because the founding fathers new what happened when you allowed such a powerful thing as central government, the right to take your money.
Look at the un-manageable behemoth we have today.
The original government handled it’s Constitutional functions just fine on it Constitutional revenue streams.
We could do the same today.
I could name hundreds of things the US government does for which there is no specific Constitutionally granted power.
The generalization of “General welfare” is why we are in so much debt.
States were supposed to perform most all those functions, housing, health, education, transportation, et al.
Problem is it scares the shit out of Democrats and RINOs is that people can actually do what they think is right and not what the Party thinks is right.
Be Woke, Go broke. I hope you Democrats starve
and you will.
As long as we have cash, we can screw the Feds. Don’t ever give up cash.
Never blame a beggar for asking money. The enabler is always the giver.
The premise of this article is total B.S. I’ve been doing taxes for over 50 years and under reporting of tip income has been a problem way before that. It has nothing to do with the 87,000 new “agents”. You think it’s ok for wait staff to bank $4,000 a month tax free? Why do they get a pass when the rest of us can’t afford a BMW like they have because we pay taxes on all our earnings. And what about restaurant owners that steal some or most of those tips from the wait staff because they don’t properly account for and report all tips paid by customers? I’ve seen it hundreds of times, and it isn’t going away unless someone big enough to rap the knuckles of the greedy restaurant owners does something about it. Unfortunately, that big bully is the IRS, unless you want to step in.
I blame the beggar and the giver. They’re both crooks.
RE: Bottom line is all income is taxable.
That would include money made from panhandling or busking on the streets. Last I heard, the IRS was not going after that. Will they now? I thought tax increases were only for those making over $400,000 ( that’s what Joe and Kamala said ) ....
This is the first year I have been made to claim the rewards that I earn for completing the surveys on my Federal tax return. Because I made over $600 last year, I received a 1099-NEC (Non-Employee Compensation) from the company that runs e-Rewards. Of course I have no way of knowing whether the $805 the company claims I earned, was actually the correct amount. I get no annual statement from them regarding the surveys I've completed, and the money I earned. I have no idea if the gift cards I get in exchange for reward money, are included in the $805. On the e-Rewards website you can only go back two months to view the surveys you've completed, and the rewards money you earned. I didn't know anything about the new $600 rule until the end of 2022, when I was told I had to fill out a form for the company, providing my social security number, and submit it. They wanted you to fill the form out online, but I refused to do that, and demanded that I be given a snail mail for the company, so I could send it in that way.
What I don't understand, is if the company is required to send you a 1099-NEC if you earn over $600 in a year, why do I have to claim the whole $805, and not just the $205 over the $600 limit? I had to fill out and include Schedule C for this compensation with my 1040 form. I get a pension and social security, own nothing, no money in the bank, no stocks or bonds, nothing. I have done paper returns my whole life. Last year, with no additional paperwork attached, it took the IRS 6 months to send me my refund, when in all the years before, it took between 4-6 weeks. With this crap, I can't imagine how long I'll have to wait this year. FJB.
We shouldn’t even have income tax. We are slaves.
You actually sent your SS# to a company that does online surveys?
I would have thought it has gotten harder to hide tip income from the IRS as more and more people use credit and debit cards for everyday transactions. Restaurant owners have an incentive to process these credit/debit tips as payroll income anyway — and even deduct 2%-3% of a waiter’s tips to cover the cost of credit card processing fees.
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