The Biden administration’s Internal Revenue Service (IRS) has proposed a program for service industry employers to report their workers’ tips to the IRS in order to improve tip reporting compliance, according to a Monday announcement.
The Service Industry Tip Compliance Agreement (SITCA) program would be optional, and the IRS would monitor the compliance of employers who opt in through annual reports, according to the announcement. Participating employers would be granted liability protection and flexibility in how they implement tip reporting policies.
The IRS would monitor employer compliance through actual annual tip revenue by tracking charge tip data from the machines that read credit and debit cards as well as employers’ reports, and would grant flexibility to employers on precisely how they report those tips to the IRS, according to the announcement.
The SITCA program is meant to increase transparency, improve tip reporting compliance and reduce the administrative burdens on both employers and the IRS in tip reporting, according to the IRS. It would replace three existing tip reporting programs, the Tip Rate Determination Agreement (TRDA), the Tip Reporting Alternative Commitment (TRAC) and the Employer designed TRAC (EmTRAC).
The IRS has been moving to crack down on small transactions, including through a requirement that digital transactions over $600 be reported to the agency on 1099-K tax forms. The agency paused the requirement in December to avoid confusion over the new policy.
The IRS did not respond to the Daily Caller News Foundation’s request for comment.
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