News/Commentary

Biden’s IRS targets service employee tips in new proposal; GOP says, you were warned

February 9, 2023 | | Print Article

The Biden administration promised last year that their 87,000 new IRS agents would only be used to crack down on the rich. It now appears they lied.

On Monday the IRS unveiled a new proposal, the Service Industry Tip Compliance Agreement (SITCA), that would change the way service industry tips are handled.

Though ostensibly voluntary, the program would “take advantage of advancements in point-of-sale, time and attendance systems, and electronic payment settlement methods to improve tip reporting compliance,” according to the agency.

In other words, the IRS would more closely monitor employee tips — just as, relatedly, the IRS is now more closely monitoring the American people’s bank accounts.

The overall goal would be to ensure that waiters, waitresses, and bartenders, all of whom for the record often earn less than minimum wage, are paying taxes on their tips.

But there’s more.

According to Fox News, SITCA would also allow the IRS to “withdraw liability protection related to ‘rules that define tips as part of an employee’s pay’ from employers that don’t cooperate.”

Naturally, all this news has prompted a massive backlash, with Rep. Thomas Massie, a Republican, leading the charge.

“Stop the presses. No need to raise the debt limit. Biden is going after those billionaire waitresses’ tips,” the Republican lawmaker sarcastically tweeted Wednesday.

His point was that the administration had repeatedly claimed that the new IRS agents would only go after the wealthy. But waiters and waitresses aren’t generally among the wealthy.

“I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels,” Treasury Secretary Janet Yellen claimed last August.

Ways and Means Subcommittee on Tax chair Mike Kelly also responded to the news.

“Washington has a spending problem, not a revenue problem. Now, the IRS is going after middle-income families and working moms and dads who are just trying to make ends meet and put food on the table,” he told Fox News.

“My colleagues and I have warned for months that the IRS would start targeting hardworking Americans in the Biden administration’s quest for more taxpayer dollars. Now, we’re starting to see some of these concerns come to fruition,” he added.

True.

Rep. Adrian Smith, another senior member of the House Ways and Means Committee,  echoed his remarks, telling Fox News that this is just the latest example of the administration going after the working class.

“Bank surveillance efforts, 1099-Ks, 87,000 new IRS agents to target taxpayers, and now a new program to go after service industry workers’ tips are all a direct result of the Biden administration’s desire to tax working families and small businesses as much as possible,” he said.

“Make no mistake: the administration’s many attempts at raising revenue are because they are unwilling to come to the table to address the debt crisis, which would require curbing their spending addiction,” he added.

Smith also assured the American people that Republicans — who now control the U.S. House — will do everything in their power to stop this overreach.

“The days of one-party rule are over, and House Republicans will use our majority to ensure hardworking families are not subject to higher taxes and more government mandates, especially not as they struggle under soaring inflation. Accountability is here – the Biden administration has some explaining to do,” he said.

See more backlash below:

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Vivek Saxena
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