On Monday, the Internal Revenue Service reportedly proposed a revenue process that would require companies in the service industry to voluntarily submit their employees’ gratuities to the tax agency.
The news comes as President Biden claimed that the Middle Class would not be targeted for tax increases during his State of the Union address.
The IRS is purportedly working to ‘enhance tip reporting compliance’ through the Service Industry Tip Compliance Agreement effort, for which it is seeking comments until early May.
The new change comes after the IRS earned a $80 billion windfall from the Inflation Reduction Act, allowing it to more than quadruple its personnel.
After each calendar year, businesses engaging in the scheme would submit an annual report on tips to the IRS.
Employees at restaurants, hotels, hairdressers, and other service-oriented enterprises are already required to keep a daily record of their tips and pay taxes to the IRS on the revenues.
The new change comes after the IRS earned a $80 billion windfall from the Inflation Reduction Act, allowing it to more than quadruple its personnel.
After each calendar year, businesses engaging in the scheme would submit an annual report on tips to the IRS.
Employees at restaurants, hotels, hairdressers, and other service-oriented enterprises are already required to keep a daily record of their tips and pay taxes to the IRS on the revenues.
The tip reporting program is also in apparently in response to an IRS plan that would force Americans to disclose transactions above $600 made through payment settlement providers like PayPal and Venmo.
The Treasury Inspector General for Tax Administration stated in a recent study that the agency’s budget for enforcement actions will rise 69% over the next decade, while the budget for taxpayer assistance will only rise by 9%.
[READ MORE: Biden Reportedly Canceled Trump Era Program To Monitor Threats From China]
About Post Author
Customers should stop giving employees tips. Give them cash “gifts”, instead.