Washington -- The Internal Revenue Service will expand a new nationwide voluntary tip compliance agreement to the gaming industry, a pact that would reduce the employer’s traditional burden of record-keeping and reporting.

The process allows a gaming industry employers, employees and the IRS to determine tip rates for tipped employees in specified occupational categories.

The IRS said the improved procedures could potentially make gaming employees eligible for higher Social Security or other pensions as well as Medicare, unemployment and workman’s compensation benefits.


The steps to the process include:

  • The employer and the IRS sign a Gaming Industry Tip Compliance Agreement, which incorporates tip rates specific to that employer’s establishment and prescribes a minimum level of participation by the employer’s employees.
  • The employer recruits his employees to voluntarily participate.
  • Participating employees must then report their tip income to their employer at or above the established tip rates, unless their tip logs can substantiate a lesser amount.
  • The employer withholds income tax from the employees and reports income on the employees’ Form W-2 based on the rates or the substantiated lesser amount.

The agreement may be renewed every three years.

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