Responding to extension requests, restaurants and bars will have a few extra months -- until June 30 for this year only -- to elect to participate in the Internal Revenue Service’s Attributed Tip Income Program.

Last summer the IRS announced the details of the program, which provides employers in the food and beverage industry with an alternative option encouraging voluntary tip income reporting by tipped employees. Normally, eligible establishments must elect to participate in the program by Feb. 28, when they timely file their Form 8027, “Employer’s Annual Information Return of Tip Income and Allocated Tips.”

Employers should have started to attribute tips beginning with the first payroll period on, or after, Jan. 1. However, for the 2007 calendar year, employers will be granted until June 30 to begin the tip attribution process, so long as they notify the IRS that they would like to participate. Employers who have already filed Form 8027 can file a duplicate form and still participate in the program.

According to the IRS, the benefits of the program include:

  • Reduced recordkeeping for the employer and the tipped employee;
  • Simplified enrollment procedures;
  • No one-on-one meetings with the IRS;
  • The promotion of accurate reporting of tip wages on federal income tax returns;
  • Safe-harbor protections against tip audits; and,
  • The elimination of financial hardships associated with unplanned tax liabilities resulting from tip audits.

More details about the program are available at,,id=168216,00.html.

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