Washington (Sept. 17, 2004) -- The Internal Revenue Service is indefinitely extending its Tip Rate Determination and Education Program, a voluntary compliance tool that was developed for the food and beverage industry.


The program, which was developed by the IRS in 1993, was set to expire in 2005. The IRS said that it will administer existing tip agreements without the need for employers to re-sign agreements.


The program offers employers multiple voluntary agreement options designed to provide non-burdensome methods for employers and employees to comply with tip reporting laws. Options include Tip Rate Determination Agreements, Tip Reporting Alternative Commitments, and EmTRACs - Employer-designed Tip Reporting Alternative Commitments.


Since the program was introduced, the IRS said that voluntary compliance has significantly increased. In 1995, tip wages reported were $9.45 billion. For 2003, the amount exceeded $18 billion. To date over 15,000 employers have entered into tip agreements, representing nearly 47,000 individual establishments.


-- WebCPA staff

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