IRS Extends Tip Income Reporting Program

The Internal Revenue Service has extended for another two years the Attributed Tip Income Program, which makes it easier for workers in the food and beverage industry to report the money they earn from tips.

The Attributed Tip Income Program was first announced in 2006 in Revenue Procedure 2006-30. The program, which was originally set to expire Dec. 31, 2009, has been extended to Dec. 31, 2011, under the newly issued Revenue Procedure 2009-53.

Employers who participate in ATIP report the tip income of employees based on a formula that uses a percentage of gross receipts, which are generally allocated among employees based on the practices of the restaurant. If employees and employers participate in the ATIP program, the IRS said it will not initiate a tip examination while they participate. Participating employees also do not have to keep a daily tip log or other tip records.

To enroll in the program, employers check the designated box on Form 8027, “Employer’s Annual Information Return of Tip Income and Allocated Tips.” Employees who work for a participating employer can elect to participate in ATIP by signing an agreement with their employer to have their tip income computed under the program and reported as wages.