As tax season approaches, restaurant owners and their employees should be aware of an Internal Revenue Service program that helps simplify record keeping.

Introduced as a pilot in 2006, the Attributed Tip Income Program is designed to increase compliance and accuracy of tax reporting in the restaurant industry by streamlining the process of tracking and reporting employee tips. The program, which was set to expire in December 2009, has been extended for two years.

Employers enrolled in program use a formula to calculate a percentage of the restaurant's gross receipts as an overall tip amount, and then allocate the total among the employees. The tips are automatically recorded and reported as wages, eliminating the need for individual reports.

Just by enrolling in the program, restaurant owners can avoid an IRS tip examination. Participation is voluntary and open to all food and beverage establishments. To enroll in the program, employers must check the designated box on their 8027 form and have any employees who wish to participate sign an agreement.

Owners of the more than 1,630 restaurants in the region should consider the program as a practical option for easing the stress of tax time, not only for their own businesses, but also for their employees.

-- Herb Wolfson,
Wittlin, Simon & Newman,
wsnpc@msn.com

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