A Tip for Restaurant Owners and Servers...

The IRS will start a new, voluntary, tip reporting program next year called the Attributed Tip Income Program or ATIP. ATIP will estimate tips based on a percentage of gross receipts and standard restaurant practices. Announced benefits for employers include safe harbor from tip audits and simplified joining and reporting procedures. For employees, ATIP offers protection from tip audits, simplified election and better access to loans. Procedures include: election through Form 8027, at least 20% of receipts that show a charged tip, at least 75% employee participation rate and a attributed tip of 2% less than the "charged tip"; presumably an average of the charged tip percentage (tip/check balance) developed by Form 8027 records. The 2% difference presumes that customers leaving cash tips tip at a lower percentage than customers leaving credit card tips.

I have never worked in the restaurant industry, but my wife did when she was a teenager. Several issues come to mind: how to handle a store like a Crackel Barrel, where a large proportion of sales revenue is not food and beverage-related; how to handle a restaurant with large numbers of immigrant employees who may be distrustful of this type of program being two. Nevertheless, a program to consider if you know someone who is a restaurant owner or employee.