From: daniel@osefs1.ssd.lmsc.lockheed.com (Daniel Sedergren 7820)
Subject: Re: allocated tips
Organization: Operational Support Engineering 78-20
Distribution: usa
Date: Tue, 15 Dec 92 17:50:03 GMT

In article <28576@oasys.dt.navy.mil> allen@oasys.dt.navy.mil (Cheryl Allen) writes:





>I have a question, I work part time at a pizza restaurant for extra
>money. The IRS now has this law that you must claimat least 8% of the
>store sales in tips. How can they, THE IRS do this?? This store is really
>a fast food type restaurant, not everyone that comes in leaves tips,
>we for the most part cater tokids and they dont leave tips. The IRS
>now claims that the amount of sales for the storeI should of claime
>almost $800.00 dollars more they I did.





>Thanks in advance if anyone knows anyting about this new 8% law.

>Cheryl

Tip Allocation is not a new law.

The following may help to clarify your position:

1.	Daily Record of Tips - The IRS requires that you keep a daily record 
or other documentation to prove the amount of tip income you report on your 
return.  The daily record must show your name and address, your employer's 
name, and the establishments name.  For each workday you must show the 
amount of cash and credit card tips you received directly from customers or 
other employees (tip splitting), the amount you paid to other employees, and 
their names.  Keeping this record then allows you to challenge allocated 
tips.

2.	Tip Allocation - Large food or beverage establishments are required 
to report to the IRS certain additional information about tips.  To make 
sure that employees are correctly reporting tips, employees must keep 
records to verify amounts reported by employees.  (You are required to 
report all tip income of $20.00 or more in any month while working for an 
employer).  Certain employers must allocate tips if the percentage of tips 
reported by employees falls below a required minimum percentage of gross 
sales.  To "allocate tips" means to assign an additional amount as tips to 
each employee whose reported tips are below the required percentage.

	If the rules on tip allocation apply to your employer's 
establishment, your employer may have to allocate to you a part of the 
difference between 8% (or some lower acceptable percentage) of the total 
sales of the operation and the amount of tips reported by all employees.  No 
allocation is made if you report tips equal to your share of the 8% of total 
sales.

	If the customers do not tip 8% on the average, either your employer 
or a majority of the directly-tipped employees may petition to have the 
allocation percentage reduced from 8%.  However, it cannot be reduced below 
2%.

	The tip allocation amount is added to your gross income unless you 
are able to prove a lesser amount with adequate documentation (i.e. your 
daily record of tips).

3.	IRS Publication 531 - For more information on Tip Allocation, see 
Publication 531.


Dan Sedergren                       When you do more than your fair share   
amaziah@cup.portal.com              of the work, you will be given more     
DANIEL@osefs1.ssd.lmsc.lockheed.com than your fair share of the work to do. 

DISCLAIMER: I know they're not much, but they're all mine.