[Federal Register Volume 63, Number 16 (Monday, January 26, 1998)]
[Proposed Rules]
[Pages 3680-3685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1548]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[REG-104691-97]
RIN 1545-AV28


Electronic Tip Reports

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the regulations dealing with 
the requirement that tipped employees report their tips to their 
employer. The proposed regulations permit employers to establish 
electronic systems for use by their tipped employees in reporting tips 
to the employer. The proposed regulations also address substantiation 
requirements for employees using the electronic system.

DATES: Written comments and requests for a public hearing must be 
received by April 27, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-104691-97), room 
5228, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered between the 
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-104691-97), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC. Alternatively,

[[Page 3681]]

taxpayers may submit comments electronically via the Internet by 
selecting the ``Tax Regs'' option on the IRS Home Page, or by 
submitting comments directly to the IRS Internet site at <a href="http://
www.irs.ustreas.gov/prod/tax__regs/comments.html">http://
www.irs.ustreas.gov/prod/tax__regs/comments.html</a>.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Karin 
Loverud, 202-622-6060; concerning submissions, Evangelista Lee, 202-
622-8452 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 
20224. Comments on the collection of information should be received by 
March 27, 1998. Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of service to provide information.
    The collections of information in this proposed regulation are in 
Sec. 31.6053-1 and Sec. 31.6053-4. This information is required to 
conform with the statute and to assist employers and employees in 
fulfilling their responsibilities. This information will be used by 
employers to establish the amount of income and FICA (or RRTA) taxes to 
withhold from the employee reporting the tips. This information will be 
used by employees in meeting the substantiation requirements. The 
collections of information are mandatory. The likely respondents are 
individuals.
    Estimated total annual reporting burden: 600,000 hours.
    Estimated average annual burden hours per respondent: 2 hours.
    Estimated number of respondents: 300,000.
    Estimated annual frequency of responses: varies.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains proposed amendments to the Employment Tax 
Regulations (26 CFR part 31) under section 6053(a) of the Internal 
Revenue Code (Code). The proposed regulations provide rules permitting 
employers to establish electronic systems for use by their tipped 
employees in reporting tips to the employer.
    In general, under section 6053(a) of the Code, every employee who 
receives tips must report the tips to the employer. The tips that must 
be reported are those that are wages for purposes of federal income tax 
withholding and the Federal Insurance Contributions Act (FICA) and 
compensation for purposes of the Railroad Retirement Tax Act (RRTA). 
The tips must be reported in a written statement or statements 
furnished to the employer on or before the 10th day following the month 
in which the tips are received. The Secretary is authorized to 
prescribe rules necessary to implement this provision, including the 
form and manner of furnishing the statements.
    Generally, all cash tips (which include tips that are charged) are 
wages (or compensation), with one exception. If the amount of cash tips 
received in a calendar month by an employee in the course of any one 
employment is less than $20, the cash tips received in that employment 
during that month are not wages subject to income tax withholding, FICA 
taxes, or RRTA taxes.
    For example, A is a full-time tipped employee of X and a part-time 
tipped employee of Y. During the month, A received $1,000 in tips in 
A's employment with X and $10 in tips in A's employment with Y. The 
$1,000 in tips received in the course of employment with X are wages 
for income tax withholding and FICA (or RRTA) tax purposes. A must 
report the $1,000 in tips to X no later than the 10th day of the 
following month. The $10 in tips received in the course of employment 
with Y are not wages for those purposes. The $10 are, however, subject 
to federal income tax and must be reported as wages by the employee on 
Form 4137, Social Security and Medicare Tax on Unreported Tip Income, 
which the employee must file with Form 1040, U.S. Individual Income Tax 
Return.
    Section 31.6053-1(b)(1) prescribes rules for tip statements. The 
statement furnished by the employee to the employer must be in writing 
and must be signed by the employee. The statement must disclose (1) the 
employee's name, address, and social security number; (2) the 
employer's name and address; (3) the period for which and the date on 
which the statement is furnished; and (4) the total amount of tips 
received by the employee during the period that are required to be 
reported to the employer.
    Under Sec. 31.6053-1(b)(2), no particular form is prescribed for 
use in furnishing the tip statement. If the employer does not provide a 
form for use by the employee in reporting tips received by the 
employee, the employee may use Form 4070, Employee's Report of Tips to 
Employer. Twelve blank Forms 4070 and 12 blank Forms 4070A, Employee's 
Daily Record of Tips are reproduced in Publication 1244, Employee's 
Daily Record of Tips and Report to Employer. (Daily completion of Form 
4070A constitutes sufficient evidence of tip income under the 
substantiation requirements of Sec. 31.6053-4.) Pub. 1244 is a 
convenient pocket-sized document that also includes the basic rules for 
reporting tips. Copies of Pub. 1244 are available from the IRS by 
calling 1-800-829-3676.
    The regulations specifically permit employers to design their own 
forms for use by employees in reporting tips. A form used solely to 
report tips must include (1) The employee's name, address, and social 
security number; (2) the employer's name and address; (3) the period 
for which and the date on which the statement is furnished; and (4) the 
total amount of tips received by the employee during the period that 
are required to be reported to the employer.
    In lieu of a special tip reporting form that is used solely for the 
purpose of reporting tips, employers may provide for reporting of tips 
on regularly used

[[Page 3682]]

forms, such as time cards. The regularly used forms need not include 
the employer information, but they must accurately identify the 
employee, identify the reporting period, and specify the amount of tips 
received. If a regularly used form is used to report tips, the employer 
must furnish the employee a statement showing the amount of tips 
reported by the employee for the period. This statement must be 
furnished no later than shortly after the first wage payment following 
the employee's tip report. A payroll check stub or other similar 
payroll document may be used for this purpose.
    The period covered by a tip statement may not exceed one calendar 
month. An employer may require tip statements more frequently, such as 
daily, weekly or every pay period, but not less frequently than 
monthly. In no event, however, may an employer permit tips received in 
one month to be reported after the 10th of the following month. See 
section 6053(a). For example, X has a weekly payroll period, beginning 
on Sunday and ending on Saturday. X requires that all tip statements be 
submitted to X no later than the Monday following each payroll period. 
For the payroll period beginning on Sunday, March 30, and ending on 
Saturday, April 5, the statements must be furnished on or before 
Monday, April 7. If this occurs, the 10th-of-the-month requirement for 
March is met. If X's payroll period were biweekly and began on March 30 
and ended on April 16 and if X required that all tip statements be 
submitted to X no later than the Monday following each payroll period, 
the 10th-of-the-month requirement for March would not be met.
    A tip statement furnished after this deadline does not meet the 
requirements of section 6053(a). The employer is not required to 
withhold income, FICA, or RRTA taxes on tips reported after the 10th of 
the following month and is not responsible for reporting those tips to 
the IRS. The responsibility for reporting and paying the employee 
portion of the FICA tax shifts to the employee. The employee must 
complete and attach Form 4137, Social Security and Medicare Tax on 
Unreported Tip Income, to the employee's federal income tax return. 
Moreover, an employee who fails to report tips as required by section 
6053(a) is subject to an addition to the FICA tax or the RRTA tax, 
whichever is applicable, equal to 50 percent of the employee portion of 
the FICA or RRTA tax on those tips.
    Section 31.6053-4(a)(1) provides that an employee must maintain 
sufficient evidence to establish the amount of tip income received 
during a taxable year. Sufficient evidence consists of either a daily 
record or, if the employee does not maintain a daily record, other 
evidence (such as documentary evidence) that is as credible and as 
reliable as a daily record. Nevertheless, if the facts or circumstances 
indicate that the employee received a larger amount of tip income, a 
daily record or other evidence may not be sufficient evidence.
    Section 31.6053-4(a)(2) describes the requirements for a daily 
record. In general, the daily record must show the amount of cash and 
charge tips received directly from customers or other employees and the 
amount of tips, if any, that the employee paid out to other employees 
through tip sharing, tip pooling, or other arrangements and the names 
of the employees. The daily record must show the date on which each 
entry is made. Each entry must be made on or near the date the tip 
income is received. An entry made when the employee has full present 
knowledge of those receipts and payments satisfies this requirement.
    Section 31.6053-4(a)(3) describes documentary evidence. Documentary 
evidence consists of copies of any documents that contain amounts added 
as a tip to a check by a customer or amounts paid by a customer for 
food or beverages with respect to which tips generally would be 
received. Examples of documentary evidence are copies of restaurant 
bills, credit card charges, or charges under any other arrangement 
containing amounts added by the customer as a tip.

Explanation of Provisions

    Electronic Tip Statements
    No provision currently exists for employees to furnish tip 
statements to employers in a form other than on paper. The proposed 
regulations would permit an employer to adopt a system under which some 
or all of the tipped employees of the employer would furnish their tip 
statements electronically. Therefore, the employer could include in its 
electronic system any tipped employee or employees working in any 
location or locations.
    The proposed regulations set forth requirements for employers who 
wish to establish electronic systems for employees to use to furnish 
tip statements to their employers. The proposed regulations apply only 
to tip statements required by section 6053(a) and not with respect to 
any other Code sections.
    An employer that chooses to establish an electronic tip reporting 
system may select the type or types of electronic systems (such as 
telephone or computer) to be used by its employees. The system must, 
however, ensure that the information received is the information 
transmitted by the employee and must document all occasions of access 
that result in the transmission of a tip statement. The design and 
operation of the electronic system, including access procedures, must 
make it reasonably certain that the person accessing the system and 
transmitting the tip statement is the employee identified in the 
transmission. In the event of an examination, the employer must supply 
a hard copy of the electronic statement to the IRS upon request.
    The electronic tip statement must contain exactly the same 
information that is required to be reported on a paper tip statement 
and must contain the employee's electronic signature. The electronic 
signature must identify the employee furnishing the electronic tip 
statement and authenticate and verify the transmission. An electronic 
signature can be in any form that satisfies the foregoing requirements. 
An electronic signature has the same effect as a signature written on a 
paper tip statement. See sections 6061, 6064, and 6065 of the Code.
    Pursuant to Rev. Rul. 71-20 (1971-1 C.B. 392), all machine-sensible 
data media used for recording, consolidating, and summarizing 
accounting transactions and records within a taxpayer's ADP system are 
records within the meaning of section 6001 and Sec. 1.6001-1. The 
record retention requirements contained in Rev. Proc. 91-59 (1991-2 
C.B. 841) (or any revenue procedure updating Rev. Proc. 91-59), dealing 
with automatic data processing systems, apply to electronic tip 
reporting systems.
    The proposed regulations provide that an employee maintains 
sufficient evidence to establish the amount of tip income received by 
the employee during a calendar month through a daily record (as 
described in Sec. 31.6053-4(a)(2)) if the employee both reports tips on 
a daily basis through an electronic system that otherwise meets the 
substantiation requirements of the regulations and receives from the 
employer a hard copy of a daily record based on those entries for the 
period.

Employee Substantiation Requirements

    Because the proposed regulations expand the permissible array of 
employer-designed reporting systems to include electronic methods, 
employers will be providing a statement to employees of the tips 
reported consistent with the existing requirements of Sec. 31.6053-
1(b). The

[[Page 3683]]

Treasury and the IRS recognize that many of these systems may capture 
tip reporting on a very current basis (e.g., point-of-sale or end-of-
shift). Thus, the information in these systems offers a reasonable 
substitute for a daily record maintained by the employee if the 
employer's system provides the employee with a printout that would 
satisfy the current substantiation requirements of Sec. 31.6053-4.
    Thus, these proposed regulations provide that, if the employer, at 
its option, provides employees with a copy of the daily record based on 
entries made by the employee in the system and otherwise satisfying the 
substantiation requirement of Sec. 31.6053-4, the entry in the 
electronic system on a daily (or more frequent) basis by the employee, 
together with the daily record based on these entries provided by the 
employer, will satisfy the substantiation requirements of Sec. 31.6053-
4. For example, assume an employee enters tips in the employer's 
electronic system at the end of each shift, but does not provide the 
employer with a signed paper record of these tips. After the end of 
each weekly payroll period, the employer provides the employee with a 
paper record that includes all the information specified in 
Sec. 31.6053-4(a)(2) and that shows the total amount of tips reported 
for each day during the period based on the employee's entries. If the 
employee maintains this employer generated paper record, the 
substantiation requirements of Sec. 31.6053-4 are satisfied.
    The Treasury and the IRS particularly invite comment on whether the 
proposed regulations should be modified to reflect ways in which these 
systems may permit further reduction in paper reporting for either the 
employer or employee while retaining provisions for appropriate and 
timely substantiation of income.

Railroad Retirement Tax Act Provisions

    The tip reporting provisions of section 6053(a) apply to tips that 
are either wages for income tax withholding and Federal Insurance 
Contributions Act (FICA) purposes or compensation for Railroad 
Retirement Tax Act (RRTA) purposes. The proposed regulations would 
clarify that the regulations under section 6053(a) apply to tips that 
are compensation as well as to tips that are wages.

Proposed Effective Date

    The revisions and additions in the proposed regulations apply to 
tips required to be reported to the employer after these regulations 
are published as final regulations in the Federal Register. However, 
taxpayers may rely on the guidance in these proposed regulations for 
prior periods.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It also has been determined 
that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
chapter 5) does not apply to these regulations.
    It is hereby certified that the collections of information in these 
regulations will not have a significant economic impact on a 
substantial number of small entities. The collection of information in 
Sec. 31.6053-1 is imposed solely on individuals, not on any small 
entities, and the regulations provide flexibility to employees who must 
provide the information required by statute, thereby reducing burden. 
With respect to the collection of information in Sec. 31.6053-4, the 
certification is based on the expectation of the IRS that most 
businesses that choose to implement the electronic tip reporting 
provisions will be larger businesses with many employees and 
sophisticated computer systems. Moreover, because the provision is 
wholly elective, any small business that would be adversely impacted 
may choose not to use electronic tip reporting. Finally, the Service 
expects that for those small entities that choose to implement the 
provision, the use of electronic tip reporting will reduce overall 
burden by reducing paper collections. Therefore, a Regulatory 
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) is not required.
    Pursuant to section 7805(f) of the Code, this notice of proposed 
rulemaking will be submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight copies) that are submitted timely (in the manner described in 
the ADDRESSES portion of this preamble) to the IRS. All comments will 
be available for public inspection and copying.
    A public hearing may be scheduled if requested in writing by any 
person that timely submits written comments. The IRS will also consider 
requests for remote teleconference sites as part of the public hearing. 
If a public hearing is scheduled, notice of the date, time, and place 
(including teleconference, if any) for the hearing will be published in 
the Federal Register.

Drafting Information

    The principal author of these proposed regulations is Karin 
Loverud, Office of the Associate Chief Counsel (Employee Benefits and 
Exempt Organizations), IRS. However, other personnel from the IRS and 
the Treasury Department participated in their development.

List of Subjects in 26 CFR Part 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 31 is proposed to be amended as follows:

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    Paragraph 1. The authority citation for part 31 continues to read 
in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 31.6053-1 is amended as follows:
    1. Paragraph (a) is revised.
    2. The introductory text of paragraph (b)(1) is revised.
    3. The last sentence of paragraph (b)(1)(iii) is revised.
    4. Paragraph (b)(2) is revised.
    5. Paragraph (c) is revised.
    6. Paragraph (d) is added.
    The revisions and additions read as follows:


Sec. 31.6053-1  Report of tips by employee to employer.

    (a) Requirement that tips be reported--(1) In general. An employee 
who receives, in the course of employment by an employer, tips that 
constitute wages as defined in section 3121(a) or section 3401, or 
compensation as defined in section 3231(e), must furnish to the 
employer a statement, or statements, disclosing the total amount of the 
tips received by the employee in the course of employment by the 
employer. Tips received by an employee in a calendar month in the 
course of employment by an employer that are required to be reported to 
the employer must be reported on or before the 10th day of the 
following month.

[[Page 3684]]

Thus, for example, tips received by an employee in January 1998 are 
required to be reported by the employee to the employer on or before 
February 10, 1998.
    (2) Cross references. For provisions relating to the treatment of 
tips as wages for purposes of the Federal Insurance Contributions Act 
(FICA) tax under sections 3101 and 3111, see sections 3102(c), 
3121(a)(12), and 3121(q) and Secs. 31.3102-3 and 31.3121(a)(12)-1. For 
provisions relating to the treatment of tips as wages for purposes of 
the tax under section 3402 (income tax withholding), see sections 
3401(a)(16), 3401(f), and 3402(k) and Secs. 31.3401(a)(16)-1, 
31.3401(f)-1, and 31.3402(k)-1. For provisions relating to the 
treatment of tips as compensation for purposes of the Railroad 
Retirement Tax Act (RRTA) tax under sections 3201 and 3221, see section 
3231(e) and Sec. 31.3231(e)-1(a).
    (b) * * * (1) In general. The statement described in paragraph (a) 
of this section can be provided on paper or transmitted electronically. 
The statement must be signed by the employee and must disclose:
* * * * *
    (iii) * * * If the statement is for a period of less than 1 
calendar month, the beginning and ending dates of the period must be 
included (for example, January 1 through January 8, 1998).
* * * * *
    (2) Form of statement--(i) In general. No particular form is 
prescribed for use in furnishing the statement required by this 
section. The statement may be furnished on paper or transmitted 
electronically. An electronic system and all tip statements generated 
by that system must meet the requirements of paragraph (d) of this 
section. If the employer does not provide any other means for the 
employee to report tips, the employee may use Form 4070, Employee's 
Report of Tips to Employer.
    (ii) Single-purpose forms. A statement may be furnished on an 
employer-provided form. The form may be on paper or in electronic form. 
An employer that provides a paper form must make blank copies of the 
form readily available to all tipped employees. Any form, whether paper 
or electronic, provided by an employer for use by its tipped employees 
solely to report tips must meet all the requirements of paragraph 
(b)(1) of this section.
    (iii) Regularly used forms. Instead of requiring that tips be 
reported as described in paragraph (b)(2)(ii) of this section on a 
special form used solely for tip reporting, an employer may prescribe 
regularly used forms for use by employees in reporting tips. A 
regularly used form may be on paper (such as a time card or report) or 
in electronic form, must meet the requirements of paragraph (b)(1)(iii) 
and (iv) of this section, must contain identifying information that 
will ensure accurate identification of the employee by the employer, 
and is permitted to be used only if the employer furnishes the employee 
a statement suitable for retention showing the amount of tips reported 
by the employee for the period. The employer statement may be furnished 
when the employee reports the tips, when wages are first paid following 
the reporting of tips by the employee, or within a short time after the 
wages are paid. The employer may meet this requirement, for example, 
through the use of a payroll check stub or other payroll document 
regularly furnished by the employer to the employee showing gross pay 
and deductions. In the case of electronic tip reports, the employer 
statement may be furnished on a daily, weekly, monthly or on a regular 
payroll basis (if not less frequent than monthly).
    (c) Period covered by, and due date of, tip statement--(1) In 
general. A tip statement furnished by an employee to an employer may 
not cover a period greater than 1 calendar month. An employer may, 
however, require the submission of a statement in respect of a 
specified period of time, for example, on a weekly or biweekly basis, 
regular payroll period, etc. An employer may specify, subject to the 
limitation in paragraph (a) of this section, the time within which, or 
the date on which, the statement for a specified period of time should 
be submitted by the employee. For example, a statement covering a 
payroll period may be required to be submitted on the first (or second) 
day following the close of the payroll period. A statement submitted by 
an employee after the date specified by the employer for its submission 
nevertheless will be considered as a statement furnished pursuant to 
section 6053(a) and this section if it is submitted to the employer on 
or before the 10th day following the month in which the tips were 
received.
    (2) Termination of employment. If an employee's employment is 
terminating, the employee must furnish a tip statement to the employer 
when the employee ceases to perform services for the employer. A 
statement submitted by an employee after the date on which the employee 
ceases to perform services for the employer will be considered as a 
statement furnished pursuant to section 6053(a) and this section if the 
statement is submitted to the employer on or before the earlier of the 
day on which the final wage payment is made by the employer to the 
employee or the 10th day following the month in which the tips were 
received.
    (d) Requirements for electronic systems--(1) In general. The 
electronic system must ensure that the information received is the 
information transmitted by the employee and must document all occasions 
of access that result in the transmission of a tip statement. In 
addition, the design and operation of the electronic system, including 
access procedures, must make it reasonably certain that the person 
accessing the system and transmitting the statement is the employee 
identified in the statement transmitted.
    (2) Same information as on paper statement. The electronic tip 
statement must provide the employer with all the information required 
by paragraph (b)(1) of this section.
    (3) Signature. The electronic tip statement must be signed by the 
employee. The electronic signature must identify the employee 
transmitting the electronic tip statement and must authenticate and 
verify the transmission. For this purpose, the terms ``authenticate'' 
and ``verify'' have the same meanings as they do when applied to a 
written signature on a paper tip statement. An electronic signature can 
be in any form that satisfies the foregoing requirements.
    (4) Copies of electronic tip statements. Upon request by the 
Internal Revenue Service (IRS), the employer must supply the IRS with a 
hard copy of the electronic tip statement and a statement that, to the 
best of the employer's knowledge, the electronic tip statement was 
filed by the named employee. The hard copy of the electronic tip 
statement must provide the information required by paragraph (b)(1) of 
this section, but need not be a facsimile of Form 4070 or any employer-
designed form.
    (5) Record retention. The record retention requirements dealing 
with automatic data processing systems apply to electronic tip 
reporting systems.
    Par. 3. Section 31.6053-4 is amended as follows:
    1. A sentence is added to paragraph (a)(1) after the third 
sentence.
    2. A sentence is added to paragraph (a)(2) after the fourth 
sentence. The additions read as follows:


Sec. 31.6053-4  Substantiation requirements for tipped employees.

    (a) * * *
    (1) * * * The Commissioner may by revenue ruling, procedure or 
other

[[Page 3685]]

guidance of general applicability provide for other methods of 
demonstrating evidence of tip income. * * *
    (2) * * * In addition, an electronic system maintained by the 
employer that collects substantially similar information as Form 4070A 
may be used to maintain such daily record, provided the employee 
receives and maintains a paper copy of the daily record. * * *
* * * * *
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 98-1548 Filed 1-23-98; 8:45 am]
BILLING CODE 4830-01-U