Source: https://www.irs.gov/irb/2012-26_IRB
Timestamp: 2018-06-21 14:31:07
Document Index: 216473162

Matched Legal Cases: ['§ 31', '§ 31', '§ 31', 'art 2', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45', '§ 430', '§ 417', '§ 417']

Internal Revenue Bulletin: 2012-26 | Internal Revenue Service
Rev. Rul. 2012-16
Notice 2012-41
Notice 2012-42
Notice 2012-43
Rev. Rul. 2012-16 Rev. Rul. 2012-16
Interest rates; underpayments and overpayments. The rates for interest determined under section 6621 of the Code for the calendar quarter beginning July 1, 2012, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for the underpayments, and 5 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 0.5 percent.
Notice 2012-40 Notice 2012-40
This notice provides guidance on the limits in section 125(i) of the Code on salary reduction contributions to health flexible spending arrangements, effective for cafeteria plan years beginning after December 31, 2012, and also requests comments on possible modification to the “use-or-lose” rule in the proposed section 125 regulations.
Notice 2012-42 Notice 2012-42
Credit for carbon dioxide sequestration; 2012 section 45Q inflation adjustment factor. This notice publishes the inflation adjustment factor for the carbon dioxide (CO2) sequestration credit under section 45Q of the Code for calendar year 2012.
Notice 2012-43 Notice 2012-43
Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in June 2012; the 24-month average segment rates; the funding transitional segment rates applicable for June 2012; and the minimum present value transitional rates for May 2012.
Rev. Rul. 2012-18 Rev. Rul. 2012-18
Announcement 2012-25 Announcement 2012-25
This announcement is seeking comments from the public regarding an interim guidance memo (IGM) issued to its examiners relating to Rev. Rul. 2012-18, published elsewhere in this Bulletin. The IGM provides audit issue direction to examiners in dealing with issues concerning the proper treatment of tips and service charges. This announcement also announces plans to solicit comments in the future regarding possible changes to voluntary tip compliance agreements.
Notice 2012-41 Notice 2012-41
This notice provides an extension of time to pay under section 6651 of the Code to eligible civilian spouses of military servicemembers who work in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands (each a “U.S. territory”) and claim residence or domicile for tax purposes in a State or the District of Columbia pursuant to the Military Spouses Residency Relief Act (“MSRRA”), for tax year 2011 and subsequent tax years. In addition, this notice provides that civilian spouses of military servicemembers working in a State or the District of Columbia but claiming residence or domicile for tax purposes in a U.S. territory under MSRRA should follow the procedures described in Notice 2010-30 with respect to their individual income tax returns for tax year 2011 and subsequent tax years.
Section 3121(a) of the Code defines “wages” for FICA tax purposes as all remuneration for employment, with certain exceptions. Section 3121(a)(12)(A) excludes from the definition of wages tips paid in any medium other than cash; section 3121(a)(12)(B) excludes cash tips received by an employee in any calendar month in the course of the employee’s employment by an employer unless the amount of the cash tips is $20 or more.
Employer FICA Obligations. Under section 3121(q) of the Code, tips received by an employee in the course of the employee’s employment are considered remuneration for that employment and are deemed to have been paid by the employer for purposes of the employer share of FICA taxes imposed by sections 3111(a) and (b), that is, social security tax and Medicare tax, respectively. The remuneration is deemed to be paid when a written statement including the tips is furnished to the employer by the employee pursuant to section 6053(a), discussed below.
Section 3111 of the Code requires the employer to pay social security tax on the amount of cash tips received by the employee up to and including the contribution and benefit base as determined under section 3121(a)(1) and to pay Medicare tax on the total amount of cash tips received by the employee. However, if the employee either did not furnish the statement pursuant to section 6053(a) or if the statement furnished was inaccurate or incomplete, in determining the employer’s liability in connection with the taxes imposed by section 3111 with respect to the tips, section 3121(q) provides that the remuneration is deemed, for purposes of subtitle F (Procedure and Administration), to be paid on the date on which notice and demand for the taxes is made to the employer by the Internal Revenue Service (Service).
Section 6053(a) of the Code requires every employee who, in the course of the employee’s employment by an employer, receives in any calendar month tips that are wages (as defined in section 3121(a) for FICA tax purposes or section 3401(a) for income tax withholding purposes) to report all those tips in one or more written statements furnished to the employer on or before the 10th day of the following month. The employee is to furnish the statements in the form and manner prescribed by the Service. See § 31.6053-1(b) of the Employment Tax Regulations.
Credit for Employer Share of FICA Taxes Paid. Section 45B(a) of the Code provides that, for purposes of the general business credit under section 38, the credit for employer social security and Medicare taxes paid on certain employee tips is an amount equal to the “excess employer social security tax” paid or incurred by the employer. The term “excess employer social security tax” means any tax paid by an employer under section 3111 (both social security tax and Medicare tax) on its employees’ tip income without regard to whether the employees reported the tips to the employer pursuant to section 6053(a). Consequently, the section 45B credit is available with respect to unreported tips in an amount equal to the “excess employer social security tax” paid or incurred by the employer. No credit, however, is allowed to the extent tips are used to meet the federal minimum wage rate. For purposes of this limitation, the federal minimum wage rate is the rate that was in effect on January 1, 2007. The credit is available with respect to FICA taxes paid on tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption, if it is customary for customers to tip the employees.
Q1. Is the characterization of a payment as a “tip” by the employer determinative for FICA tax purposes under section 3121 of the Code?
A1. No. The employer’s characterization of a payment as a “tip” is not determinative. For example, an employer may characterize a payment as a tip, when in fact the payment is a service charge. The criteria of Rev. Rul. 59-252, 1959-2 C.B. 215, should be applied to determine whether a payment made in the course of employment is a tip or non-tip wages under section 3121 of the Code. The revenue ruling provides that the absence of any of the following factors creates a doubt as to whether a payment is a tip and indicates that the payment may be a service charge: (1) the payment must be made free from compulsion; (2) the customer must have the unrestricted right to determine the amount; (3) the payment should not be the subject of negotiation or dictated by employer policy; and (4) generally, the customer has the right to determine who receives the payment. All of the surrounding facts and circumstances must be considered. For example, Rev. Rul. 59-252 holds that the payment of a fixed charge imposed by a banquet hall that is distributed to the employees who render services (e.g., waiter, busser, and bartender) is a service charge and not a tip. Thus, to the extent any portion of a service charge paid by a customer is distributed to an employee it is wages for FICA tax purposes.
Example A: Restaurant W’s menu specifies that an 18% charge will be added to all bills for parties of 6 or more customers. Customer D’s bill for food and beverages for her party of 8 includes an amount on the “tip line” equal to 18% of the price for food and beverages and the total includes this amount. Restaurant W distributes this amount to the waitresses and bussers. Under these circumstances, Customer D did not have the unrestricted right to determine the amount of the payment because it was dictated by employer policy. Customer D did not make the payment free from compulsion. The 18% charge is not a tip within the meaning of section 3121 of the Code. The amount included on the tip line is a service charge dictated by Restaurant W.
Example B: Restaurant X includes sample calculations of tip amounts beneath the signature line on its charge receipts for food and beverages provided to customers. The actual tip line is left blank. Customer G’s charge receipt shows sample tip calculations of 15%, 18% and 20% of the price of food and beverages. Customer G inserts the amount calculated at 15% on the tip line and adds this amount to the price of food and beverages to compute the total. Under these circumstances, Customer G was free to enter any amount on the tip line or leave it blank; thus, Customer G entered the 15% amount free from compulsion. Customer G and Restaurant X did not negotiate the amount nor did Restaurant X dictate the amount. Customer G generally determined who would get the amount. The amount Customer G entered on the tip line is a tip within the meaning of section 3121 of the Code.
A2. All cash tips received by an employee are wages for FICA tax purposes and, therefore, must be reported to the employer unless the cash tips received by the employee during a single calendar month while working for the employer total less than $20. If an employee works for more than one employer during a month and receives less than $20 in tips while working for each employer, no tips are required to be reported to any of the employers. Cash tips include tips received from customers, charged tips (e.g., credit and debit card charges) distributed to the employee by his or her employer, and tips received from other employees under any tip-sharing arrangement. Thus, both directly and indirectly tipped employees must report tips received to their employer. Non-cash tips (i.e., tips received by an employee in any other medium than cash, such as passes, tickets, or other goods or commodities) from customers are not wages for FICA tax purposes and are not reported to the employer. All cash tips and non-cash tips are includable in an employee’s gross income and subject to federal income taxes.
A3. The employee must give the employer a written statement (or statements) of cash tips by the 10th day of the month after the month in which the tips are received. Form 4070, Employee’s Report of Tips to Employer, is available for this purpose and may be found in Publication 1244, Employee’s Daily Record of Tips and Report to Employer. The statement may be furnished on paper or transmitted electronically. See § 31.6053-1(b) of the regulations.
A4. The employer withholds the employee share of FICA taxes on the reported tips from the wages of the employee (other than tips) or from other funds made available by the employee for this purpose. See section 3102(c) of the Code and §§ 31.3102-3 and 31.3402(k)-1(c) of the regulations. The employer pays both employer and employee shares of FICA taxes in the same manner as the taxes on the employee’s non-tip wages and includes the reported tips on the employee’s Form W-2, Wage and Tax Statement. The employer makes a current period adjustment on Form 941, Employer’s QUARTERLY Federal Tax Return, to reflect any uncollected employee FICA taxes on reported tips. The employer reports any uncollected employee FICA taxes on the employee’s Form W-2, Wage and Tax Statement. The employee must report these amounts as additional tax on the employee’s Form 1040, U.S. Individual Income Tax Return (or other applicable return in the Form 1040 series).
Q6. Which year’s social security and Medicare rates and social security contribution and benefit base apply to compute the employee’s FICA tax liability on unreported tips?
A6. The social security and Medicare rates and the social security contribution and benefit base applicable to the calendar year in which the tips were actually received apply to compute the employee’s FICA tax liability. Form 4137 includes the applicable social security and Medicare rates and social security contribution and benefit base. The employer is not liable to withhold and pay the employee share of FICA taxes on the unreported tips.
A7. Yes. Under section 6652(b) of the Code, an employee who fails to report tips required to be reported to an employer is subject to a penalty equal to 50 percent of the employee share of FICA taxes on those tips, unless the employee can provide a satisfactory explanation showing that the failure was due to reasonable cause and not due to willful neglect. The explanation must be made in the form of a written statement setting forth all the facts alleged as a reasonable cause. This statement can be attached to the employee’s Form 1040 (See Form 4137). If the statement is submitted in response to a notice regarding a proposed penalty assessment, the statement must contain a declaration that it is made under the penalties of perjury.
A9. There is no specific form or procedure prescribed for a Section 3121(q) Notice and Demand. Notice and demand is made by the Service when it advises the employer in writing of the amount of tips received by an employee (or employees) who failed to report or underreported tips to the employer. Although no specific form is prescribed, a document will constitute a Section 3121(q) Notice and Demand if it (1) includes the words “notice and demand” and “section 3121(q),” (2) states the amount of tips received by the employee (or employees), and (3) states the period to which the tips relate. However, a document including such information will not constitute a Section 3121(q) Notice and Demand if it states that it is not a notice and demand.
A10. The employer reports the amount of the section 3121(q) FICA tax liability as a current period liability for FICA taxes on the employer’s Form 941 for the calendar quarter in which notice and demand is made. Employers should consult the Instructions for Form 941 to determine the correct line entry on Form 941. The employer must also include the amount of the section 3121(q) FICA tax liability on the appropriate line of the record of federal tax liability (Part 2 of Form 941 for a monthly depositor or Schedule B (Form 941) for a semi-weekly depositor) corresponding to the date of the Section 3121(q) Notice and Demand.
Q11. Which year’s social security and Medicare rates and social security contribution and benefit base apply to compute the employer’s FICA tax liability on unreported tips?
A11. The social security and Medicare rates and the social security contribution and benefit base applicable to the calendar year in which the tips were actually received apply to compute the employer’s FICA tax liability. The Service will compute the employer’s liability, and include a calculation worksheet with the Section 3121(q) Notice and Demand.
Q12. If the Service determines that an employer’s employees have unreported tips and issues a Section 3121(q) Notice and Demand to the employer, what is the period of limitations for the Service to assess the employer share of FICA taxes?
Q13. Is the employer liable for interest on the employer’s FICA tax liability for unreported tips?
A15. The section 45B credit is applied to the taxable year that the “excess social security tax” amount is paid or incurred. The section 45B(b)(1) definition of “excess social security tax” is limited to tips that “are deemed to have been paid by the employer to the employee pursuant to section 3121(q).” Under this definition of “excess social security tax,” such tax cannot be paid or incurred prior to the time that the tip amounts are deemed to have been paid under section 3121(q), which occurs on the date on which notice and demand for the employer share of FICA taxes is made to the employer. Therefore, the section 45B credit is available to the employer in the year the Section 3121(q) Notice and Demand is made and not the year in which the unreported tips were received by the employee. The credit is claimed on Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.
The federal short-term rate determined in accordance with section 1274(d) during April 2012 is the rate published in Revenue Ruling 2012-13, 2012-19 I.R.B. 878, to take effect beginning May 1, 2012. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of April 2012 is 0 percent. Accordingly, an overpayment rate of 3 percent (2 percent in the case of a corporation) and an underpayment rate of 3 percent are established for the calendar quarter beginning July 1, 2012. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning July 1, 2012, is 0.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning July 1, 2012, is 5 percent. These rates apply to amounts bearing interest during that calendar quarter.
The 3 percent rate also applies to estimated tax underpayments for the third calendar quarter in 2012.
Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of this Revenue Ruling. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 57, 59, and 63 of Rev. Proc. 95-17, 1995-1 C.B. 611, 613, and 617.
The principal author of this revenue ruling is A.M. Gulas of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue ruling, contact Ms. Gulas at (202) 622-4570 (not a toll-free call).
Extension of Relief and Procedures Under Notice 2010-30 and Notice 2011-16 for Spouses of U.S. Servicemembers Who are Working In or Claiming Residence or Domicile In a U.S. Territory Under the Military Spouses Residency Relief Act
On April 15, 2010, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) published Notice 2010-30, 2010-18 I.R.B. 650, which provides relief and procedures for certain taxpayers who are spouses (civilian spouses) of active duty members of the uniformed services (servicemembers). The relief and procedures were made available to civilian spouses who (A) accompany their servicemember spouses to a military duty station in American Samoa, Guam, the Northern Mariana Islands (NMI), Puerto Rico, or the U.S. Virgin Islands (USVI) (each a “U.S. territory”) and claim residence or domicile (tax residence) in one of the 50 States or the District of Columbia under the Military Spouses Residency Relief Act (MSRRA) or (B) accompany their servicemember spouses to a military duty station in one of the 50 States or the District of Columbia and claim tax residence in a U.S. territory under MSRRA. The relief and procedures set forth in Notice 2010-30 were initially available for the taxable year including November 11, 2009 (generally, this would be calendar year 2009, referred to hereinafter as 2009). On April 8, 2011, the Treasury Department and the IRS published Notice 2011-16, 2011-17 I.R.B. 720, which extended the relief and procedures announced in Notice 2010-30 to the first taxable year beginning after November 11, 2009 (generally, this would be calendar year 2010).
This notice further extends the relief set forth in Notice 2010-30 for civilian spouses described in the prior paragraph to taxable years beginning after November 11, 2010 (generally, these will be calendar year 2011 and subsequent calendar years, referred to hereinafter as 2011 and subsequent taxable years), and provides that such civilian spouses should follow the applicable procedures described in Notice 2010-30.
The extension of time to pay federal income taxes described in Part III(A)(1)(b) of Notice 2010-30 for 2009 is available to eligible civilian spouses described in Part III(A)(1)(b) of Notice 2010-30 claiming MSRRA relief with respect to individual federal income tax returns filed for 2011 and subsequent taxable years. To obtain an extension of time through October 17, 2012, to pay federal income taxes for 2011, such taxpayers should follow the procedures in Part III(A)(1)(b) of Notice 2010-30. To obtain an extension to pay federal income taxes for subsequent taxable years, such taxpayers should follow those same procedures adjusted for the appropriate filing dates in each such subsequent taxable year.
As provided in Notice 2010-30, the IRS has also determined pursuant to section 6654(e)(3)(A) of the Internal Revenue Code that, with respect to civilian spouses eligible for the extension of time to pay federal income taxes described in this notice and Part III(A)(1)(b) of Notice 2010-30, the addition to tax under section 6654(a) will not apply in the case of an underpayment of estimated tax by such civilian spouses for 2011 and subsequent taxable years due to unusual circumstances.
Civilian spouses who obtain the extension to pay federal income taxes for 2011 and subsequent taxable years provided by this notice are required to pay interest on the amount of tax from the original payment due date until the date the tax is paid. Pursuant to section 6601, interest is calculated from the prescribed payment due date determined under section 6151 without regard to any extension to pay federal income tax, including the extension to pay tax provided by this notice.
For the reasons discussed in Part III(A)(2) of Notice 2010-30, the extension to pay federal income taxes described in Part III(A)(1)(b) of Notice 2010-30 is not available to civilian spouses claiming tax residence in a State or the District of Columbia under MSRRA and filing individual federal income tax returns for 2011 and subsequent taxable years who are (A) federal employees in American Samoa, Guam, or the USVI, or (B) individuals working in Guam or the NMI to whom section 935 applies. These civilian spouses should file their individual federal income tax returns for 2011 and subsequent taxable years, and pay any taxes due, according to the procedures described in Part III(A)(2) of Notice 2010-30.
Civilian spouses who accompany their servicemember spouses to a military duty station in one of the 50 States or the District of Columbia and who claim tax residence in a U.S. territory under MSRRA should follow the procedures in Part III(B) of Notice 2010-30 with respect to their individual federal income tax returns for 2011 and subsequent taxable years.
The principal author of this notice is Jackie B. Manasterli of the Office of Associate Chief Counsel (International). For further information regarding this notice, contact Jackie B. Manasterli at (202) 435-5262 (not a toll-free call).
Credit for Carbon Dioxide Sequestration 2012 Section 45Q Inflation Adjustment Factor
This notice publishes the inflation adjustment factor for the credit for carbon dioxide (CO2) sequestration under § 45Q of the Internal Revenue Code (§ 45Q credit) for calendar year 2012. The inflation adjustment factor is used to determine the amount of the credit allowable under § 45Q. The calendar year 2012 inflation-adjusted credit applies to the amount of qualified CO2 captured by a taxpayer at a qualified facility and disposed of in secure geological storage.
Section 45Q(d)(2) provides that the Secretary, in consultation with the Administrator of the Environmental Protection Agency (EPA), the Secretary of Energy, and the Secretary of the Interior, shall establish regulations for determining adequate security measures for the geological storage of CO2 under subsection (a)(1)(B) or (a)(2)(C) such that the CO2 does not escape into the atmosphere. See section 5 of Notice 2009-83, 2009-44 I.R.B. 588, for procedures regarding secure geological storage.
Section 43(b)(3)(B) defines “inflation adjustment factor” as, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of § 45Q(d)(7), with respect to 2012 calendar year, the inflation adjustment factor is a fraction the numerator of which is the GNP implicit price deflator for 2011 (113.347) and the denominator of which is the GNP implicit price deflator for 2008 (108.589).
The inflation adjustment factor for calendar year 2012 is 1.0438. The 45Q credit for calendar year 2012 is $20.88 per metric ton of qualified CO2 under § 45Q(a)(1) and $10.44 per metric ton of qualified CO2 under § 45Q(a)(2).
The composite corporate bond rate for May 2012 is 4.39 percent. Pursuant to Notice 2004-34, the Service has determined this rate as the average of the monthly yields for the included corporate bond indices for that month.
June 2012 5.44 4.90 5.44
Notice 2007-81, 2007-2 C.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Pursuant to Notice 2007-81, the monthly corporate bond yield curve derived from May 2012 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of May 2012 are, respectively, 1.59, 4.12, and 5.04. The three 24-month average corporate bond segment rates applicable for June 2012 are as follows:
1.84 4.79 5.90
The transitional rule of § 430(h)(2)(G) does not apply to plan years beginning after December 31, 2009. Therefore, for a plan year beginning after 2009 with a lookback month to June 2012, the funding segment rates are the three 24-month average corporate bond segment rates applicable for June 2012, listed above without blending for any transitional period.
The rate of interest on 30-year Treasury securities for May 2012 is 2.93 percent. The Service has determined this rate as the average of the yield on the 30-year Treasury bond maturing in February 2042 determined each day through May 9, 2012, and the yield on the 30-year Treasury bond maturing in May 2042 determined each day for the balance of the month.
June 2012 3.88 3.49 4.08
Generally for plan years beginning after December 31, 2007, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. For plan years beginning in 2008 through 2011, the applicable interest rates are the monthly spot segment rates blended with the applicable rate under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning in 2007. Notice 2007-81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value transitional segment rates determined for May 2012, taking into account the May 2012 30-year Treasury rate of 2.93 stated above, are as follows:
2011 1.86 3.88 4.62
2012 1.59 4.12 5.04
Monthly Yield Curve for May 2012 Derived from May 2012 Data
0.5 0.52 20.5 4.83 40.5 5.07 60.5 5.16 80.5 5.20
1.0 0.85 21.0 4.84 41.0 5.07 61.0 5.16 81.0 5.20
1.5 1.14 21.5 4.85 41.5 5.08 61.5 5.16 81.5 5.21
2.0 1.40 22.0 4.86 42.0 5.08 62.0 5.16 82.0 5.21
2.5 1.60 22.5 4.87 42.5 5.08 62.5 5.16 82.5 5.21
3.0 1.78 23.0 4.88 43.0 5.08 63.0 5.17 83.0 5.21
3.5 1.93 23.5 4.88 43.5 5.09 63.5 5.17 83.5 5.21
4.0 2.08 24.0 4.89 44.0 5.09 64.0 5.17 84.0 5.21
4.5 2.24 24.5 4.90 44.5 5.09 64.5 5.17 84.5 5.21
5.0 2.40 25.0 4.91 45.0 5.10 65.0 5.17 85.0 5.21
5.5 2.56 25.5 4.91 45.5 5.10 65.5 5.17 85.5 5.21
6.0 2.72 26.0 4.92 46.0 5.10 66.0 5.17 86.0 5.21
6.5 2.89 26.5 4.93 46.5 5.10 66.5 5.18 86.5 5.21
7.0 3.05 27.0 4.93 47.0 5.11 67.0 5.18 87.0 5.21
7.5 3.21 27.5 4.94 47.5 5.11 67.5 5.18 87.5 5.21
8.0 3.36 28.0 4.95 48.0 5.11 68.0 5.18 88.0 5.22
8.5 3.51 28.5 4.96 48.5 5.11 68.5 5.18 88.5 5.22
9.0 3.65 29.0 4.96 49.0 5.12 69.0 5.18 89.0 5.22
9.5 3.78 29.5 4.97 49.5 5.12 69.5 5.18 89.5 5.22
10.0 3.90 30.0 4.97 50.0 5.12 70.0 5.18 90.0 5.22
10.5 4.01 30.5 4.98 50.5 5.12 70.5 5.18 90.5 5.22
11.0 4.11 31.0 4.99 51.0 5.12 71.0 5.19 91.0 5.22
11.5 4.20 31.5 4.99 51.5 5.13 71.5 5.19 91.5 5.22
12.0 4.28 32.0 5.00 52.0 5.13 72.0 5.19 92.0 5.22
12.5 4.35 32.5 5.00 52.5 5.13 72.5 5.19 92.5 5.22
13.0 4.42 33.0 5.01 53.0 5.13 73.0 5.19 93.0 5.22
13.5 4.47 33.5 5.01 53.5 5.13 73.5 5.19 93.5 5.22
14.0 4.52 34.0 5.02 54.0 5.14 74.0 5.19 94.0 5.22
14.5 4.57 34.5 5.02 54.5 5.14 74.5 5.19 94.5 5.22
15.0 4.61 35.0 5.03 55.0 5.14 75.0 5.19 95.0 5.22
15.5 4.64 35.5 5.03 55.5 5.14 75.5 5.19 95.5 5.23
16.0 4.67 36.0 5.04 56.0 5.14 76.0 5.20 96.0 5.23
16.5 4.70 36.5 5.04 56.5 5.15 76.5 5.20 96.5 5.23
17.0 4.72 37.0 5.04 57.0 5.15 77.0 5.20 97.0 5.23
17.5 4.74 37.5 5.05 57.5 5.15 77.5 5.20 97.5 5.23
18.0 4.76 38.0 5.05 58.0 5.15 78.0 5.20 98.0 5.23
18.5 4.78 38.5 5.05 58.5 5.15 78.5 5.20 98.5 5.23
19.0 4.79 39.0 5.06 59.0 5.15 79.0 5.20 99.0 5.23
19.5 4.81 39.5 5.06 59.5 5.16 79.5 5.20 99.5 5.23
20.0 4.82 40.0 5.07 60.0 5.16 80.0 5.20 100.0 5.23
Interim Guidance on Rev. Rul. 2012-18
The Internal Revenue Service (Service) is providing administrative guidelines to examiners concerning Rev. Rul. 2012-18, published in the 2012-26 Internal Revenue Bulletin.[1] The Service is aware that some businesses may have to change automated or manual reporting systems in order to comply with the proper treatment of service charges as specified in Q&A 1 of Rev. Rul. 2012-18.
When performing a tip examination, examiners must ensure that distributed service charges are properly characterized as wages and not tips. Q&A 1 of Rev. Rul. 2012-18 reaffirms the factors that are used to determine whether payments constitute tips or service charges. Q&A 1 of Rev. Rul. 2012-18 provides that the absence of any of the following factors creates a doubt as to whether a payment is a tip and indicates that the payment may be a service charge:
(3) The payment should not be the subject of negotiation or dictated by employer policy; and,
The Service is providing the interim guidance memorandum below to its examiners. The memorandum provides that, in limited circumstances, an examiner should apply Q&A 1 of Rev. Rul. 2012-18 prospectively to amounts paid on or after January 1, 2013, in order to allow businesses not currently in compliance additional time to amend their business practices and make needed system changes. The Service is seeking public comments regarding this interim guidance and whether additional time is needed to ensure that systems are compliant. Comments on the interim guidance may be submitted on or before September 24, 2012, either electronically at TIP.Program@irs.gov or in writing to:
In a future announcement, the Service will also solicit public comments on proposed changes to the Service’s existing voluntary tip compliance agreements. Specifically, the Service is considering significant changes to the Tip Reporting Alternative Commitment (TRAC) program and other variations of TRAC agreements. Versions of the existing voluntary tip compliance agreements are available on the IRS website at Market Segment Understandings (MSU) http://www.irs.gov/businesses/small/article/0,,id=98944,00.html. They may also be obtained from the IRS office listed above. The Service is interested in updating its suite of voluntary tip compliance agreements to place a greater emphasis on computations derived from Point of Sale systems and the use of electronic payment settlement methods, such as credit and debit cards. While employee education will remain a focus of the Service’s efforts, these new voluntary tip compliance agreements will increase the participants’ reliance on internal control systems to improve employee tip reporting compliance.
Following is a copy of the interim guidance memorandum that examiners will use until procedures are published in the Internal Revenue Manual, after receiving and considering comments submitted in response to this announcement.
[1] Among the topics covered in this revenue ruling are reporting and depositing of FICA taxes on tips, Section 3121(q) Notice and Demand issues, and the section 45B credit.
Bulletins 2012-1 through 2012-26
2012-25 2012-26 I.R.B. 2012-26
2012-40 2012-26 I.R.B. 2012-26
2012-41 2012-26 I.R.B. 2012-26
2012-42 2012-26 I.R.B. 2012-26
2012-43 2012-26 I.R.B. 2012-26
142561-07 2012-25 I.R.B. 2012-25 1020
141075-09 2012-25 I.R.B. 2012-25 1028
2012-16 2012-24 I.R.B. 2012-24
2012-17 2012-25 I.R.B. 2012-25 1018
2012-18 2012-26 I.R.B. 2012-26
95-7 Modified and superseded by Rev. Rul. 2012-18 2012-26 I.R.B. 2012-26