 Internal revenue service IRS tax news IRS introduces new service industry tip reporting program. Oh Here we go again Technology increases making things easier and the IRS just exploits it for more personal information You see this is why we still need cash. This is why we still need cash I'm telling you like I want my tips go into who I give them to not the government dang it Specifically I want my tips to be stored safely and securely in the cleavage for which they were intended He's a monster Just kidding, but seriously, I mean it's ridiculous Like you can't even tip somebody without the government getting in the middle of a transaction these days And I I find it strange that the government's attention is so focused on retrieving my tip out of cleavage a job Most likely assigned to Hunter Biden that the government neglects to put their attention where it's supposed to be Namely national defense as they ignore like a Chinese spy balloon casually crossing the entire country I mean pull your head out of the cleavage and do what we pay you to do dang it You degenerate slacking miscreants. I swear. I mean it's bad enough We have our own government spying on us, but at least they could stop the Chinese government from spying on us too But I mean, you know, unfortunately a balloon with like cameras on it is Way too recent a technology for Joe Biden to comprehend. What's the matter with this thing? What's all that churning and bubbling you call that a radar screen? No, sir. We call it mr. Coffee careful some Yes, I always have coffee when I watch radar. You know that of course. I do sir. Everybody knows that I mean if only the spy craft was comprised of two balloons Because then Joe Biden may have mistaken it for large breasts Resulting in him being excitedly ready to search the cleavage for tips that he could take, you know To to help out the national debt and everything I'm gonna be easy everywhere. I look something reminds me But why would they need to shoot down the spy balloon some say I mean after all President Biden totally jammed the signal man rendering the spy balloon useless Radar about to be J Plus that the Chinese assure us it was just a civilian balloon not a spy balloon So it's there's totally no reason to shoot it down and now we've upset the Chinese by assuming bad intentions I mean the Chinese are like that balloon was to be for your surprise birthday party And you totally ruin the joyous moment with your unfounded Suspicious, how could you I it's it's just like that time you thought we engineered a virus in a lab when in Actuality it was the wet market bat eater people. What did it? I mean, how could you how could you even ever think? We would be anything but honest always looking out for your best interest You blew up the birthday cake that we were floating over in a balloon Sorry, that's an attempt at a Russell brand bit poorly executed I think I think you need to have an accent to perform it proper, but in any case on to the news I are 2023 dash 19 February 6 2023 Washington the Treasury Department and Internal Revenue Service today issued notice 2023 dash 13 There's a link to that here which contains a proposed revenue procedure that would establish the service industry tip compliance agreement program the SITC a or sit California for short if you need an acronym a voluntary tip reporting program between the IRS and employers in various service industries the IRS is issuing this guidance in proposed form to provide an Opportunity for public comment. So tips have always been kind of a problem area with regards to reporting And let's just kind of give a recap of why that might be remember that we have an income tax type of system So income is actually kind of bad for taxes because reporting the income means that you're gonna be paying Taxes on it from the IRS or government side of things They would like to be double-checking looking over your shoulder making sure that you're reporting everything They would probably like to have a system set up where they don't even have to have you voluntarily file the tax return They could just basically get the information from whoever paid you and so they have the leverage on the payer In a transaction every transaction has someone that's paying for goods and services And someone that is providing the goods and services the one that's providing the goods and services is getting income Though the one that's paying for the goods and services the money is going out there They have an expense which might be a deduction expenses being good for taxes Therefore the IRS has the leverage on the person that's paying being able to say Hey, do you want a tax deduction if you do then give us the information that you gave the money to so that we can go after them For the income on their side for the income tax type of system if you have an employee employee or situation That's quite clear because the IRS is telling the employer They have to report the income not only that but actually do the withholdings So they're actually doing the tax collecting on behalf of the government and providing that to the government in a 1099 situation Then of course, they don't have to do the actual withholding usually but they still have to basically tell the government Hey, this person is someone I paid they have income You can double check that they report that income on their taxes now The IRS has always had issues with certain industries where they don't have that kind of leverage You can see restaurants. They get paid by the customer. You can see hair salons nail salons Massage parlors all those kind of things where there's cash involved and you're getting paid by the end user the customer and not another business The the IRS doesn't have leverage over the end customer who got a haircut to say hey Do you want a deduction for your haircut? If so, you've got to tell us who you paid To get your haircut. They don't have that kind of leverage, right? And that's why I think they don't really like those kind of businesses They kind of went after them quite heavily during the whole covert thing. I it's my conspiracies theory They don't like them in the first place, but okay And then you got the tips that mess things up too because the idea of a tip situation is that you're getting tips for Services that are above and beyond the the service that that is that is generally required That would be the general usual idea of a tip So you get a tip directly from a customer, which again it used to be That the employer wasn't involved in that transaction That would be the ideal situation right that if you're if you're a server at a restaurant The old tip strategy of a business model would be that you're gonna make tips the tips are yours I'm as the employer. I'm not gonna get involved in your tips. They're depending on your service They're your clients you bring them in they're coming to see you or get your service You get the tips. I get the revenue for the food or the drinks That's how it's set up But the government doesn't like that of course because now you've got tips and the tips are Something that are hard for the government to track so they would like to force the employer to track the tips The employer doesn't want to a lot of times because now they're getting in the middle the tips thing And so now you've got these different kind of a shorthand rules with regards to tips reporting So that the government can get their double check in and kind of like a w2 type of scenario For the tips and so now you've got all these weird things with regards to tips And you can't have a classical business structure of a restaurant where the server just gets paid from tips and then but any Gets here we go. That's the general background of this whole thing. So the proposed SITCA program is designed to take advantage of Advancements in point of sale time and attendance systems and electronic payment settlement methods to improve tip reporting compliance The proposed program would also decrease taxpayer and IRS administrative burdens and provide more Transparency and certainty to taxpayers meaning they'll probably have to report more of their tips and under the so the proposed program Includes several features the monitoring of employer compliance based and actual annual tip revenue and charge tip data from the employer's point of sale system and Allowance for adjustments in tipping practices from year to year So since we have a point of sales it used to be we don't have as much like people didn't pay electronically as much and pay their tips electronically and Therefore you didn't record the transaction possibly at the point of sale for small restaurants and coffee shops and that kind of thing Now everything is electronic and even the tips are electronic Therefore you've got this added resource that you might be able to track the tips and actually where the tips are going if you don't want that to happen If you want your tips possibly to go further possibly in the pocket of the individual that you actually gave the tip to you might Want to still give them cash or something like that, but not that you shouldn't report your cash tips I'm just saying that you know, but it's still cash could be still useful in some situations could go a little bit further on the tipping side of things You know my and so you might want to keep some around from time to time and not let the government totally crush cash So participating employers demonstrate compliance with the program requirements by submitting an annual report after the close of the calendar year Which reduces the need for compliance reviews by the IRS Participating employers receive protection from liability under the rules that define tips as part of an employee's pay For calendar years in which they remained compliant with program requirements So you can see what's happening here the old model used to be hey look you serve The food or the drinks or whatever we're serving I make money on the drinks and the food as the person that makes the drinks and the food you make the money on the tips and That's it right. I'm not going to get in it's basically your own business You're doing your own little serving business over there and I make money on the drinks and food classical model You still work great for many businesses can't do it now because the IRS wants to hold the employer Responsible for the for the tips of the servers and so that becomes a whole mess right now The employers kind of has to get in the middle of a whole tip thing so Participating employers have flexibility to implement employee tip reporting policies that are best suited for their employers and their business Model in accordance with the section of the tax law that requires employees to report tips to their employers so once again, they've made the employer into the tax collector for a Situation where they once were not and in my opinion, that's usually a bad move. It's usually crushing. It's usually Has a crushing effect on the industry decreases that the overall GDP the actual industry goes down Similar things are gonna happen with you would think gig work, right? They're trying to get a stranglehold They want to see everything you can see why they would want to do that because people are cheating out there and whatnot But in doing so and trying to hold on too tight They're gonna crush their golden egg, right? They're gonna choke the chicken's neck that laid the golden egg or the goose whatever lays the egg so the intent of the SITCA program is to serve as the sole tip reporting compliance program for employers in various service industries and would replace the following programs the tip our Rate determination agreement. That's the TRDA tip reporting alternative commitment That's the TRAC and employer Designed TRAC. That's the EM TRAC. So if you've worked with restaurants or anything like that like I have in the past It's been a while tips are a mess, right? It's like it's kind of a mess to dive in and get involved in and how you have to report the tips So the IRS is continuing to explore opportunities within the gaming industry and as such this program does not impact the existing Gaming industry tip compliance agreement the GITCA program the proposed revenue procedure provides that for employers With any of these existing agreements such agreements would remain in effect until the earlier of one the employer's acceptance into the SITCA program to an IRS Determination that the employer is non-compliant with the terms of their TRDA TRAC or EM TRAC agreement So if you like those other agreements over what they're provoking now You're gonna want to stay in compliance with them or the IRS is gonna look for ways to push you over to the thing that it Looks like they're trying to get going here, which is this new thing So number three the end of the first full calendar year after the final revenue procedure is published in the internal revenue bulletin So anyone interested in providing feedback to the proposed SITCA sit California program Should follow the instructions in the notice and replied by May 7th 2023 so if you've got any comments if you're in the restaurant industry Obviously tips are a big thing then in a lot of places and it can have a huge impact on Those industries and how they're gonna be competing in that market space so you can give your feedback I'm not I'm not sure if they're gonna listen to people But at least they put it out there and allow for comments with it So check it out. There'll be a links to this in the description so you can see it