Internal Revenue Code:Sec. 6053. Reporting of tips
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 61 - INFORMATION AND RETURNS
Subchapter A - Returns and Records
PART III - INFORMATION RETURNS
Subpart C - Information Regarding Wages Paid Employees
Statute
Sec. 6053. Reporting of tips
(a) Reports by employees
Every employee who, in the course of his employment by an
employer, receives in any calendar month tips which are wages (as
defined in section 3121(a) or section 3401(a)) or which are
compensation (as defined in section 3231(e)) shall report all such
tips in one or more written statements furnished to his employer on
or before the 10th day following such month. Such statements shall
be furnished by the employee under such regulations, at such other
times before such 10th day, and in such form and manner, as may be
prescribed by the Secretary.
(b) Statements furnished by employers
If the tax imposed by section 3101 or section 3201 (as the case
may be) with respect to tips reported by an employee pursuant to
subsection (a) exceeds the tax which can be collected by the
employer pursuant to section 3102 or section 3202 (as the case may
be), the employer shall furnish to the employee a written statement
showing the amount of such excess. The statement required to be
furnished pursuant to this subsection shall be furnished at such
time, shall contain such other information, and shall be in such
form as the Secretary may by regulations prescribe. When required
by such regulations, a duplicate of any such statement shall be
filed with the Secretary.
(c) Reporting requirements relating to certain large food or
beverage establishments
(1) Report to Secretary
In the case of a large food or beverage establishment, each
employer shall report to the Secretary, at such time and manner
as the Secretary may prescribe by regulation, the following
information with respect to each calendar year:
(A) The gross receipts of such establishment from the
provision of food and beverages (other than nonallocable
receipts).
(B) The aggregate amount of charge receipts (other than
nonallocable receipts).
(C) The aggregate amount of charged tips shown on such charge
receipts.
(D) The sum of -
(i) the aggregate amount reported by employees to the
employer under subsection (a), plus
(ii) the amount the employer is required to report under
section 6051 with respect to service charges of less than 10
percent.
(E) With respect to each employee, the amount allocated to
such employee under paragraph (3).
(2) Furnishing of statement to employees
Each employer described in paragraph (1) shall furnish, in such
manner as the Secretary may prescribe by regulations, to each
employee of the large food or beverage establishment a written
statement for each calendar year showing the following
information:
(A) The name and address of such employer.
(B) The name of the employee.
(C) The amount allocated to the employee under paragraph (3)
for all payroll periods ending within the calendar year.
Any statement under this paragraph shall be furnished to the
employee during January of the calendar year following the
calendar year for which such statement is made.
(3) Employee allocation of 8 percent of gross receipts
(A) In general
For purposes of paragraphs (1)(E) and (2)(C), the employer of
a large food or beverage establishment shall allocate (as tips
for purposes of the requirements of this subsection) among
employees performing services during any payroll period who
customarily receive tip income an amount equal to the excess of
-
(i) 8 percent of the gross receipts (other than
nonallocable receipts) of such establishment for the payroll
period, over
(ii) the aggregate amount reported by such employees to the
employer under subsection (a) for such period.
(B) Method of allocation
The employer shall allocate the amount under subparagraph (A)
-
(i) on the basis of a good faith agreement by the employer
and the employees, or
(ii) in the absence of an agreement under clause (i), in
the manner determined under regulations prescribed by the
Secretary.
(C) The Secretary may lower the percentage required to be
allocated
Upon the petition of the employer or the majority of
employees of such employer, the Secretary may reduce (but not
below 2 percent) the percentage of gross receipts required to
be allocated under subparagraph (A) where he determines that
the percentage of gross receipts constituting tips is less than
8 percent.
(4) Large food or beverage establishment
For purposes of this subsection, the term ''large food or
beverage establishment'' means any trade or business (or portion
thereof) -
(A) which provides food or beverages,
(B) with respect to which the tipping of employees serving
food or beverages by customers is customary, and
(C) which normally employed more than 10 employees on a
typical business day during the preceding calendar year.
For purposes of subparagraph (C), rules similar to the rules of
subsections (a) and (b) of section 52 shall apply under
regulations prescribed by the Secretary, and an individual who
owns 50 percent or more in value of the stock of the corporation
operating the establishment shall not be treated as an employee.
(5) Employer not to be liable for wrong allocations
The employer shall not be liable to any person if any amount is
improperly allocated under paragraph (3)(B) if such allocation is
done in accordance with the regulations prescribed under
paragraph (3)(B).
(6) Nonallocable receipts defined
For purposes of this subsection, the term ''nonallocable
receipts'' means receipts which are allocable to -
(A) carryout sales, or
(B) services with respect to which a service charge of 10
percent or more is added.
(7) Application to new businesses
The Secretary shall prescribe regulations for the application
of this subsection to new businesses.
Sources
(Added Pub. L. 89-97, title III, Sec. 313(e)(2)(A), July 30, 1965,
79 Stat. 384; amended Pub. L. 89-212, Sec. 2(d), Sept. 29, 1965, 79
Stat. 859; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4,
1976, 90 Stat. 1834; Pub. L. 97-248, title III, Sec. 314(a), Sept.
3, 1982, 96 Stat. 603; Pub. L. 98-369, div. A, title X, Sec.
1072(a), (c)(1), July 18, 1984, 98 Stat. 1052.)
Miscellaneous
AMENDMENTS
1984 - Subsec. (c)(3)(C). Pub. L. 98-369, Sec. 1072(a),
substituted ''Upon the petition of the employer or the majority of
employees of such employer, the Secretary'' for ''The Secretary''
and ''2 percent'' for ''5 percent''.
Subsec. (c)(4). Pub. L. 98-369, Sec. 1072(c)(1), inserted
provision that an individual who owns 50 percent or more in value
of the stock of the corporation operating the establishment shall
not be treated as an employee.
1982 - Subsec. (c). Pub. L. 97-248 added subsec. (c).
1976 - Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1965 - Subsec. (a). Pub. L. 89-212, Sec. 2(d)(1), inserted ''or
which are compensation (as defined in section 3231(e)''.
Subsec. (b). Pub. L. 89-212, Sec. 2(d)(2), inserted ''or section
3201 (as the case may be)'' and ''or section 3202 (as the case may
be)''.
EFFECTIVE DATE OF 1984 AMENDMENT
Section 1072(c)(2) of Pub. L. 98-369 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to calendar years beginning after December 31, 1982.''
EFFECTIVE DATE OF 1982 AMENDMENT
Section 314(e) of Pub. L. 97-248, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. - The amendments made by this section (amending
this section and sections 6001 and 6678 of this title, and enacting
provisions set out as a note under this section) shall apply to
calendar years beginning after December 31, 1982.
''(2) Special rule for 1983. - For purposes of section 6053(c) of
the Internal Revenue Code of 1986 (formerly I.R.C. 1954), in the
case of payroll periods ending before April 1, 1983, an employer
must only report with respect to such periods -
''(A) amounts described in subparagraphs (A), (B), (C), and (D)
of section 6053(c)(1) of such Code, and
''(B) the name, and identification number, wages paid to, and
tips reported by, each tipped employee.''
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by Pub. L. 89-212 effective only with respect to tips
received after 1965, see section 6 of Pub. L. 89-212, set out as a
note under section 3201 of this title.
EFFECTIVE DATE
Section 313(f) of Pub. L. 89-97 provided that: ''The amendments
made by this section (enacting this section and amending sections
451, 3102, 3121, 3401, 3402, 6051, 6652, and 6674 of this title and
section 409 of Title 42, The Public Health and Welfare) shall apply
only with respect to tips received by employees after 1965.''
REGULATIONS
Section 1072(b) of Pub. L. 98-369 provided that: ''The Secretary
of the Treasury shall prescribe by regulations within 1 year after
the date of the enactment of this Act (July 18, 1984) the
applicable recordkeeping requirements for tipped employees.''
THREAT OF AUDIT PROHIBITED TO COERCE TIP REPORTING ALTERNATIVE
COMMITMENT AGREEMENTS
Pub. L. 105-206, title III, Sec. 3414, July 22, 1998, 112 Stat.
755, provided that: ''The Secretary of the Treasury or the
Secretary's delegate shall instruct employees of the Internal
Revenue Service that they may not threaten to audit any taxpayer in
an attempt to coerce the taxpayer into entering into a Tip
Reporting Alternative Commitment Agreement.''
MODIFICATION OF TIPS ALLOCATION METHOD
Pub. L. 99-514, title XV, Sec. 1571, Oct. 22, 1986, 100 Stat.
2765, provided that: ''Effective for any payroll period beginning
after December 31, 1986, an establishment may utilize the optional
method of tips allocation described in the last sentence of section
31.6053-3(f)(1)(iv) of the Internal Revenue Regulations only if
such establishment employs less than the equivalent of 25 full-time
employees during such payroll period.''
STUDY OF TIP COMPLIANCE
Section 314(c) of Pub. L. 97-248 directed Secretary of the
Treasury or his delegate to submit before Jan. 1, 1987, to
Committee on Ways and Means of House of Representatives and to
Committee on Finance of Senate a report with respect to tip
compliance in food and beverage service industry. Such study to
include, but not be limited to, an analysis of tipping patterns,
tip-sharing arrangements, and tip compliance patterns.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 45B, 451, 3306, 3102,
3121, 3202, 3231, 3401, 3402, 6001, 6041, 6041A, 6051, 6652, 6674,
6678, 6724 of this title; title 42 section 409; title 45 section
231.
