House bill filed to bar IRS' employer-only tip audits

Nation's Restaurant News, Sept 23, 2002

WASHINGTON -- Rep. Wally Herger, R-Calif., and Rep. John Tanner, D-Tenn., introduced a bill in the House called the Tip Tax Fairness Act, which would prohibit the Internal Revenue Service from conducting "employer-only" audits and assessments of servers' tip incomes.

The Herger-Tanner bill is a response to the Supreme Court's June 17 ruling that the IRS can use "aggregate estimates" of allegedly unreported tips to bill employers for Social Security and Medicare payroll taxes on those approximated gratuities.

A spokesman in Herger's office said the bill was scheduled to be introduced Sept. 17 and would be discussed at a press conference during the National Restaurant Association's Public Affairs Conference this week.

The NRA is expected to begin actively lobbying Congress to pass the Tip Tax Fairness Act.