Food Industry
Industry: Email Alert RSS FeedNRA files suit against IRS over FICA tax collection
Nation's Restaurant News, Oct 3, 1994
WASHINGTON - The National Restaurant Association is suing the Internal Revenue Service for its ongoing campaign to collect FICA taxes for unreported tips through foodservice employers.
The suit, filed in the U.S. Court of Federal Claims, alleges that the agency's assessment of employers for FICA taxes on their employees' unreported tips is arbitrary and that the FICA taxes collected by such methods do not benefit the employees' Social Security wage-earning accounts.
The action was filed on behalf of The Bubble Room Inc., an Orange City, Fla., restaurant whose claim for a refund of FICA taxes paid on their employees' unreported tips was disallowed.
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According to the suit, following an audit in 1991 the restaurant was assessed $32,000 plus interest for FICA taxes on unreported tips in 1989. Because individual employees were not audited, unreported tips were not credited to any employee's Social Security accounts, the suit said.
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