TE/GE - Tip Compliance Agreements

IRM 4.23.7, Employment Tax on Tip Income, provides information about employment taxes on tip income, tip agreements, employment tax tip examinations, etc. While tip income among government employees is not common, TE/GE examiners should consider, as a possible area of non-compliance, tips provided to employees of a food and beverage establishment that is operated by a government, such as a city-operated museum or convention center restaurant. Baggage handlers at a city- operated airport and employees at a city-operated golf course, recreation center, or tourist service are additional examples of positions that may receive tip income as well.

Developing a tip compliance agreement using the parameters outlined in IRM 4.23.7 may be appropriate.

See IRM 4.70.18, Tip Compliance Agreement Procedures.