SECTION 2. BACKGROUND

The Gaming Industry Tip Compliance Agreement Program (­GITCA Program) is designed to promote compliance by gaming industry employers and employees with the provisions of the Internal Revenue Code relating to tip income and to reduce disputes under section 3121(q). Under section 3121(q), tips received by an employee in the course of the employee’s employment are considered remuneration for that employment and are deemed to have been paid by the employer for purposes of the employer share of social security and Medicare tax imposed by sections 3111(a) and (b). The remuneration is deemed to be paid when a written statement including the tips is furnished to the employer by the employee pursuant to section 6053(a). The ­GITCA Program was established by Revenue Procedure 200335, 2003-20 I.R.B. 919, and was updated by Revenue Procedure 2007-32 with a new model ­GITCA. The model ­GITCA in Revenue Procedure 2007-32 was intended to enhance administration of the ­GITCA Program by facilitating and promoting the use of financial information technology in the tip reporting process.

Under the ­GITCA Program, a gaming industry employer and the Internal Revenue Service (Service) work together to reach a ­GITCA that establishes minimum tip rates for participating tipped employees in specified occupational categories, prescribes a threshold level of participation by the employer’s employees, and reduces compliance burdens for the employer and enforcement burdens for the Service.