An interesting story from Las Vegas: It seems that there’s a problem with tips, and tip reporting, in Sin City.
The American Gaming Association is very unhappy about the IRS’ enforcement of the voluntary tip program. This program allows workers to report set rates of tips, based on where they work and what shift they’re on. Tips are a big part of workers incomes in Las Vegas.
The IRS has decided to audit 1000 of the workers who signed up for the tip program; that’s what’s making the AGA upset. The IRS is likely angry because workers are — gasp — underreporting cash tip income! That’s unheard of!
In any case, the Vegas tip program agreement ends in just a few months. At that point, the gratuity may become extra.
IRS OK WITH CASINO COMPS DEDUCTION
Agents won’t be allowed to challenge whether casino comps to high-rolling patrons qualify for treatment as promotional expenses, according to a memo released by the Large and Mid-Size Business Division of the IRS. Casinos have usually marketed their comp programs in such a way that the costs are treated as promotional expenses – being given to gamblers based on a casion’s expected win calculated from the gambler’s prior activity.
“Unless the manner in which a casino awards comps to its patrons differs markedly from the method described in the memo, agents are directed not to challenge whether the comps qualify as promotional expenses”, the memo said. “This directive is intended to conserve examination resources.” – Accounting News – CPAWeb
Milt Baker CPA