Tech makes tips more transparent to IRS
If you rely on a POS system that suggests tip amounts at the end of a transaction, the IRS will increasingly be leaning on the data trail from these systems to keep employers and employees honest. As reported recently by Forbes, the IRS says in its Tax Gap Studies that it collects 99 percent of what it is due on regular wages – where taxes are withheld and reported to the IRS and to the taxpayer via a W-2 – as opposed to just 55 percent of what it is owed in tips. It’s something to keep in mind as the IRS steps up its auditing efforts. When tips were largely collected in cash, earnings were easier to disguise – but tech is changing that by acting as an automated auditor.
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