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Employer FICA tax on unreported tip income.

Publication: The Tax Adviser
Publication Date: 01-OCT-02
Format: Online - approximately 560 words
Delivery: Immediate Online Access
Full Article Title: Employer FICA tax on unreported tip income.(Federal Insurance Contributions Act)

Article Excerpt
In Fior D'Italia, Inc., 122 S. Ct. 2117 (2002), the Supreme Court reversed the Ninth Circuit, granting the IRS the authority to assess employer FICA taxes on estimated unreported tip income. Moreover, the IRS has the authority to determine these estimates based on the aggregate-estimation method. This latest development creates a new headache for employers with tip employees (primarily in the restaurant industry).

Overview

The IRS has attempted to force accurate reporting of tips, to no avail. Prior to Fior D' Italia, it...

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