The IRS’s next target: Tips from waiting tables

The IRS announced last year that its agents would be on the lookout for $600 sums sent through third-party processors such as CashApp and Venmo. The federal agency announced on Monday that its enforcement efforts would include the “service industry tip reporting program.”

In layman’s terms, the government is coming after tips people get from waiting tables. The IRS couches the plan as a proposal, and has opened the public comment window.

• Related reading: IRS delays $600 reporting threshold for third-party payments

The IRS says the tip reporting program is “designed to take advantage of advancements in point-of-sale, time and attendance systems, and electronic payment settlement methods to improve tip reporting compliance.”

Which is to say: The technology used to log employee time at work will now help the government ensure people are paying taxes on their tips.

Here’s how the IRS describes the program in Notice 2023-13:

Throughout his presidency, Joe Biden has claimed he would tax the rich. The New York Post reported Tuesday that Biden’s State of the Union speech would revive a plan to tax billionaires.

Thus far, IRS enforcement efforts under Biden have mostly targeted small sums of money: $600 here, tips from the breakfast diner there. The IRS has begun the decade-long process of hiring 87,000 new agents to boost its enforcement efforts.

An effort to defund those agents passed the U.S. House this year, but the Senate has not taken action.