The National Restaurant Association (NRA) has filed an amicus curiae or “friend of the court” brief in support of the restaurant Fior d’Italia in its tip reporting battle before the U.S. Supreme Court, arguing that the case has tremendous ramifications for the nation’s 200,000 restaurants with tipped employees.
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The case involves a claimed underpayment of tip taxes for 1991 and 1992 by the San Francisco-based Fior d’Italia restaurant. The NRA has long maintained that holding only employers liable when the IRS fails to determine which workers failed to report tips pits restaurateurs against their own employees, turning them into “tip police”. In addition to impacting the nation’s 200,000 restaurants with tipped employees the outcome will have ramifications for any business with tipped employees.
“We are filing this brief in USA v. Fior d’Italia because we strongly believe that Congress never intended to give the IRS the authority to take aim at employers without determining whether employees underreported their tips.
“Clearly, the responsibility for reporting tips lies with the employee who receives them. By holding only employers liable when employees fail to report all of their tips, the IRS’s attacks put restaurant operators in an untenable position. It is the IRS’s responsibility – not a restaurant operator’s – to determine which employees failed to report tips before assessing the employer,” said NRA senior VP of operations and general counsel Peter Kilgore, who authored the brief.
“As the Supreme Court takes up this issue, the IRS could finally be forced to look at how inappropriate and wrong its policy is toward restaurant operators – and other small businesses – with tipped employees. It is our hope that the Supreme Court will agree that the IRS does not have the authority to give an employer one huge tax bill for alleged underreported employee tip estimates without first determining which employees failed to report and the amount,” he said.
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By GlobalDataThe US Supreme Court will hear oral arguments in the case in April, and a ruling is expected by June.
