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IRS Agrees to Cut Withholding Rate on Tips

LAS VEGAS, Nevada –- The Internal Revenue Service has agreed to withhold a smaller percentage of casino worker tips so long as hotel occupancy rates remain below 80 percent because of last week's terrorist attacks in New York City and Washington, D.C.

Workers complained the dramatic reduction in travel to Las Vegas would result in the IRS taxing them for tips, or tokes, they were no longer receiving, prompting MGM Mirage executives to push for the change.

The deal applies to all Nevada hotel-casino workers participating in a voluntary program designed to spare workers from having to maintain logs of their daily tips while ensuring taxes on tips are paid.

It will be visible in the next paychecks of workers who retain their tokes, as opposed to pooling them with others, and will apply to an estimated 15,000 Nevada workers, with about 5,000 of them at MGM Mirage properties.

"With these times, it was important to get these workers some relief," said Dennis Ozment, IRS territory manager.

The amount withheld varies according to job, hotel and shift. Among the workers eligible to participate in the program are cocktail servers, bartenders, valets, buspeople, bellboys, waiters and limousine drivers.

"We wanted to do this (deal) immediately to give people relief for this week," said Betty Wilson, MGM Mirage's vice president of taxes. "A lot of people have paychecks this week, and we wanted to get the deal done before payday."

Tip earners who opt out of participating in the plan must log their daily tips and are subject to IRS audits.

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