SEARCH NEWS:

 

IRS Alters Tip Tax

LAS VEGAS, Nevada –– Tens of thousands of tip earners at Nevada casinos will see their federal income tax withholding rates cut in half, officials said Wednesday.

The deal, brokered by former U.S. Sen. Richard Bryan and Carson City-based casino lobbyist Bill Bible, comes in the aftermath of the Sept. 11 terror strikes. It will cut withholdingtaxes for workers who have faced dramatic reductions in their tip income after a sharp slowdown in Las Vegas visitation.

Bryan said several megaresort accounting managers balked at an earlier MGM Mirage-brokered deal with the Internal Revenue Service that would have pegged withholding rates at the same rate as individual hotel occupancy rates.

"That deal was too cumbersome, with the rates being set on a property-by-property basis, and adjusted every pay period," Bryan said.

Instead, Bryan, now a lawyer with Las Vegas-based firm Lionel, Sawyer & Collins, and Nevada Resort Association President Bible persuaded the IRS to accept a simple formula for workers participating in voluntary tip compliance. The deal expires Oct. 31, but Bryan said it could be extended if conditions persist.

Among the workers eligible to participate in the program are cocktail servers, bartenders, valets, buspersons, bellboys, waiters and limousine drivers. Table games dealers are ineligible for the plan.

The plan, called the Tip Rate Determination Program, allows some tip workers to have a pre-determined hourly amount withheld from their paychecks and to have their tip income protected from IRS audit.

The withholding amount varies according to the job, hotel and shift of workers, and includes only workers who keep their individual tips.

"This agreement recognizes the changing realities in the workplace after the tragic events of Sept. 11," Bryan said. "It provides substantial relief at a time when tipped income has dropped dramatically."

An IRS employee confirmed the deal, but agency officials failed to return late Wednesday phone messages asking for details.

< Gaming News