Title 26 — Internal Revenue CodeRelease 119-73
§6053 Reporting of tips
Title 26 › Subtitle Subtitle F— - Procedure and Administration › Chapter CHAPTER 61— - INFORMATION AND RETURNS › Subchapter Subchapter A— - Returns and Records › Part PART III— - INFORMATION RETURNS › Subpart Subpart C— - Information Regarding Wages Paid Employees › § 6053
Summary
Employees who get tips that count as wages must tell their employer in writing about all those tips each calendar month. They must give those written tip reports by the 10th day after the month ends. The IRS can set the exact form and timing. If the taxes owed on the tips the employee reports are more than the employer can collect from the employee’s pay, the employer must give the employee a written notice showing the extra tax. The employer may also have to send a copy of that notice to the IRS. Large food or drink businesses must send the IRS a yearly report with a few items: gross food and drink sales, total charged sales, tips charged on those sales, the total tips employees reported plus small service charges the employer reported, and the amount of tips the employer allocates to each employee. The employer must also give each employee a yearly written statement with the employer’s name and address, the employee’s name, and the amount allocated to that employee. The employer allocates tips when tipped staff reported less than 8% of gross receipts; the allocated amount is the difference between 8% of gross receipts and the tips reported. Allocation can follow a fair agreement with employees or IRS rules. The IRS can lower the 8% but not below 2% if asked. A “large” place is one where tipping is normal and it usually had more than 10 employees on a typical business day last year. Carryout sales and services with a 10% or larger service charge are not included in these receipts. Certified professional employer organizations must give needed reporting information to the customer and the IRS.
Full Legal Text
Title 26, §6053
Internal Revenue Code — Source: USLM XML via OLRC
(a)Every employee who, in the course of his employment by an employer, receives in any calendar month tips which are wages (as defined in section 3121(a) or section 3401(a)) or which are compensation (as defined in section 3231(e)) shall report all such tips in one or more written statements furnished to his employer on or before the 10th day following such month. Such statements shall be furnished by the employee under such regulations, at such other times before such 10th day, and in such form and manner, as may be prescribed by the Secretary.
(b)If the tax imposed by section 3101 or section 3201 (as the case may be) with respect to tips reported by an employee pursuant to subsection (a) exceeds the tax which can be collected by the employer pursuant to section 3102 or section 3202 (as the case may be), the employer shall furnish to the employee a written statement showing the amount of such excess. The statement required to be furnished pursuant to this subsection shall be furnished at such time, shall contain such other information, and shall be in such form as the Secretary may by regulations prescribe. When required by such regulations, a duplicate of any such statement shall be filed with the Secretary.
(c)(1)In the case of a large food or beverage establishment, each employer shall report to the Secretary, at such time and manner as the Secretary may prescribe by regulation, the following information with respect to each calendar year:
(A)The gross receipts of such establishment from the provision of food and beverages (other than nonallocable receipts).
(B)The aggregate amount of charge receipts (other than nonallocable receipts).
(C)The aggregate amount of charged tips shown on such charge receipts.
(D)The sum of—
(i)the aggregate amount reported by employees to the employer under subsection (a), plus
(ii)the amount the employer is required to report under section 6051 with respect to service charges of less than 10 percent.
(E)With respect to each employee, the amount allocated to such employee under paragraph (3).
(2)Each employer described in paragraph (1) shall furnish, in such manner as the Secretary may prescribe by regulations, to each employee of the large food or beverage establishment a written statement for each calendar year showing the following information:
(A)The name and address of such employer.
(B)The name of the employee.
(C)The amount allocated to the employee under paragraph (3) for all payroll periods ending within the calendar year.
(3)(A)For purposes of paragraphs (1)(E) and (2)(C), the employer of a large food or beverage establishment shall allocate (as tips for purposes of the requirements of this subsection) among employees performing services during any payroll period who customarily receive tip income an amount equal to the excess of—
(i)8 percent of the gross receipts (other than nonallocable receipts) of such establishment for the payroll period, over
(ii)the aggregate amount reported by such employees to the employer under subsection (a) for such period.
(B)The employer shall allocate the amount under subparagraph (A)—
(i)on the basis of a good faith agreement by the employer and the employees, or
(ii)in the absence of an agreement under clause (i), in the manner determined under regulations prescribed by the Secretary.
(C)Upon the petition of the employer or the majority of employees of such employer, the Secretary may reduce (but not below 2 percent) the percentage of gross receipts required to be allocated under subparagraph (A) where he determines that the percentage of gross receipts constituting tips is less than 8 percent.
(4)For purposes of this subsection, the term “large food or beverage establishment” means any trade or business (or portion thereof)—
(A)which provides food or beverages,
(B)with respect to which the tipping of employees serving food or beverages by customers is customary, and
(C)which normally employed more than 10 employees on a typical business day during the preceding calendar year.
(5)The employer shall not be liable to any person if any amount is improperly allocated under paragraph (3)(B) if such allocation is done in accordance with the regulations prescribed under paragraph (3)(B).
(6)For purposes of this subsection, the term “nonallocable receipts” means receipts which are allocable to—
(A)carryout sales, or
(B)services with respect to which a service charge of 10 percent or more is added.
(7)The Secretary shall prescribe regulations for the application of this subsection to new businesses.
(8)For purposes of any report required by this subsection, in the case of a certified professional employer organization that is treated under section 3511 as the employer of a work site employee, the customer with respect to whom a work site employee performs services shall be the employer for purposes of reporting under this section and the certified professional employer organization shall furnish to the customer and the Secretary any information the Secretary prescribes as necessary to complete such reporting no later than such time as the Secretary shall prescribe.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2014—Subsec. (c)(8). Pub. L. 113–295 added par. (8). 1984—Subsec. (c)(3)(C). Pub. L. 98–369, § 1072(a), substituted “Upon the petition of the employer or the majority of employees of such employer, the Secretary” for “The Secretary” and “2 percent” for “5 percent”. Subsec. (c)(4). Pub. L. 98–369, § 1072(c)(1), inserted provision that an individual who owns 50 percent or more in value of the stock of the corporation operating the establishment shall not be treated as an employee. 1982—Subsec. (c). Pub. L. 97–248 added subsec. (c). 1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing. 1965—Subsec. (a). Pub. L. 89–212, § 2(d)(1), inserted “or which are compensation (as defined in section 3231(e)”. Subsec. (b). Pub. L. 89–212, § 2(d)(2), inserted “or section 3201 (as the case may be)” and “or section 3202 (as the case may be)”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2014 AmendmentAmendment by Pub. L. 113–295 applicable with respect to wages for services performed on or after Jan. 1 of the first calendar year beginning more than 12 months after Dec. 19, 2014, see section 206(g)(1) of Pub. L. 113–295, set out as a note under section 3302 of this title.
Effective Date
of 1984 Amendment Pub. L. 98–369, div. A, title X, § 1072(c)(2),
July 18, 1984, 98 Stat. 1052, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to calendar years beginning after
December 31, 1982.”
Effective Date
of 1982 Amendment Pub. L. 97–248, title III, § 314(e), Sept. 3, 1982, 96 Stat. 605, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) In general.—The
Amendments
made by this section [amending this section and section 6001 and 6678 of this title, and enacting provisions set out as a note under this section] shall apply to calendar years beginning after
December 31, 1982. “(2) Special rule for 1983.—For purposes of section 6053(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], in the case of payroll periods ending before
April 1, 1983, an employer must only report with respect to such periods—“(A) amounts described in subparagraphs (A), (B), (C), and (D) of section 6053(c)(1) of such Code, and “(B) the name, and identification number, wages paid to, and tips reported by, each tipped employee.”
Effective Date
of 1965 AmendmentAmendment by Pub. L. 89–212 effective only with respect to tips received after 1965, see section 6 of Pub. L. 89–212, set out as a note under section 3201 of this title.
Effective Date
Pub. L. 89–97, title III, § 313(f), July 30, 1965, 79 Stat. 385, provided that: “The
Amendments
made by this section [enacting this section and amending section 451, 3102, 3121, 3401, 3402, 6051, 6652, and 6674 of this title and section 409 of Title 42, The Public Health and Welfare] shall apply only with respect to tips received by employees after 1965.”
Regulations
Pub. L. 98–369, div. A, title X, § 1072(b), July 18, 1984, 98 Stat. 1052, provided that: “The Secretary of the Treasury shall prescribe by
Regulations
within 1 year after the date of the enactment of this Act [
July 18, 1984] the applicable recordkeeping requirements for tipped employees.” Threat of Audit Prohibited To Coerce Tip Reporting Alternative Commitment Agreements Pub. L. 105–206, title III, § 3414,
July 22, 1998, 112 Stat. 755, provided that: “The Secretary of the Treasury or the Secretary’s delegate shall instruct employees of the Internal Revenue Service that they may not threaten to audit any taxpayer in an attempt to coerce the taxpayer into entering into a Tip Reporting Alternative Commitment Agreement.” Modification of Tips Allocation Method Pub. L. 99–514, title XV, § 1571, Oct. 22, 1986, 100 Stat. 2765, provided that: “Effective for any payroll period beginning after
December 31, 1986, an establishment may utilize the optional method of tips allocation described in the last sentence of section 31.6053–3(f)(1)(iv) of the Internal Revenue
Regulations
only if such establishment employs less than the equivalent of 25 full-time employees during such payroll period.” Study of Tip Compliance Pub. L. 97–248, title III, § 314(c), Sept. 3, 1982, 96 Stat. 605, directed Secretary of the Treasury or his delegate to submit before Jan. 1, 1987, to Committee on Ways and Means of House of Representatives and to Committee on Finance of Senate a report with respect to tip compliance in food and beverage service industry. Such study to include, but not be limited to, an analysis of tipping patterns, tip-sharing arrangements, and tip compliance patterns.
Reference
Citations & Metadata
Citation
26 U.S.C. § 6053
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73