‘Deal is a deal’

Friday, Aug. 18, 2006 | 9 a.m.

Saying "a deal is a deal," Gov. Kenny Guinn pledged Thursday to do whatever he could to hold the Internal Revenue Service to an agreement not to audit Las Vegas food and beverage workers who have been participating in a voluntary tip-reporting program.

"This was put together with a great deal of trust from both sides, and it was done in good faith," Guinn said. "If they're not upholding the deal, I don't think that's right."

Joining the Republican governor in coming to the aid of thousands of food and beverage workers facing IRS audits was Rep. Shelley Berkley, D-Nev., who grew up in a tip-earning family.

Berkley, who worked her way through college and law school as a waitress and keno runner on the Strip, called upon the IRS to "stop bullying and intimidating" the workers.

"This is an inappropriate and unilateral exercise of their authority in contravention of the agreement that was painstakingly worked out among the parties," she said. "The IRS can be very arbitrary and capricious. Once they sink their teeth into your neck, they're worse than a vampire."

Jon Summers, a spokesman for Nevada Sen. Harry Reid, said the Senate's Democratic leader is worried that the agreement could fall apart if the IRS does not halt the stepped-up audits.

"If the workers begin to feel that the IRS isn't holding up its end of the deal, then employees could decline to participate in the future," Summers said.

Earlier this week, Culinary Union Secretary-Treasurer D. Taylor accused the IRS of double-crossing casino industry workers, many of whom are members of his influential local.

Taylor charged that the federal tax collectors reneged on a promise not to audit those who agreed three years ago to participate in the tip-reporting program.

He estimated that thousands of food and beverage workers - most of whom complied with the reporting procedures set up by the IRS - have been wrongly audited in the last six months.

Casino industry leaders have rallied behind the union, expressing their displeasure with a flawed process that has forced their companies to spend countless hours helping employees respond to the IRS audits.

Both Taylor and Bill Bible, president of the Nevada Resort Association, gaming's political arm in the state, said the program could self-destruct if the IRS continues to take away the incentive of avoiding an audit.

Top IRS officials were in Las Vegas on Thursday to hear the concerns of the gaming leaders at a meeting described by those who attended as a "tip summit."

Shawn Sani, an MGM Mirage senior vice president who deals with tax issues, said the meeting was "heated" at times, but the parties made progress.

"It's clear that we caught the attention of the highest levels of the IRS in terms of recognizing the severity and magnitude of the audit issue," he said. "They recognize it's a problem, and they really want to work with us."

The tip-reporting program, which has been around in various forms since the early 1990s, was designed to eliminate the need for casino workers to keep detailed tip records and make it less burdensome on the IRS to ensure that tips are accurately reported.

Under the program, IRS formulas based on workers' jobs, shifts and other factors determine the dollar amount of tips that must be reported on their tax returns, and in return the employees are told they need not worry about being audited.

Raphael Tulino, an IRS spokesman for Nevada, could not be reached for comment after Thursday's meeting.

But Sani said the IRS understands that if it continues to audit workers who are doing everything the agency asks of them, it could be "fatal" to the program.

"They recognize that they've got to change the mind-set within the IRS of how to approach this," he said.

The IRS, Sani said, agreed to form a task force with casino executives to find ways in the weeks ahead to streamline the reporting system.

Wally Chalmers, vice president of the American Gaming Association, the industry's Washington lobbyist, said he came away from the meeting with a positive attitude.

But he added: "The proof is in the follow-up to the meeting. We just want them to be fair."