IRS to honor agreement with tip earners

Jeff German, Las Vegas Sun

Thursday, Sept. 21, 2006 | 7:27 a.m.

In a move that should bring relief to food and beverage workers along the Strip and throughout Nevada, U.S. Sens. Harry Reid and John Ensign won a commitment from the Internal Revenue Service on Wednesday to stop auditing participants in the tax agency's tip-reporting program.

The commitment came directly from IRS Commissioner Mark Everson following a half-hour meeting on Capitol Hill with the two Nevada senators.

"The meeting couldn't have gone any better," said Ensign, a Las Vegas Republican up for re-election. "You don't usually walk out of a meeting with the IRS and feel really good, but we actually feel good about walking out of this meeting."

Reid, the Senate minority leader, shared that opinion, adding that he was confident that Everson, whom he described as a straightforward "very businesslike guy," would stick to his word.

Raphael Tulino, an IRS spokesman for Nevada, declined to comment Wednesday.

But Everson, the senators said, also promised to start the process of refunding any additional money that participants paid the IRS as a result of being audited.

And the commissioner agreed to establish fair tip-reporting rates with the workers and the casino industry in upcoming negotiations for new three-year agreements.

Last month the Sun reported that union and casino industry leaders were outraged that thousands of voluntary participants in an IRS-approved tip-reporting program were being audited under the current three-year deal.

D. Taylor, secretary-treasurer of the Culinary Union, which represents many of the workers, charged that the IRS had "double-crossed" the volunteers by reneging on a promise not to audit workers who signed up for the program.

Taylor and casino industry leaders said they feared the program might fall apart if the IRS took away the biggest incentive to participate.

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 workers are told they need not worry about being audited.

Angry industry leaders voiced their concerns about the high number of audits during an Aug. 17 summit with top IRS officials in Las Vegas.

Reid and Ensign, who got involved at the request of both the union and the industry, said Everson acknowledged in their meeting Wednesday that the IRS needed to live up to its end of the bargain.

"It was stressed that once they make a commitment like this, that's the way it has to be, and he agreed," Reid said. "A deal's a deal."

Three years ago Reid and Ensign had briefly held up Everson's confirmation in the Senate, until the IRS broke a negotiating stalemate with the casino industry and signed the current tip-reporting agreements.

Everson's commitment to the senators drew a positive response Wednesday from casino officials.

Shawn Sani, an MGM Mirage senior vice president who deals with tax issues - and who has been deeply involved in discussions with the IRS - said he was pleased to see that the tax agency "has agreed to do the right thing.

"This is a significant development for the employees in our industry and is the result of efforts of the American Gaming Association, the Nevada Resort Association and the Culinary Union, who together worked very hard to protect the interests of our employees."

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