The Internal Revenue Code requires all income to be reported and taxes paid on that income as determined by law. I understand that income includes all tips, gifts and gratuities in addition to wages I receive as a result of my employment. I am reporting the following information for the accurate preparation of my 2009 income tax returns:
__ I did not receive any tips, gifts or gratuities in 2009 related to my employment.
__ All tips, gifts and gratuities were reported to my employer and have been included on my W-2, Wage & Income Statement.
__ I had tips, gifts and gratuities in the amount of $______________ to be reported as income.
Signed: ____________________________ Date: _________________
The above is a statement one of our board members recommended as a solution to the problem of clients not claiming all their income. My comments are not to be construed as a criticism of the board member, who has consistently given good advice on this forum. And this advice, of itself, is not "wrong" and I am not advocating that others not listen to it.
Resorting to this kind of CYA action, however, is disturbing. We are not supposed to be auditors and we are not lawyers. This almost acknowledges that the responsibility of policing unreported income is ours and we are just bailing out of our liability by having the client sign this statement.
I know it is the delusionary dream of IRS commissioners to have tax preparers working for them instead of working for our clients. And the threats of assessing penalties of course are causing people in our profession to scurry hither and yon drafting various documents belying responsibility that should never be ours to begin with.
IRS already requires 8% of gross receipts to be allocated for waitresses and others in the "tipping" businesses, and then dumps the methodology for this upon the various employers, who are left without guidance and end up allocating in whatever fashion they deem appropriate. I am often asked by waiters/waitresses how this happens and they complain as often as not that they never receive as much as their allocation. In particular, they complain about their employer's allocation methods, and that the employer picks and chooses to whom they allocate disproportionate shares of tips. In many cases, if you subtract these allocated tips, some of these people are working at less than minimum wage.
I can't justify shoving a document under the nose of these people for them to sign, instead of getting on with the business of filling out their tax return. And anyone who thinks a stripper is going to claim her income is not living in the real world. I checked into a hotel behind one who appeared plump in a pullover coat -- and she kept pulling dollar bills out of her coat and garments and pulling and pulling and when she was finished she was really skinny.
I will refrain from alienating my clients by asking them to sign front-end documents unless there is a real threat, and for positions that are simply not sustainable to the extent that I have to beat them up with a CYA statement, I'll just tell them I won't take these positions and be done with it. There are easier ways to simplify this business, folks.
__ I did not receive any tips, gifts or gratuities in 2009 related to my employment.
__ All tips, gifts and gratuities were reported to my employer and have been included on my W-2, Wage & Income Statement.
__ I had tips, gifts and gratuities in the amount of $______________ to be reported as income.
Signed: ____________________________ Date: _________________
The above is a statement one of our board members recommended as a solution to the problem of clients not claiming all their income. My comments are not to be construed as a criticism of the board member, who has consistently given good advice on this forum. And this advice, of itself, is not "wrong" and I am not advocating that others not listen to it.
Resorting to this kind of CYA action, however, is disturbing. We are not supposed to be auditors and we are not lawyers. This almost acknowledges that the responsibility of policing unreported income is ours and we are just bailing out of our liability by having the client sign this statement.
I know it is the delusionary dream of IRS commissioners to have tax preparers working for them instead of working for our clients. And the threats of assessing penalties of course are causing people in our profession to scurry hither and yon drafting various documents belying responsibility that should never be ours to begin with.
IRS already requires 8% of gross receipts to be allocated for waitresses and others in the "tipping" businesses, and then dumps the methodology for this upon the various employers, who are left without guidance and end up allocating in whatever fashion they deem appropriate. I am often asked by waiters/waitresses how this happens and they complain as often as not that they never receive as much as their allocation. In particular, they complain about their employer's allocation methods, and that the employer picks and chooses to whom they allocate disproportionate shares of tips. In many cases, if you subtract these allocated tips, some of these people are working at less than minimum wage.
I can't justify shoving a document under the nose of these people for them to sign, instead of getting on with the business of filling out their tax return. And anyone who thinks a stripper is going to claim her income is not living in the real world. I checked into a hotel behind one who appeared plump in a pullover coat -- and she kept pulling dollar bills out of her coat and garments and pulling and pulling and when she was finished she was really skinny.
I will refrain from alienating my clients by asking them to sign front-end documents unless there is a real threat, and for positions that are simply not sustainable to the extent that I have to beat them up with a CYA statement, I'll just tell them I won't take these positions and be done with it. There are easier ways to simplify this business, folks.
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