Question

In: Accounting

Anita Leland, a waitress in Atlantis Casino, reported tips of $467 to her employer last year.

Anita Leland, a waitress in Atlantis Casino, reported tips of $467 to her employer last year. Two months after she filed her federal income tax return, Leland received a letter from the IRS informing her that she had earned $5,260 in tips rather than the $467 reported and that she owed the government $1,872.94 in back taxes. a. How is the IRS able to determine the amount of tips received by a waitress in a casino? b. If the IRS is correct in its determination of the tips received, is Atlantis subject to a penalty for not having withheld payroll taxes on all the tips Leland received during the year?

Solutions

Expert Solution

Part (a):

An assigned measure of tips gotten by the aggregate sum off the receipts from sustenance and refreshment tasks will be accounted for to the IRS by the nourishment and/or drink foundation.

Part (b):

No, Atlantis won't be liable to a punishment for not having retained duties. Government salary charges are to be retained just on the revealed tips and not on the tips simply allotted.

They can just duty what was accounted for from a server.

ekkarill92 answered 2 years ago
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