How is ATIP different from other tip reporting programs?
Unlike TRAC and TRDA, ATIP does not require the employer to meet with the IRS prior to participation. Another difference is that ATIP provides a formula that the participating employer uses to determine its tip rate. This “formula tip rate” is basically the establishment’s tip rate for charged sales minus two percentage points. Employers compute the formula tip rate using a charged tip rate that is based upon the data reported (or to be reported) on the establishment’s Form 8027 for the preceding calendar year. For example, an employer that elects to participate for the 2007 calendar year uses information from its 2006 Form 8027 to calculate the tip rate. For payroll periods in January and February of 2007, prior to filing Form 8027, the employer may compute the formula tip rate using information from the Form 8027 for the calendar year two years before the year of participation. That means for participation in 2007 the employer may use data from the 2005 Form 8027 to determine the for
