What benefits does ATIP provide an employer?
The IRS will not initiate tip examinations of a participating food or beverage establishment as long as the establishment satisfies all ATIP requirements. Any section 3121(q) notice and demand issued to the employer with respect to a participating establishment relating to any period during which the establishment participates in ATIP will be based either on amounts reflected on a Form 4137, Social Security and Medicare Tax on Unreported Tip Income, filed by an employee with Form 1040 or Form 885-T, Adjustment of Social Security Tax on Tip Income Not Reported to Employer, prepared at the conclusion of an employee tip examination. Additionally, participating establishments will not be required to allocate tips to participating employees. Employers may still have to allocate tips to nonparticipating employees under the allocation rules.
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