ORLANDO, Fla., 6/1/2002 - A June 17 Supreme Court ruling that the Internal Revenue Service can use estimates to make sure it is collecting enough taxes on cash restaurant tips has the nation�s 200,000 restaurants worried. If their employees underreport their tips, the restaurants could be the ones who will be penalized with the tax bill. 

That�s why it is essential that every restaurant has a plan in place to ensure that its employees know how to properly record, report, and verify their tip income. Reporting Tip Income, a training video from the Educational Institute of the American Hotel & Lodging Association, offers a concise, step-by-step lesson in tip-reporting that makes training easy. 

The video explains and demonstrates the application of the Tip Reporting Alternative Commitment (TRAC), a program developed by the IRS and food service establishments to improve tip reporting. Two years ago, the National Restaurant Association board of directors passed a resolution encouraging restaurateurs to consider signing a TRAC contract with the IRS. 

Under TRAC, a restaurant agrees to assume greater responsibility for educating and getting employees to report their tips. In return, the IRS agrees that it will not bill the restaurant for FICA taxes on allegedly unreported tips unless it has first examined which employees had not reported tips accurately. Peter Kilgore, senior vice president and general counsel for the NRA, has called TRAC �the best protection an operator has� in order to avoid estimation billing by the IRS. 

EI�s Reporting Tip Income video introduces employees to the TRAC program, explains in simple terms what might happen if they don�t accurately report their tips, and presents a simple three-step tip-reporting process: record, report, and verify. The accompanying training guide includes discussion questions to test employee comprehension and a training activity to provide employees with practice using the procedures taught in the video.