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Beth Ann Head: Hello, and welcome to today's webinar, Employer-Computed Tip Reporting Process Certification for the Gaming Industry Tip Compliance Agreements or GITCA. This process is also commonly referred to as payroll certification. My name is Beth Ann Head, and I'm a Senior Program Analyst for the National Tip Reporting Compliance Program or NTRCP. NTRCP is a national program that services all employers, small and large in the tipping industry. Also presenting today is our NTRC Program Manager, Dianne Marquard. Our goal for this webinar is to explain the Employer-Computed Tip Reporting Process, also referred to simply as certified payroll for tip agreement purposes. Our objectives are to identify which tip agreement the employer computed tip reporting process applies to and the authority that allows us to certify payroll as part of the tip agreement. In addition, by going through this process, you will understand the importance of a certified payroll as it relates to tip compliance. We will also share how we evaluate the criteria that is reviewed and validated as part of the certification process, namely, the employers execution and administration of the tip agreement. Finally, we will cover the benefits of having a certified payroll. IRS revenue procedure 2007-32 covers The Gaming Industry Tip Complaints Agreement or GITCA. GITCA is our tip agreements for those in the gaming industry, primarily casinos. Section B, paragraph J describes the requirements of the Employer-Computed Tip Reporting Process. In practice, we refer to it as payroll certification. Broadly speaking, if the property can demonstrate that they can track, apply and report the participant rates accurately the IRS may execute the Appendix E, the Employer-Computed Tip Reporting Process Certification for certifying the property's payroll. Here is a copy of the Appendix E. When executing the agreement, the service will either concur or not concur and complete the Appendix E based upon documentation, summarizing the conclusion of the test conducted. Please note, payroll certification is not required for a GITCA tip agreement. But as you will soon learn it is preferred by both the taxpayers and the IRS. An Employer-Computed Tip Reporting Process means a process established, maintained and controlled by the employer under which time, the time and attendance and payroll processing systems used for the operation and management of the employers business are applied by the employer during the full term of the agreement to compute without intervention by the employee the tips reportable in respect to each participating employee.

Well, there's a lot of information in that statement. It basically means that strong internal controls are essential to any business to minimize the risk of error or fraud. For tips in the tip agreement, the internal controls are assessed as they relate to the reporting of tip income.

The time and attendance system, also referred to as a clock must align with the payroll processing system. We'll talk in more detail about this in a minute. Without intervention by the employee means that any changes would be adjusted by the payroll staff with management approval and not at the clock by the employee. Again, for certification purposes, the employer must demonstrate strong internal controls for the reporting of tip income. Specifically through payroll, the employer automatically multiplies the participant tip rate, as listed in their agreement to the eligible hours worked for the participating employee for each occupational category, shift and outlet worked during the particular work day or payroll cycle or take in the case of occupational categories and outlets that are highly regulated by governing bodies such as the state or gaming association, in which tips are pulled in split. If internal controls are verified and it is confirmed that a 100% of the tips are reported directly to payroll. The IRS will permit the actual tips earned for these select positions to be included in the agreement as a participant with the rate of actual. In addition for the GITCA agreement, section Z, paragraph E, sub-paragraph 2 the employer must utilize the list of tip splits as determined by the standard operating procedures to report the actual amount of tips burned. Having a certified income tax withholding, as well as social security and Medicare taxes and are correctly placed payroll means all participant tips earned are reported through payroll are subject to federal in appropriate boxes on the Form W-2. It seems simple, but one of the most common errors is that tip rates are not entered correctly for all three shifts. And therefore tips are end reported as not all of the eligible hours received a tip rate or they received the wrong tip rate. This happens because the participant tip rates may not be loaded correctly in the time and attendance system. So of course the payroll system will not report the correct tips for the applicable hours. Similarly, if a participant moves from one outlet or position to another, the tip rate may change. Overall, to remain compliant with the agreement, the participant rate must change if during their work hours the employee moves into another outlet or position. This also applies to those employees on actual who have both an actual tip rate and an hourly participant tip rate as listed on the tip agreement. Dianne, would you like to tell us where the participant rates come from? Dianne Marquard: Thank you, Beth Ann. I would be glad to explain it. Participant rates are calculated when establishing a new tip agreement or renewing an existing tip agreement. The IRS refers to the process as initial and renewal rate reviews. The service uses specific reliable data, including point of sale information, which includes gross receipts, sales by tender, sales by occupation, as well as payroll data by occupation, outlet and shift. The same scientific methodology is used nationwide maintain their consistent and accurate calculations in the development of the participant rate. The employer acknowledges that the service has the authority pursuant to Internal Revenue Code Section 7602, 7604 and 7609 to security information necessary for the service to develop the tip rate. The uncertified reduces the administrative burden of reporting to the IRS and the GITCA Appendix A tip rates are listed for each occupational category, I outlet and sometimes by shift. These tip rates are one of the basis for verifying compliance with the tip agreement. Every year all GITCA employers must file Forms 14439 Employee Data Report. If the employer is a large food and beverage establishment, a Form 8027 Employer's Annual Information Report of Tip Income and Allocated Tips is also required to be filed. These forms are due by March 31 of the following calendar year for each and every year of the tip agreement. The service will send a courtesy reminder letter for this annual requirement. Form 14439 Employee Data Report is an annual employee data report of tipped employee. It requires listing each tipped employee by outlet and by shift with the total number of hours worked for each and provides the total tips included in the W-2. If an employee works it more than one outlet, more than one position, or more than their home shifts, they must be listed separately for each outlet position or shift. If payroll is certified, then they only have to report non-participating employees that work during the year listed. If they are not certified, all tipped employees, participants and non-participants must be listed. And I want to pause for a minute here to define what a participant is and a non-participant is. A participant is an employee who timely accepts the tip rates for their position, or positions if they have more than one, and they have the established tip rate applied to all tipped hours worked for the entire calendar year through payroll. A non-participant is an employee who does not elect to be a part of the tip agreement and who does not accept the tip rate for the entire calendar year. The non-participants must keep a daily tip log and report tips monthly to their employer if they exceed $20 a month. All right, so let's go back to the forms that are required. Form 8027 Employer's Annual Information Return of Tip Income and Allocated Tips is required if you operate a large food or beverage establishment and is used to determine if allocated tips to be reported in Box 8 of the W-2 for non-participant employees in each individual outlet. The IRS has a separate video on the Form 8027 that has helpful information on understanding and preparing the form. The time and attendance and payroll report is generated from the employers time and attendance and payroll system. It shows the tip rates being used by the system to calculate reported tips and lists each occupational category outlet and shift and it will include the number of eligible employees as of December 31. There is a copy of Form 14439. If you have many employees or have many positions with all three shifts, filling out this form for all tipped employees to be a task. If the payroll is certified, the reporting on this form is limited to non-participants only. It is to the taxpayers benefit to have strong internal controls for tip reporting in order to be certified and to encourage all employees to participate in the tip agreement to reduce the number and type of reporting to non-participants only. So how do we use these reports and why are they important to the employer computers tip reporting process. The service will match the rates from the Appendix A of the tip agreement to the information submitted on your time attendance report to verify that the employer has accurately loaded the appropriate rates correctly. The Appendix A lists all shifts positions just outlets and rate.

The Appendix A is developed with the employer and is approved when the tip agreement is signed.

In addition, the service will apply the tip rates from your tip agreement to Form 14439 to analyze and generate projected under reported tip. Under section X, paragraph A the GITCA tip agreement requires minimum tip employee participation of 75%. If employee participation is below 75% of the eligible employees the service and the employer shall meet to discuss the cause of the decline and determine appropriate measures to increase the participation rate. Identifying under reported tips is one method to improve participation rate. The tip agreement is based on substantial tip compliance and is a commitment by the employer to apply tip rates correctly. The matching process also aids the IRS in identifying errors or weaknesses in the employer system for administering the tip agreement. As you can see, it is imperative that the occupational category outlet in shifts match exactly to the titles and the rates listed on the Appendix A. It is important to note that the employer inform the IRS of any changes that may affect the Appendix A.

If the employer does not report timely changes employees who are once participating may inadvertently become non-participant, if the tips are underreported, because of changes to their outlets, positions, or sometimes even the employer identification number. Do not let organizational changes negatively impact the tip agreement and the tip audit protection provided to the employer or to the employee. When a Tips Agreement is executed, the IRS takes the Appendix A and loads it into a database. At year-end, when the IRS receives the Form 14439 it is uploaded to the same database and an analysis is completed. If the Form 14439, if the titles don't match the Appendix A on file an error report is generated and the employer is contacted to remedy the situation. Here is an example of how the simplest of errors can cause unwanted consequences and a lot of work down the road. Compare the time and attendance system report to the Appendix A. See the difference in the occupational category, Apprentice BT does not match the Apprentice Bartender. Note also how the outlet name is listed differently, lounge-oak versus oak lounge.

Look at the shift titles. One list the shift is swing and another as all whereas the Appendix A lists out each shift by grave, day and swing. This may seem minor but they're not. The IRS will not assume that the Apprentice BT is the same position as the Apprentice Bartender, but that oak is the same as oak lounge. Consistency with the Appendix A is very important when communicating with the IRS. The most common errors are titles not updated for venues or positions just listed as one, two, three and the Form 14439, but listed as day, grave or swing on the Appendix A and titles listed as department codes. The worst errors are wrong rates being applied, which can affect an employee's tip audit protection under the tip agreement and an employer's payroll certification data. Accuracy of these reports is so important in maintaining the credibility and integrity of the program. Errors on this report which is used to calculate under reported tip can cause havoc for both the IRS and the employer. Strong internal controls and compliance means to accurately prepare and report tips in a related form. Beth Ann, as we get back to the certification process, can you please review what is an Employer-Computed Tip Reporting Process?

Beth Ann Head: Yes, Dianne. Just a quick reminder as we get back into talking about the payroll certification process. The Employer-Computed Tip Reporting Process means there is a process established, maintained and controlled by the employer that utilizes a time and attendance and payroll processing system, which is used in applying the established tip rate to the total hours worked by the participating employee for each occupational category, shift and outlet. The process must be secure in order for employees to report tips accurately, which means the employee cannot manipulate or tamper with the intent to evade tip reporting. In other words, processes and procedures must be in place that reports tip earn at or above the established participant tip rate, times the eligible hours work. Now let's talk about the agreement in the certification requirements. As part of the Tip agreement, payroll information is requested in order to conduct the payroll certification. The information submitted is subject to review and validation by the IRS. As part of the agreement, the employer must maintain these records for at least four years after April 15 following the calendar year to which the records relate. This service will test to determine that the tip rates applicable under the agreement are automatically processed for each participating employee for each work assignment by multiplying the tip rates by the total hours worked for each occupational category, just an outlet worked during the particular work day or payroll cycle. It is okay for participant employees to report more than the hourly tip rate if they want. Additional tip amounts above the tip rate are never a problem of course, the employer needs to provide instructions to the employee on how to claim this. The process cannot involve changing the tip rate. For those positions on actual or credit card tips, this service will require proper documentation of the internal controls, along with a record of the dollar amount of tips that is provided to the payroll department. Keep in mind that for our position to be on actual, the service will confirm that 100% of the tips are reported through payroll. Let's talk about internal controls. The purpose of evaluating the internal controls is to gain an understanding of the employer's business operations and control features. The review of written to committee rules, standard operating procedures in source documents can identify measures taken to safeguard proper reporting and also assist with recognizing any steps needed to strengthen the employer's policies or procedures and to prevent exposure to potential shortfalls. Unique to the tipping industry, there are employees who receive tips that are reported as actual. The IRS considers positions whose tips are reported as actual to have 100% of their tips reported to payroll, while actual tips reported generally are used by table game dealers in casinos across the country. It is also quite common in high end restaurants, spas, and other venues where there are primarily credit card cells and controls in place to assure capture a 100% of the tips received. Remember that a rate of actual is for Occupational categories in outlet with strong internal controls that are highly regulated by governing bodies and where tips are pooled and split. The IRS will verify that 100% of those tips are reported directly to payroll by reviewing source documents. It is easy to confuse actual tips with distributed wages, also known as auto gratuities. The revenue ruling 2012-18 auto gratuities or service charges are not tip but wages and must be ran to payroll. Auto gratuities are additional fees established by the outlet that's just 20% per parties of six or more. Now to be a tip by definition, it means it is not a state enforced amount of gratuity but given freely and determined by the guests how much and even if they want to leave a tip. During the certification process, the IRS will confirm proper treatment of auto gratuities as wages. Evaluating internal controls for both actual tips and distributed wages ensure that there is little or no opportunity for employees to collude with each other, or avoid proper reporting of their tips to payroll. In addition, the procedures will be tested to verify the process for reporting tips and making sure that it does not allow for tampering with the records or the clock. This does not include reporting tips above the tip rate.

Evaluation of the payroll processing system is an integral part of understanding the strength of the internal controls for the reporting of tips and auto gratuity. As you can see, it is vital to understand the payroll process. It is the very foundation for the success of the tip program.

When certifying the employer will provide information and demonstrate their payroll and timekeeping systems. Many taxpayers open multiple hours a day over the course of a full seven days. Employees may work a day shift, evenings, or even overnight. The tips earned may differ based on time of day or even the day of the week. Employees may also work different positions. A good payroll and timekeeping system will be able to capture occupation, shifts and rate changes.

The IRS and the employee employer will often discuss the following. The name and type of payroll and timekeeping software systems and how they interact. The capabilities of those systems, basically how they track and apply the participant rate, does the employee swipe in? Or does the employee punch in their job code? We'll also look into the internal procedures and integrity of data. We will look at the job codes. Do they match the Appendix A titles? Are there secondary job codes added for employees who work more than one outlet or occupations? What are the timekeeping roles? We'll also ask about local and corporate responsibilities, are their time editors who is responsible for the Tip Compliance Program? And finally, we will review the oversight checks and balances of the Managers and Payroll Supervisors. What role do the Managers and Payroll Supervisors play in administering the tip agreement? Dianne, would you like to elaborate on why it is so important to understand the entire payroll process? Dianne Marquard: Yes, thanks, Beth Ann. There are many factors to consider when taking into account the entire payroll process. Employees may be scheduled for shifts that does not align with the grave, day or swing rate. There may be shift hours that begin with the day rate and move into the swing rate. So it is important based on how the clock works, that the appropriate rate is applied to the hours worked. This is critical. The program clock times do not necessarily align with the meal period titles in the point of sale system. In addition, employees may not realize the shift times programmed at the clock, and they mistakenly think they work a shift other than the officially titled shift. Another area that requires attention for those employees who may be another area that requires attention are for those employees who are dual-coded. Dual-coded means an employee has an assigned home job code, but also has a secondary job code assigned. The employees designation can change if there's a COLA or the employee works in another occupational category or outlet. The payroll process must be able to adapt to unforeseen changes to ensure that the corrective rate is applied. It has been a common practice for supervisors of outlets to pool and split to receive tips. Another thing to remember is the recent legislation, H.R.5180 Tip Income Protection Act of 2018, that act prevents certain Supervisors from sharing in the same tip pool as their employees. Solid payroll system will have certain procedures in place. One of the most important is administrative oversight at the clock to ensure there is no tampering or changing of position back in time, or amount of tips reported. In other words, an employee may not change the swiping time of the clock, enter a job code that has a lower participant rate, or manually adjust the amount of tips that should be recorded automatically through payroll.

Management oversight is a great way to enhance the monitoring and management of internal controls. Another indicator of strong internal controls are Managers using daily staffing schedules to assign employees to an outlet position and shift. When that employee swipes or punches into the timekeeping system, the time entry is stamped and the shift begins. The swipe per punch reads the job codes and the correct assigned tip rate is applied. The payroll system would apply the correct wage rate and perform the necessary withholding. When an employee is transferred to another outlet or job post, the employee would swipe or punch and the secondary job code would be assigned. Again the timekeeping system will automatically assign the shifts and time work and the employee would have no access to override the clock at any time. The time editor will validate the daily staffing schedule against the employees actual shifts and time work. And approval process before payroll goes to print is another indicator of a strong internal control. For instance, a Manager uses the daily staffing schedule to assign the employees to an occupational category, outlet or shift. For a particular day, a few changes are made due to call off additions or emergencies. The Manager informs the time editor who will track the changes and make updates to the master schedule in the timekeeping system. The Manager must approve any staffing changes to ensure expenses are associated with the correct profit center. Management oversight and controls at the clock, protect the administration of the tip agreement. Taken up the clock, understanding how the clock works is essential to execute the tip agreement accurately. A swipe clock is where one tip rate is assigned to all hours work based on the shift swipe, a rolling clock is one that automatically changes the shift to capture the hours worked and the tip rate for more than one shift. It is very important to have a rolling clock in place if the shift rates are in play, and necessary to match the sales per shift with the hours worked per shift. Here is an example of the difference the clock can make. In our example, the clock is programmed accordingly. The day shift starts at 8:00 a.m. and goes until 4:00 p.m. The day participant rate is $6 an hour. The swing shift starts at 4:00 p.m. and goes until 12:00 a.m.

with a swing participant rate of $10 an hour. For this example, the employee clocks in on a day shift at 1, works in eight hour shifts until 9:00 p.m. If the rate is based on a swipe, that means all eight hours are assigned the shift rate that the employee clocked in during, since the employee started on the day shift, the participating employee would have $48 and tips reported for that shift, which is $6 an hour, times the eight hours work. Now let's look at rolling clocks. A rolling clock would take the number of hours worked on each shift multiplied by the applicable shift rate. According to our example, where the day shift starts at 8:00 a.m. and goes until 4:00 p.m. and the participant rate stays at $6 an hour and the swing shift starts at 4:00 p.m. and goes until 12:00 a.m. with the swing participant rate of $10 an hour. Again, the employee clocks in on the day shift at 1:00 p.m. and works the full eight hours until 9:00 p.m.

In the case of a rolling clock, the total tips reported would be $68. That would be three hours of the day shift, the 1:00 to 4:00 p.m., multiplied by the $6 an hour for $18 plus the $5 and the swing shift, which is from 4:00 p.m. to 9:00 p.m. multiplied by $10 an hour for $50. This gives us a total of $68 reported. A rolling clock automatically matches sales and payroll hours. A swipe clock stays within one shift and one rate. Both are okay, but note when the IRS works with the employer to calculate tip rate, when entering a new tip agreement, a swipe clock tip rate will account for the shift going into another shift and maybe higher than the tip rate for the rolling clock if all other factors remain the same. Now let's combine the time and attendance and the payroll system. For purposes of the agreement, the term employer computed tip reporting process means accurate tip reporting. The tip amounts must reflect the correct tip rate multiplied by the total hours worked for the participating employee for each occupational category just an outlet work during a particular day or payroll cycle or with actual tips. Tips are considered reported to the employer by the participating employee the verified process.

Those processes uphold the law that tip income must be reported by the employee to the employer.

There is no need to have a separate monthly tip report from the employee. Of course tips are considered income and subject to withholding an applicable taxes and the computed tips. Tips will then be reported in Box 7 of Form W-2 and on the year-end reports discussed earlier. When the employer computed tip reporting process satisfies the requirements of section V.E(2) paragraph J of the GITCA, the employer would be considered to have a certified payroll. We'll talk a little bit later about the benefits of having a certified payroll. But now Beth Ann will you tell us more about the certification process and what we should expect. Beth Ann Head: Thank you, Dianne.

There are multiple steps involved in the certification process. The first step will be the evaluation of the payroll process. This begins with an interview in information document requests. Questions will involve learning about the capabilities of the payroll system, and the ability to accurately report tips. Tests will be conducted on the ability of the time and attendance system to capture the hours worked by occupational category, outlet and shift, segregating out non-tip hours such as sick leave, training, or meeting hours, and mini paid time off to arrive at the eligible hours subject to the tip rate. So in summary, only eligible hours are subject to the tip rate. One item to note is that breaks instead of times during the shift should still have a tip rate applied. Once the payroll and time and attendance systems are documented, the second step is to sample the effectiveness and accuracy of the system. Documents may be multiple detailed earning statement screens and the employees' time and attendance cards to verify proper rates for use to calculate the tips earned, also reported on the employees paychecks, also the employees paychecks will be reconciled with the total tips earned and reported on the Form W-2 along with the proper amounts of taxes withheld. Additionally, proper enforcement of revenue ruling 2012-18 will be considered as auto gratuities or wages and must be ran through payroll. This is especially important for compliance with the I.R.C. Sec. 45 (b)

general business credit that is only given on tips and not on auto gratuity. Payroll certification includes reviewing and testing the internal controls or standing operating procedures that are in place to account for the tip from receipt of the tip from the customer to the counting of those tips in subsequent reporting of the tips through payroll. This service will review any specific procedures instituted by each employer, such as how an employee's signal to the surveillance camera, supervisors in security that they're in receipt of a tip. Other crucial facts include who has access to the keys for the access to the keys for the top boxes where the count performed? Is it under camera at all times? How our tips split? And finally, what are the consequences for not following the procedures. If the employee warned on the first offense, put on probation or suspended for second offense or even terminated for third strike. Compliance checks are an integral ingredient for payroll certification. Our all tax returns filed has the employer filed all the years reporting requirements including the Form 8027, does the Form 14439 Employee Data Report contains all required information including the correct eligible hours. The report should not include any paid time off for hours worked in a non-tipped position which can skew the employee tip reporting calculation. Keep in mind, any end reporting makes the employee a non-participant by default and subject to a potential employee tip exam. The employer would not want this to be the result of not properly administering the program. However, it is the employee's responsibility to make sure tips are reported to the employer. The proper treatment of auto gratuities will be confirmed. Employees are not allowed to take home auto gratuities like they do tip. Remember, auto gratuities are wages and should be coded as such on the employee's timecard and they are subject to withholding before they can be paid out. Don't forget that tips may be eligible for the I.R.C. Sec. 45 (b) general business credit, they can reduce the employers taxable income. However, auto grats are not eligible for this treatment. Also, during the certification process, the overall participation levels will be tested. The agreement requires a minimum participation level of 75% property wide. If the participation level falls below this amount, this service will work with the property to investigate the reasons for low levels of participation. We've talked a lot about participants and having a payroll process that accurately reports their tip rate. During the payroll certification process, other employee tip reporting processes are reviewed. For instance, is there a distinction between tests recorded for participants versus non-participants are different codes used? What is the written policy for non-participants to report their tips to the employer? This is the requirement per I.R.C. Sec. 5053.

Our non-participants are encouraged to report their tips? Do they report them at the clock? Do they keep a tip blog when a new hire is allowed to join the tip program, while the maximum time allowed to enter and be a participant is 60 days from the date of hire. The employer may have a policy to join sooner, but not later. Current employees must sign up at the start of the agreement or once a year starting with the first pay period of the year. If an employee does not employee is considered a non-participant by default. What are the procedures when an employee participate in entire calendar year, or within 60 days of their date of hire for that year, the drops out of the program? Once payroll certification process is completed, and all the tests are met, the IRS will recommend that that payroll be certified and will issue the Appendix E of the GITCA agreement to be signed by both the property executive in the NTRC program manager. If however, there are weaknesses in controls, or failed tests, the payroll would not be certified.

The IRS may agree to return at a later date to conduct another payroll certification testing once the employer has corrected efficiencies. Keep in mind that the NTRCP workload in resources are taken into consideration when scheduling a follow up. Now Dianne, will you please tell us about the benefits of having a certified payroll? Dianne Marquard: Thanks, Beth Ann. Yes, last but not least, we want to make sure everyone understands the benefits of having a certified payroll. The certification process has many layers to it. But the rewards are great and pay off year after year with reduced annual reporting. It also provides assurances that the employer is in compliance with their tip agreements as the tip rates can be tracked. A certified payroll confirms adequate internal controls are in place for tip reporting. The employer has a process in place to control the time and attendance and payroll processing system without an intervention by the employee to accurately track and report tips for each participating employee. If the employer's payroll is certified, the property only must record the non-participants on the year-end report. And that's the Form 14439 Employee Data Report. The authority for this can be found in Revenue Procedure 2007-32 or the GITCA agreement under section B. F, paragraph 2, where it states that an additional annual report must be submitted for participants unless an employer uses an employer computed tip reporting process to compute and report the tips of participating employees. So again, for your reference, this is described in section V. J. of the GITCA agreement and is confirmed with the execution of concurs and the Appendix E. So now do you see why it's so important to encourage participation and have a certified payroll? A quick reminder here in order to be a participant in employee, the employee must participate the entire calendar year that the program is available to him or her and have had their tips recorded at or above the hourly participant rate, times the hours they work in a particular occupational category outlet and chef. Another great benefit of conducting the payroll certification is that it verifies the titles and the rates from the agreements Appendix A, and it reconciles that to the time and attendance and payroll system here by diminishing the potential errors that we find to be common, but sometimes frustrating and time consuming the errors on the year-end report. This slide acknowledges that most information is within the GITCA agreement. Payroll certification is located under Appendix E. There's also a publication 4936, Your Guide to Maintaining and Complying with the GITCA. To summarize, an employer computed tip recording process for payroll certification is only applicable to a GITCA agreement. If the payroll has been certified, the Appendix E list concurs and will be signed by both the employer and the NTRC program manager. The key to the proper administration of the agreement centers around payroll processes and procedures, including the operation of the clock in order to capture just whether the participant has an hourly tip rate or are on actual. The best internal controls are when there is regular oversight and monitoring by managers and payroll staff to ensure that the tip rates are accurate and are being applied correctly even with the shifts or even when the shifts or last minute staffing changes are made. The certification process has multiple steps where tests are conducted and reports are reviewed and analyzed. The main focus is on the ability of the system to program the established hourly participant tip rate, track the eligible payroll hours and apply those rates to the hours worked, therefore reporting the correct computed tips to payroll. Ultimately, payroll certification reduces the amount of data that must be provided to the IRS each year. A certified payroll means that the taxpayer reports information on non-participants only. This concludes the webinar. Beth Ann and I want to thank you for joining us today to discuss the GITCA Agreement and the Appendix E, Employer-Computed Tip Reporting Process for Payroll Certification.