IRS logo
Small Business and Self-Employed Division
Tips vs. Service Charges: What are they and how are they reported?
I prefer to view the archive using:

IRS Presenters
Joseph Tiberio Joseph Tiberio
Program Manager
National Tip Reporting Compliance
Small Business and Self-Employed Division

Click for bio

Michelle Weigelt Michelle Weigelt
Employment Tax Attorney
Tax Exempt and Government Entities Division

Click for bio

Sherry Saucerman Sherry Saucerman
Senior Stakeholder Liaison
Communications & Stakeholder Outreach
Small Business/Self-Employed Division

Click for bio
Viewing problems?
arrow Email us
arrow View help pages
hands holding money, glasses on an open book, fingers on a calculator

Tips vs. Service Charges: What are they and how are they reported?

Playout date:
February 11, 2015
2 p.m. Eastern Time
1 p.m. Central Time
Noon Mountain Time
11 a.m. Pacific Time

Learn about:

  • Tips – Employee and Employer Responsibilities
  • Tips vs. Service Charges
  • Revenue Ruling 2012-18
  • Form 8027
  • Additional Medicare Tax on Tips

arrowTopic 761 - Tips – Withholding and Reporting
arrowPublication 531, Reporting Tip Income
arrowPublication 15 Section 6
arrowPublication 1244, Employee’s Daily Record of Tips and Report to Employer (PDF)
arrowForm 4137, Social Security and Medicare Tax On Unreported Tip Income
arrowForm 8027, Employer's Annual Information Return of Tip Income and Allocated Tips
arrowForm W-2, Wage and Tax Statement
arrowPublication 3144 Tips on Tips (A Guide to Tip Income Reporting) for Employer (PDF)
arrowPublication 3148 Tips on Tips (A Guide to Tip Income Reporting) for Employees (PDF)
arrowTip Recordkeeping and Reporting
arrow Rev. Rul. 2012-18 The revenue ruling provides guidance for employers and employees in a question and answer format regarding taxes imposed on tips under the Federal Insurance Contributions Act (FICA), including information on the difference between tips and service charges, the reporting of the employer share of FICA under section 3121(q) of the Code, and the section 45B credit.
arrow Announcement 2012-25 In Announcement 2012-25, the Service is seeking comments from the public regarding an interim guidance memo (IGM) issued to its examiners relating to Rev. Rul. 2012-18. The IGM provides audit issue direction to examiners in dealing with issues concerning the proper treatment of tips and service charges. The Announcement also announces plans to solicit comments in the future regarding possible changes to voluntary tip compliance agreements.
arrowAnnouncement 2012-50
arrow Receive updates from the IRS by e-mail. Visit our subscription services page on to choose the e-newsletters you'd like to receive. It's easy and you can edit your choices at any time.