The Internal Revenue Service released three documents June 2012 related to taxes imposed on tips under the Federal Insurance Contributions Act (FICA), audit direction relating to tips, and interim guidance on auditing businesses where tipping is customary.

Revenue Ruling 2012-18 provides guidance for employers and employees in a question-and-answer format on the taxes imposed on tips under FICA including information on the difference between tips and service charges, reporting of the employer share of FICA under tax code Section 3121(q), and the Section 45B credit.

SBSE-04-0612-057, dated June 7, provides administrative guidelines to examiners auditing businesses where tipping is customary and/or where a business adds service charges to customers’ bills, which are then distributed to employees.

Announcement 2012-25 provides administrative guidelines to examiners about Revenue Ruling 2012-18 and seeks public comments by Sept. 24 on the interim guidance and whether additional time is needed to ensure that systems are compliant.