79 STAT. ]
PUBLIC LAW 89-212-SEPT. 29, 1965
859
"(A) to estimate the amount of tips that will be reported by the employee pursuant to section 6053(a) in any quarter Ante, p. 384. of the calendar year, "(B) to determine the amount to be deducted upon each payment of compensation (exclusive of tips) during such quarter as if the tips so estimated constituted actual tips so reiw)rted, and "(C) to deduct upon any payment of compensation (other than tips, but including funds turned over by the employee to the employer pursuant to paragraph (2)) to such employee during such quarter (and within 30 days thereafter) such amount as may be necessary to adjust the amount actually deducted upon such compensation of the employee during the quarter to the amount required to be deducted in respect of tips included in written statements furnished to the employer during the quarter. "(4) If the tax imposed by section 3201 with respect to tips ^°^ ^- ^^^' which constitute compensation exceeds the portion of such tax which can be collected by the employer from the compensation of the employee pursuant to paragraph (1) or paragraph (3), such excess shall be paid by the employee." (b)(1) The second sentence of subsection (e)(1) of section 3231 of such Code (relating to definition of compensation for purposes of the ll%l^c\23i' Railroad Retirement Tax Act) is amended by inserting "(except as is provided under paragraph (3))" after "tips. (2) Subsection (e) of such section 3231 is further amended by adding at the end thereof the following new paragraph: " (3) Solely for purposes of the tax imposed by section 3201 and other provisions of this chapter insofar as they relate to such tax, the term 'compensation' also includes cash tips received by an employee in any calendar month in the course of his employment by an employer unless the amount of such cash tips is less than $20." (3) Such section 3231 is further amended by adding at the end thereof the following new subsection: "(h)
TIPS CONSTITUTING COMPENSATION, TIME DEEMED PAID.—For
purposes of this chapter, tips which constitute compensation for purposes of the tax imposed under section 3201 shall be deemed to be paid at the time a written statement including such tips is furnished to the employer pursuant to section 6053(a) or (if no statement including such tips is so furnished) at the time received; and tips so deemed to be paid in any month shall be deemed paid for services rendered in such month." (c) Section 3402(k) of such Code (relating to income tax collected at source on tips) is amended (1) by inserting "or section 3202(c)(2)" after "section 3102(c)(2)" and (2) by inserting "or section 3202(a)" after "section 3102(a)". (d)(1) Section 6053(a) of such Code (relating to reports of tips by employees) is amended by inserting "or which are compensation (as defined in section 3231(e))" after "or section 3401(a))". (2) Section 6053(b) of such Code (relating to statements furnished by employers) is amended (A) by inserting "or section 3201 (as the case may be)" after "section 3101", and (B) by inserting "or section 3202 (as the case may be)" after "section 3102^'. (e) Section 6652(c) of such Code (relating to failure to report tips) is amended (1) by inserting "or which are compensation (as defined in section 3231(e))" after "which are wages (as defined in section 3121(a))", and (2) by inserting "or section 3201 (as the case may be)" after "section 3101'\
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