The IRS, in a deal that affects thousands of Nevada casino workers, has agreed to stop audits and refund money collected in violation of an agreement on tip income reporting, Nevada Sens. Harry Reid and John Ensign said Thursday.
Reid and Ensign met Wednesday with IRS Commissioner Mark Everson in Reid's Washington, D.C., office following reports that the IRS had reneged on a promise to not challenge workers' tip income claims if they helped in accurately tracking and reporting such income.
Thousands of workers had agreed to participate in the tracking-reporting program only to find themselves the target of IRS challenges, Ensign and Reid said.
"This will bring a lot of relief to a lot of casino workers in Nevada, who are the lifeblood of our state's largest industry," said Ensign, a Republican who's up for re-election.
Reid, the Democratic Senate minority leader, said he's confident that Everson, whom he described as a straightforward "very businesslike guy," would keep his word.
Union and casino industry leaders had complained last month that thousands of voluntary participants in the IRS-approved tip-reporting program were being audited, and said the program might fall apart if the IRS took away the biggest incentive to participate.
D. Taylor, secretary-treasurer of the Culinary Union which represents many of the workers, charged that the IRS had "double-crossed" the volunteers by reneging on a promise not to audit workers who signed up for the program.
Under the program, IRS formulas based on workers' jobs, shifts and other factors determine the dollar amount of tips that must be reported on their tax returns, and in return the workers are told they need not worry about being audited.
Three years ago, Reid and Ensign had briefly held up Everson's confirmation in the Senate, until the IRS broke a negotiating stalemate with the casino industry and signed the tip-reporting agreements.
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