I don't like the
Allocated Tips.
The IRS assumes that all directly tipped employees of a food and beverage establishment should receive tips in the amount of 8% of the establishment’s gross food and beverage receipts. Each year the employer must file Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. The Instructions for Form 8027 state that if the total reported tips is less than 8% of the gross receipts, the difference must be allocated to the directly tipped employees.
The employee doesn't have to pay tax on the allocated tips if he can prove he accurately claimed all tips.
Tipped employees have an obligation to pay income taxes on the tips they receive, so they must try to keep accurate records of tips received. If an employee receives a Form W-2 at the end of the year with allocated tips reported in Box 8, the employee must either add those allocated tips to his reported income, or he can ignore them if he can prove that he reported all of his tips. Thus, good record keeping can save taxes in the long run.
If one claims everything they wrote down for the employer, how could the IRS say they didn't claim all their tips? How does one prove they didn't receive any more cash than they claimed?
Hopefully no one falls for that and pays taxes on what they didn't actually receive.
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