[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.6053-4]

[Page 362-363]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
Subpart G_Administrative Provisions of Special Application to Employment 
Taxes (Selected Provisions of Subtitle F, Internal Revenue Code of 1954)
 
Sec. 31.6053-4  Substantiation requirements for tipped employees.

    (a) Substantiation of tip income--(1) In general. An employee shall 
maintain sufficient evidence to establish the amount of tip income 
received by the employee during a taxable year. A daily record 
maintained by the employee (as described in paragraph (a)(2) of this 
section) shall constitute sufficient evidence. If the employee does not 
maintain a daily record, other evidence of the amount of tip income 
received during the year, such as documentary evidence (as described in 
paragraph (a)(3) of this section), shall constitute sufficient evidence, 
but only if such other evidence is as credible and as reliable as a 
daily record. The Commissioner may by revenue ruling, procedure or other 
guidance of general applicability provide for other methods of 
demonstrating evidence of tip income. However, notwithstanding any other 
provision of this paragraph (a) (1), a daily record or other evidence 
that is as credible and as reliable as a daily record may not be 
sufficient evidence if there are facts or circumstances which indicate 
that the employee received a larger amount of tip income. Moreover, oral 
statements of the employee, without corroboration, cannot constitute 
sufficient evidence.
    (2) Daily record. The daily record shall state the employee's name 
and address, the employer's name, and the establishment's name. The 
daily record shall show for each work day the amount of cash tips and 
charge tips received directly from customers or from other employees, 
and the amount of tips, if any, paid out to other employees through tip 
sharing, tip pooling or other arrangements and the names of such 
employees. The record shall also show the date that each entry is made. 
Form 4070A, Employee's Daily Record of Tips, may be used to maintain 
such daily record. In addition, an electronic system maintained by the 
employer that collects substantially similar information as Form 4070A 
may be used to maintain such daily record, provided the employee 
receives and maintains a paper copy of the daily record. The daily 
record of tips received by an employee shall be prepared and maintained 
in such manner that each entry is made on or near the date the tip 
income is received. A daily record made on or near the date the tip 
income is received has a high degree of credibility not present with 
respect to a record prepared subsequent thereto when generally there is 
a lack of accurate recall. An entry is made ``near the date the tip 
income is received'' if the required information with respect to tips 
received and paid out by the employee for the day is recorded at a time 
when the employee has full present knowledge of those receipts and 
payments.
    (3) Documentary evidence. Documentary evidence consists of copies of 
any documents that contain (i) amounts that were added to a check by 
customers as a tip and paid over to the employee or (ii) amounts that 
were paid by a customer for food or beverages with respect to which tips 
generally would be received by the employee. Examples of documentary 
evidence are copies of restaurant bills, credit card charges, or charges 
under any other arrangement (see Sec. 31.6053-3(j)(4)) containing 
amounts added by the customer as a tip.
    (b) Retention of records. Records maintained under this section 
shall be kept at all times available for inspection by authorized 
internal revenue officers or employees, and shall be retained so long as 
the contents thereof may become material in the administration of any 
internal revenue law.

[[Page 363]]

    (c) Effective date. The substantiation requirements of this Sec. 
31.6053-4 shall be effective for tips received on or after October 1, 
1985. For the rules in effect prior to October 1, 1985, see section 6001 
and the regulations thereunder. Substantiation considered sufficient as 
provided in this Sec. 31.6053-4 will also be considered sufficient for 
tips received before October 1, 1985.

[T.D. 8141, 52 FR 21513, June 8, 1987, as amended by T.D. 8910, 65 FR 
77820, Dec. 13, 2000]