FYI: When Legislation Was Enacted in 1982 Giving the IRS Strong Powers to Collect Taxes on Tips, Then-Sen. Joe Biden Voted "Nay"!

While there may be ways to negotiate reporting and tip rates and those sorts of things, I think it ignores the underlying problem. The employers and the employees are required under the law to report income -- income that they actually earn and that they receive. I know there is a statute about the estimated income, and I am very familiar with all that. I have a problem with it when you are paying tax and the government is requiring employers and employees to report on estimates. I certainly would not want to be pooled -- I would hate to be pooled with you, Mr. Chairman, and have to pay based on that. I just think that is wrong.

The industry is not the secret police of the IRS, and I think if the IRS thinks there is a problem, then the IRS needs to take care of their business and they need to do it in a way that is consistent with the Constitution and with the Fifth amendment, and maybe they should get a good book on privacy and read that. If we are going to target the restaurant industry and the salon industry and the gambling industry, then we need to target the doctors and the lawyers and the bankers and the candlestick makers, just like us. I was looking yesterday at some of the issues on the IRS. The taxpayers overpay taxes by an estimated $1 billion a year because they fail to claim an itemized deduction. A quarter of the taxpayers who are eligible for the earned income tax credit (EITC) fail to claim it because it is too complicated. Small business overpaid their taxes by $18 billion in 2000 and 2001 because of return errors.
Tens of thousands of farmers paid an average of $500 too much in tax because they failed to take care of income averaging.

The Deputy Treasury Secretary told the Senate Finance Committee that the IRS walked away from more than 2 million delinquent tax accounts last year totaling $16.5 billion. The agency pursued just 18 percent of abusive tax shelters. Mr. Chairman, when the IRS takes care of those and when they go after those tax shelters and when they start going after the accounts that are delinquent, I think then we can look at the poor waiters and waitresses and salon owners and hairdressers, and we can look at trying to do something to collect their tax.

Until such time as they take care of this stuff, I think it is absolutely ridiculous to go after single mothers with three children that are wait staff in a restaurant trying to pay their bills. . . .

This entire thing, Mr. Chairman, just scares me in that we have the government running around creating potential conflicts between employers and employees and going after people on criminal allegations when they have absolutely no information and no probable cause about the individuals involved, and you* think you are going to strong-arm industries and poor waitresses, single waitresses with children. You do not even go and collect this money that you know is owed. You do not go and investigate abusive tax shelters. You do not give money back that you collect illegally. I think we are going about it the wrong way. When you take care of those things, then I think we can go look at our waitresses and folks that work in the gambling industry and otherwise. It is outrageous that the U.S. Government would go after people on criminal allegations without any sort of information whatsoever except data on a group.