The Internal Revenue Service (IRS) is proposing a new program that could have a major impact on the service industry. The Service Industry Tip Compliance Agreement (SITCA) program, which was announced this week, would be a voluntary tip reporting system in which the IRS and service industry companies cooperate.

Under the proposed program, the IRS would monitor employer compliance based on actual annual tip revenue and charge tip data from an employer’s point-of-sale system. It would also allow for adjustments in tipping practices from year to year.

This move has caused uproar among many, including Mike Palicz, federal affairs manager at Americans for Tax Reform, who tweeted, “Those 87,000 new IRS agents that you were promised would only target the rich. They’re coming after waitresses’ tips now.”

The proposal has also been met with criticism from the Republican-majority House, which passed legislation in early January to rescind $70 billion of the Inflation Reduction Act’s budget, which would have boosted the IRS’ budget by $80 billion.

Despite the criticism, IRS Commissioner Charles Rettig has responded that the agency will not use new resources to punish small businesses or middle-income Americans.

The proposed program has the potential to drastically alter the service industry, so it’s important to stay informed and provide feedback on the program before it is implemented. This proposal is not in effect and is intended to welcome further conversation from all interested parties before any rule is put into place.

The IRS’s goal is to improve tip reporting compliance, reduce administrative burdens and provide more transparency and certainty to taxpayers. With the proposed program, the service industry could see a major shift in the way tips are reported and monitored.

It’s a move that could affect millions of Americans, so it’s important to stay informed and provide feedback on the program before it is implemented. The public has until early May to provide feedback on the program before it is implemented, so now is the time to make your voice heard.