Rev. Rul. 66-54

Advice has been requested whether tips reported after 1965 by an employee to his employer, as required by section 6053(a) of the Internal Revenue Code of 1954, are `accounted for' within the meaning of paragraph (j)(3) of section 31.3306(b)-1 of the Employment Tax Regulations under the Federal Unemployment Tax Act (chapter 23, subtitle C, of the Code).

Under section 6053(a) of the Code, written statements must be furnished by an employee to his employer to report tips received after 1965, if the tips are `wages' for purposes of the Federal Insurance Contributions Act (chapter 21, subtitle C, of the Code) or of the Collection of Income Tax at Source on Wages (chapter 24, subtitle C, of the Code). Paragraph (j)(3) of section 31.3306(b)-1 of the regulations excludes from `wages' for purposes of the Federal unemployment tax, tips or gratuities paid directly to an employee by a customer of an employer, and not accounted for by the employee to the employer.

The mere reporting of tips by an employee to his employer pursuant to the requirements of section 6053(a) of the Code does not mean that the tips are `accounted for' as contemplated by paragraph (j)(3) of section 31.3306(b)-1 of the regulations. Accordingly, such tips are not `wages' for purposes of the Federal Unemployment Tax Act solely as a result of that reporting. For a prior ruling as to the meaning of the term `accounted for', see S.S.T. 301, C.B. 1938-1, 455.