Question : What penalties, fines, or legal action will the I.R.S make for not declaring all my tips?
I Have been notified by my employer and the I.R.S that I am being audited. I am a server at a large chain restaurant. I have not been reporting all my tips. Does anyone know the exact penalties and fines for under reporting tips. I wish I would have known about TRAC before making such a foolish mistake.
server audit

Best answer:

Answer by v b
1. The audit will determine the unreported tips. Plan on 15% income tax minimum.

2. Plan on 7.65% for fica/mc and 50% failure to report penalty.

3. 20% accuracy penalty.

4. Interest….

So if you underreported say $ 1000 in tips, plan on owing $ 400 to $ 500.