Vice President Kamala Harris, who recently mirrored former President Donald Trump’s proposal to abolish taxes on tips, played a crucial role in passing legislation that enables the IRS to track and tax workers’ tips.
On August 7, 2022, Harris broke a tie in the Senate to help pass the Inflation Reduction Act.
This legislation granted the IRS an additional $80 billion, which the agency has since used to increase oversight on how tips in the service industry are reported and taxed.
Marking the second anniversary of this vote, Harris shared a video on her Facebook page, recalling the moment she cast her tie-breaking vote, saying, “The Senate being equally divided, the vice president votes in the affirmative, and the bill as amended is passed.”
The Biden administration promoted the new funding as a way to address tax evasion by the wealthy. However, recent IRS actions suggest a broader focus.
In February 2023, the IRS introduced the Service Industry Tip Compliance Agreement (SITCA) program, aimed at employers in the service industry.
This program, presented as a voluntary measure, actually involves closely monitoring employers’ tip reporting practices and adjusting tax requirements based on collected data.
Critics argue that the program is less about voluntary compliance and more about increasing tax revenue from working-class Americans.
Mike Palicz of Americans for Tax Reform expressed concerns, stating, “Ultimately, the goal is to go and grab as much revenue as possible and from whoever they can.” He added that despite promises that IRS efforts would focus on the wealthy, the new rules target the tips earned by waitresses and other service workers.
The introduction of SITCA has sparked significant backlash, especially in light of Harris’s recent campaign pledge to eliminate taxes on tips.
Social media users have pointed out the irony, with the hashtag #CopyCatKamala trending in response to Trump’s earlier commitment to do the same if he wins the presidency.
While the administration continues to justify the IRS funding as a measure to enforce tax fairness, the scrutiny on workers’ tips has raised concerns about who is truly bearing the brunt of these policies.