The program simplifies the recordkeeping required for reporting tip income in the food and beverage industry. Participating employers report the tip income of employees by using a formula that uses a percentage of gross receipts, which are generally allocated among employees, based on the practices of the restaurant. Participating employees do not have to keep a daily tip log or other tip records. The IRS will not initiate a tip examination during the time the employer and employee participate in ATIP.
Employers enroll in the ATIP program by checking a box on IRS Form 8027. Employees of a participating employer need to sign an agreement with their employer to have their tip income computed under the ATIP program and reported as wages.