Ann 2001-1

Part IV. Items of General Interest
Voluntary Tip Agreements for
Employers of Tipped Employees
Announcement 2001–1
The Internal Revenue Service has finalized pro forma Tip Rate Determination
Agreements (TRDA) and Tip Reporting
Alternative Commitment (TRAC) agreements for use in its Tip Rate Determination/Education Program (TRD/EP). The
TRD/EP is designed to enhance tax compliance among tipped employees through
taxpayer education and voluntary advance
agreements instead of traditional audit
techniques.
The Service published five voluntary
agreements in proposed form on May 8,
2000 (see 2000–19 I.R.B.): (1) a revised
TRAC agreement for use in the cosmetology and barber industry (Announcement
2000–21, 2000–19 I.R.B. 983), (2) a revised TRAC agreement for use in the food
and beverage industry (Announcement
2000–22, 2000–19 I.R.B. 987), (3) a revised TRDA for use in the food and beverage industry (Announcement 2000–23,
2000–19 I.R.B. 992), (4) a new TRAC
agreement for use in industries other than
the food and beverage industry and the
cosmetology and barber industry in which
tipped employees receive both cash and
charged tips (Announcement 2000–19,
2000–19 I.R.B. 973), and (5) a new
TRDA for use in industries other than the
food and beverage industry and the gaming industry (Announcement 2000–20,
2000–19 I.R.B. 977).
Final versions of these agreements are
available on the IRS website at http://
www.irs.gov/bus_info/msu-info.html.
They can also be obtained from any IRS
office. The substance of the revised
agreements has not changed.
The Service received comments from
interested persons and has incorporated
most of the comments in the final ver-

2001–2 I.R.B.

sions. Two commentators expressed concern about the employer that has already
entered into an agreement and that may be
interested in replacing its existing agreement with the new updated agreement.
One commentator suggested that the updated provisions of the revised agreements automatically be extended to employers that have an existing agreement.
The Service wants to offer employers the
broadest choice of voluntary compliance
agreements and recognizes that some employers may choose to continue to be
bound by their existing agreements.
Another commentator suggested notifying employers who have existing agreements of the availability of the new updated agreement. These employers would
be advised that, if they choose to enter
into a new agreement, the old agreement
will automatically terminate. In response
to this comment, the Service has added a
new Termination of prior agreement section to the termination provisions of the
first three agreements listed above. The
new provision states:
Termination of prior agreements. Any
prior [TRAC agreement or TRDA] relating to an Establishment covered by
this Agreement shall terminate on the
day preceding the effective date of this
Agreement with respect to the Establishment.
Some commentators requested clarification of certain provisions. They wondered, for example, whether the Service
intends to terminate a TRAC agreement if
only one establishment fails to meet a requirement, or whether the Service will invoke the termination provision under the
administrative or judicial action provision
by instituting an examination of a tax return. These kinds of issues will be addressed in the IRS manual, Handbook
104.6.7.12.1, entitled TRDA/TRAC
Agreements. This section of the manual
is currently being revised to reflect these

277

new provisions and address these issues.
The appropriate manual provision will be
available on the IRS website at
http://www.irs.gov/bus_info/tax_pro/irmpart/part04.html. The Service expects to
make these provisions available soon.
Taxpayers interested in learning more
about these agreements should contact their
local tip coordinator. A list of tip coordinators is available at http://www.irs.gov/
bus_info/tip-coord.html.
DRAFTING INFORMATION
The principal author of this announcement is Karin Loverud of the Office of
Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding
this announcement or any of the voluntary
agreements, contact Ida Volz of the Office
of Compliance Policy at (202) 622-5532.

Announcement 2001–2
New Revision of Publication
551, Basis of Assets
Publication 551, revised December
2000, will be available soon from the Internal Revenue Service. It replaces the
April 1999 revision.
This publication provides information
on how to figure your basis in property in
order to compute depreciation, amortization, depletion, and casualty loss deductions, as well as gain or loss on sales or
other dispositions of property.
You can get a copy of this publication
by calling 1-800-TAX-FORM (1-800829-3676). You can also write to the IRS
Forms Distribution Center nearest you.
Check your income tax package for the
address. The publication is also available
on the IRS Internet web site at
www.irs.gov.

January 8, 2001