Biden’s IRS slammed over plan to dip into tip jars: ‘Already struggling to survive’

As waiters and waitresses who live off tips could soon get served with new tax scrutiny, service industry workers alongside lawmakers are sounding off on the Internal Revenue Service’s (IRS) latest proposal under President Biden.

"This new ‘voluntary’ system is probably more to track smaller, family-owned establishments," Olivia Kerwin, waitress and full-time student in the West Palm Beach area, told Fox News Digital on Thursday, "which would suck if they use this to impose more taxes on these businesses that are already struggling to survive."

The IRS has opened itself up to public feedback regarding a proposed tip reporting system between the tax agency and employers in service called the Service Industry Tip Compliance Agreement (SITCA).

The program would be voluntary and is designed to "take advantage of advancements in point-of-sale, time and attendance systems, and electronic payment settlement methods to improve tip reporting compliance," the agency said in a statement on Monday.

WHEN SHOULD YOU LEAVE A TIP? AMERICANS SOUND OFF ON ‘CULTURAL PRESSURE’

While reportedly replacing other tip reporting systems, according to the IRS, SITCA would monitor employer compliance based on annual tip revenue and charge tip data from an employer’s point-of-sale system.

Participating employers would have to submit an annual report after the close of the calendar year, which reduces the need for compliance reviews by the IRS.

Many service industry workers, like Kerwin, rely strictly on tips to make a sustainable living as many servers’ hourly pay falls below minimum wage.

"I was looking at my taxes from this past month, I paid probably $1,100 in taxes, and my hourly [wage] was $10.90," Kerwin had previously explained to Fox News Digital. "So I paid an extra $10 on top of what my hourly was. I didn't see any of my hourly pay. Everything I saw was from my tips."

Kerwin further argued how abiding by a new IRS regulation would fuel confusion and frustration for businesses, who have already seen their tips get hit by inflation.

"I feel like due to inflation costs, people start to tip less and people will get confused. They're like, ‘Oh, well, you shouldn't be mad that we're not tipping. You should be mad at your company for not paying you a livable wage,’" Kerwin noted. "But the other side of that sword is most servers make more being tipped than they would if they were to make $20 or $25 hourly. And I know myself personally, the extent of the work that I do, I wouldn't go above and beyond if I knew I was only going to be making that same $20 an hour."

Most nights, Kerwin claims she won’t take home the entirety of her tips either, as some establishments split tips between servers, hostesses, bartenders and food runners.

"Probably about 5% of our total gross sales, we have to tip out," she said, "and we don't tip out based on the amount of money we are tipped, we tip out based on our total amount of sales."

"So say someone dined in and they spent $100, but they only tip me $5, I'm not getting any of that. I'm probably even, at that point, paying out of my own pocket for them to have eaten there," Kerwin continued, "because I still have to tip out the bartender on that $100, I still have to tip out the food runners and the hostesses on that money."

TIPPING AT THE COUNTER: ARE YOU BEING RUDE IF YOU DON'T LEAVE SOMETHING EXTRA?

Lawmakers on Capitol Hill have also publicly opposed SITCA, such as Rep. Claudia Tenney, R-N.Y., who used to be a waitress herself.

"It's unconscionable," Tenney said on "Mornings with Maria" Thursday. "And you know, if you tax the rich all the way to the end, 42% of our federal tax revenues come from the 1%. But to go after waitresses? I remember when I was a waitress, I made a dollar an hour, and then I relied on my tips… But this is the kind of thing where you're not going to solve our budget problems by going after hard-working Americans."

"Washington has a spending problem, not a revenue problem," Rep. Mike Kelly, R-Pa., the chairman of the Ways and Means Subcommittee on Tax, previously told Fox News Digital on Wednesday. "Now, the IRS is going after middle-income families and working moms and dads who are just trying to make ends meet and put food on the table."

"My colleagues and I have warned for months that the IRS would start targeting hardworking Americans in the Biden administration’s quest for more taxpayer dollars. Now, we’re starting to see some of these concerns come to fruition," he added.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Rep. Adrian Smith, R-Neb., another senior member of the House Ways and Means Committee, echoed Kelly's comments, saying the plan was the latest example of the Biden administration targeting working families via tax policy. He also said the GOP was prepared to be a check on the IRS's programs.

"Bank surveillance efforts, 1099-Ks, 87,000 new IRS agents to target taxpayers, and now a new program to go after service industry workers’ tips are all a direct result of the Biden administration’s desire to tax working families and small businesses as much as possible," Smith also told Fox News Digital Wednesday. "Make no mistake: the administration’s many attempts at raising revenue are because they are unwilling to come to the table to address the debt crisis, which would require curbing their spending addiction."

READ MORE FROM FOX BUSINESS

Fox News’ Thomas Catenacci and FOX Business’ Louis Casiano contributed to this report.