[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3121(a)(12)-1]

[Page 34]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table 
 
  Subpart B_Federal Insurance Contributions Act (Chapter 21, Internal 
                          Revenue Code of 1954)
 
Sec.  31.3121(a)(12)-1  Tips.

    The term ``wages'' does not include remuneration received by an 
employee after December 1965 in the form of tips if--
    (a) The tips are paid in any medium other than cash, or
    (b) The cash tips received by an employee in any calendar month in 
the course of his employment by an employer are less than $20.

If the cash tips received by an employee in a calendar month after 
December 1965 in the course of his employment by an employer amount to 
$20 or more, none of the cash tips received by the employee in such 
calendar month are excluded from the term ``wages'' under this section. 
The cash tips to which this section applies include checks and other 
monetary media of exchange. Tips received by an employee in any medium 
other than cash, such as passes, tickets, or other goods or commodities 
do not constitute wages. If an employee in any calendar month performs 
services for two or more employers and receives tips in the course of 
his employment by each employer, the $20 test is to be applied 
separately with respect to the cash tips received by the employee in 
respect of his services for each employer and not to the total cash tips 
received by the employee during the month. As to the time tips are 
deemed paid, see Sec.  31.3121(q)-1. For provisions relating to the 
treatment of tips received by an employee prior to 1966, see paragraph 
(j)(3) of Sec.  31.3121 (a)-1.

[T.D. 7001, 34 FR 999, Jan. 23, 1969]