Fior D'Italia, Inc. v U.S., 536 U.S. 238. 122 S.Ct. 2117, (SCt 6/17/2002)
The Supreme Court ruled that the IRS can use estimates of tip income from restaurant employees to calculate the employer's share of FICA taxes on cash tips.
Commissioner Rossotti issued the following statement in response to this ruling:
The Court's important decision upholds our ability to make sure all Americans pay a fair share of taxes. The IRS plans to continue working cooperatively with the Restaurant Industry and other industries where tips are common. Our goal is to create a fair, accurate system for reporting tip income while minimizing burden on taxpayers and business.