In August 2024, former U.S. President Donald Trump's campaign released a TV advertisement claiming, "News reports confirm Biden and Harris have weaponized the Internal Revenue Service (IRS) to confiscate your tip money. Harris and Biden have literally unleashed the IRS to harass workers who receive tips, and they just may be coming to your house next."
The ad showed actors in suits wearing sunglasses — an apparent depiction of IRS agents — invading an American home to search for loose cash.
As its evidence, the campaign ad's onscreen text cited several sources, for example a Feb. 8, 2023, article from the Daily Mail tabloid — a website once banned by Wikipedia's editors from being used as a source for its lack of reliability. To further attempt to support its primary claims, the ad also mentioned a Feb. 10, 2023, article from the libertarian magazine website Reason.com and an Aug. 13, 2024, article from the politically conservative group Americans for Tax Reform.
The campaign ad played on a rumor claiming that President Joe Biden's Inflation Reduction Act of 2022 mentioned the enforcement of fully reporting taxes on tips. More broadly, the rumor claimed the legislation — for which Vice President Kamala Harris cast the tie-breaking vote — benefited efforts for the IRS to specifically "go after" people who depend on tips, such as restaurant servers, providing $80 billion in funding to hire 87,000 new IRS agents for enforcement of the middle class.
However, the claims promoted by the Trump campaign ad — like others surfacing weeks before the November 2024 election — intended to both mislead and strike fear into voters, all based on a complete misrepresentation of the facts.
In sum, the Inflation Reduction Act did not mention taxes on tips. The claim that the IRS planned to spend $80 billion in funding to hire 87,000 new agents for enforcement to "come after" and audit middle-class Americans was false, as we previously reported more than two years ago. Further, as we'll explain in this story, the part of this overall rumor pertaining to a "new service industry tip reporting program," known by the acronym "SITCA," completely lacked context.
How This Rumor Started
The issue of taxes on tips emerged as a hot topic of discussion in the weeks ahead of the November 2024 presidential election, after former President Donald Trump first mentioned the idea of not taxing tips, followed by Vice President Kamala Harris endorsing the idea for her own campaign.
In one online example of the rumor at hand in this fact check, a user on X posted (archived) on Aug. 13, "Don't forget: Kamala Harris was the tie breaking vote on the Inflation Reduction Act which put taxes on tips and hired 87,000 IRS agents to go after the middle and lower class to get the money."
Some Facebook posts mentioning the rumor also shared a screenshot of an article published by the conservative news website Breitbart.com on Aug. 11. The headline of the Breitbart story read, "VP Kamala Harris Cast Tie-Breaking Vote to Let IRS Track Workers' Tips So They Can Be Taxed." An alternate headline similarly said, "Kamala Harris Voted to Pass Legislation Allowing IRS to Track Workers' Tips So They Can Be Taxed."
The Breitbart article appeared to be the originating reason why some or all of the other online users created their posts in the days and weeks that followed, as well as the possible inspiration for the Trump ad, seeing as the campaign released the ad days later.
The Breitbart article began, "Harris cast the tie-breaking vote to pass the Inflation Reduction Act that provided $80 billion in additional funding to the Internal Revenue Service (IRS), which then got to work cracking down on the service industry's reporting of tips so that they could be taxed." The Breitbart story then tied that information to a February 2023 IRS proposal for a "new service industry tip reporting program" named SITCA — a voluntary program that the Tampa Bay Times later reported on Aug. 28, 2024, did not end up being implemented. The Breitbart story published days earlier did not inform readers of the program's defunct status.
The Inflation Reduction Act Does Not Mention Tips
While Harris did cast the tie-breaking vote for the Inflation Reduction Act, the legislation — which can be read in full here — did not once mention tips. It did, however, feature a brief area labeled "Funding the Internal Revenue Service and Improving Taxpayer Compliance." That section's name read, "Enhancement of Internal Revenue Service Resources." (Readers can find this section by using a browser's "find" function to look here for the text "SEC. 10301," without quotes.)
That section of the legislation provided nearly $80 billion to the IRS for several purposes. As The Washington Post reported in August 2022, "Years of congressional underfunding of the IRS has left the agency without the resources to quickly process returns, let alone assess the complex tax-avoidance strategies of well-heeled individuals. So audit rates have fallen dramatically and more taxpayers are presumed to be not paying what they owe."
The legislation allocated $45,637,400,000 of the nearly $80 billion in funds for enforcement. The description for the purpose of the funds did not mention tips but did note that the money's usage spanned through 2031 and involved amounts "in addition to amounts otherwise available for such purposes":
For necessary expenses for tax enforcement activities of the Internal Revenue Service to determine and collect owed taxes, to provide legal and litigation support, to conduct criminal investigations (including investigative technology), to provide digital asset monitoring and compliance activities, to enforce criminal statutes related to violations of internal revenue laws and other financial crimes, to purchase and hire passenger motor vehicles (31 U.S.C. 1343(b)), and to provide other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, $45,637,400,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to amounts otherwise available for such purposes.
The False Rumor About 87,000 New IRS Agents
Regarding the part of the rumor mentioning the hiring of 87,000 new IRS agents for enforcement purposes, we previously reported about the misrepresentative efforts from other users who failed to tell the truth.
The people who promoted this misinformation sourced the "87,000" number from a May 2021 report published by the U.S. Department of Treasury. That report specified the planned hiring of 86,852 new IRS employees by 2031. But as Time.com reported, most of those hires wouldn't be IRS agents dedicated to tax enforcement, nor would they all be new positions:
According to a Treasury Department official, the funds would cover a wide range of positions including IT technicians and taxpayer services support staff, as well as experienced auditors who would be largely tasked with cracking down on corporate and high-income tax evaders.
"It is wholly inaccurate to describe any of these resources as being about increasing audit scrutiny of the middle class or small businesses," Natasha Sarin, a counselor for tax policy and implementation at the Treasury Department, tells TIME.
At the same time, more than half of the agency's current employees are eligible for retirement and are expected to leave the agency within the next five years. "There's a big wave of attrition that's coming and a lot of these resources are just about filling those positions," says Sarin, an economist who has studied tax avoidance extensively and who was tapped by the Biden administration to beef up the IRS's auditing power.
In all, the IRS might net roughly 20,000 to 30,000 more employees from the new funding, enough to restore the tax-collecting agency's staff to where it was roughly a decade ago.
The IRS' SITCA Program for Reporting Tips
The August 2024 Breitbart.com article featured a Feb. 8, 2023, post (archived) from podcaster Patrick Bet-David, in which Bet-David misleadingly tied the false rumor about the hiring of 87,000 new IRS agents for enforcement to the headline of an IRS website page for the Service Industry Tip Compliance Agreement (SITCA) program, titled, "IRS introduces new service industry tip reporting program." That page displayed the date of Feb. 6, 2023.
This post lacked context. In February 2023, the SITCA program existed as a proposal seeking "public feedback." As with pre-existing programs, SITCA was announced as voluntary. The IRS said the new program featured purported benefits including the improvement of tip-reporting compliance, the decrease of taxpayer and IRS administrative burdens, and "more transparency and certainty" for taxpayers. Further, the IRS stated its intention with the SITCA proposal was to replace three other programs involving taxes and tips — meaning a single program to handle all needs. Once again, though, the IRS didn't implement the new program.
The Washington Post reported in late August 2024 a statement from U.S. Department of Treasury spokesperson Ashley Schapitl, who said, "Treasury and the IRS have no plans to move forward with the voluntary program and, as such, there are no new reporting or compliance components." She also added, "We continue to carefully consider comments received in response to the proposed guidance." By email, Schapitl confirmed to Snopes her statement's authenticity.
As of September 2024, the IRS website hosted another page titled, "Tip recordkeeping and reporting." That page listed other "voluntary tip compliance agreements" intended to "enhance tax compliance among tipped employees and their employers through taxpayer education." Two of those programs — programs SITCA would have replaced — had been in effect since 1993.