The Internal Revenue Service recently ordered Brinker International, parent company of Chili's and Macaroni Grill among other restaurant brands, to pay over $31 million in back FICA tax for failing to accurately report employees tips. Although Brinker International had a contract on tip reporting procedures with the IRS, it was revoked by the IRS, saying that the company wasn't trustworthy.

Brinker denied the IRS allegations, and said they will dispute the accuracy of the proposed IRS settlement. The government agency interviewed employees to determine how the company taxed unreported cash tips. The agency determined that the cash tip should have been approximately 2 percentage points below the reported charged tip rate. Brinker did not disclose what it actually reported to the IRS.

The IRS has continued its tactics of using tip audits of employers for estimating unreported tips of employees, and assessing the employer the FICA tax on those unreported tips, even though the IRS cannot apply the tax collected to the individual employees FICA account.