Dealers Sue Harrah's & IRS Over Tip Policy

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Dealers at Harrah's Reno are suing the hotel casino and the Internal Revenue Service. They say hundreds of thousands of dollars of their tip money is being witheld without their consent.

The lawsuit alleges the IRS suddenly changed its tax policy agreement with Harrah's and the change left which left dealers high and dry.

At most of the casinos in town, dealers share their tips. They pool the money, and a committee of dealers records the amount, and everyone takes his share after every shift.

"It's called 100-percent compliance. Tthey keep track of what you make and it's taxed and taken from your paycheck," says dealer Brad Talbot.

Talbot has been dealing for 21 years. He says he depends on leaving work with the cash in his pocket. "It makes it convenient to buy groceries, get gas, we're so used to it."

But Brad's counterparts at Harrah's were told on Friday to get used to something else-. They now have to turn their tips over to the casino every night and they have to wait two weeks to get that money back in their paycheck.

Says attorney Ken McKenna: "This deprives them of money on a daily basis and they're upset because they didn't agree to it."

McKenna, filing on behalf of hundreds of dealers, says the IRS is backing out of an agreement it negotiated with the dealers 11 years ago.

But the IRS says it revoked the agreement after auditing Harrah's tax reporting.

Meanwhile dealers are caught in the middle.

"We want to stop the IRS from what they're doing," McKenna says. " "Tthis is them wielding their power - it's mean and wrong."

Now it's up to the courts. Either a judge will overturn the new rule or the lawsuit will convince the IRS to establish a new deal with the dealers.

Attorneys for Harrah's say they won't comment on the lawsuit.

We also tried to speak with the dealers, but many of them say they are afraid to comment until they find out what's going to happen legally.

What about the other casinos and their relationship with the IRS? That looks like this is an isolated situation involving Harrah's and its agreement with the tax agency.

So far no other dealers have reported complaints about the way their tip money is being handled.