The employer also undertakes to comply with TRAC`s requirements for reporting, filing, paying and registering taxes. The employer must also set up an education program on tipping obligations. New employees must continue to train and train existing staff on a quarterly basis. However, the EmTRAC program offers a little more flexibility to the employer in the design of its educational program and in the procedures for reporting tips. Even though an EmTRAC must be approved by the IRS, it does not require an employer to withdraw a formal written contract with the IRS. The IRS developed the EmTRAC agreement program in response to employers in the food and beverage industry who have expressed interest in designing their own TRAC programs. As a result, in 1994, a coalition of employers from several restaurants and hotels, as well as representatives of the IRS, developed TRAC to increase legitimate employee tip coverage. TRAC is a tastier alternative to the IRS Tip Reporting Determination Agreement (TRDA), which the IRS introduced nationwide in 1993. A TRAC lease usually contains a “depreciation reserve” into which you deposit. Once the lease is over, you either owe money or you will receive a refund based on the actual value of the equipment. The procedure for participating in the TRAC program involves filing an application with the IRS District Director for the district where the employer is located. For an established company, a new TRAC agreement would take effect at the beginning of the calendar quarter, after the TRAC agreement is signed by the IRS District Director.