It has always been the responsibility of the employee to report their tip income to the employer so it could be included on the W-2 form. However, with the increase of tips being entered on credit and debit cards, the IRS is beginning to match data from electronic tips. According to the IRS, employees must report all cash tips to their employer in a written statement, except for the tips from any month that do not total at least $20 (this includes both cash and tips on credit/debit cards).
Reporting Tips on W-2 Forms