New IRS policy taxes automatic tips for waiters

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AFTP
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New IRS policy taxes automatic tips for waiters

Postby AFTP » Mon Sep 09, 2013 8:18 pm

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Re: New IRS policy taxes automatic tips for waiters

Postby AndyK » Tue Sep 10, 2013 1:02 am

Tips have always been taxable income; except that, in most cases, they were self-reported by the employee AND were not considered employment income in the sense of Social Security and so on.

NOTE: The self-reported aspect has received the attention of the IRS many times in industries such as gambling casino employees and wai-staff at high-priced restaurants.

In any case, the only change is that the IRS is now going to view "automatic tips" (that sneaky percentage added to your bill when you are a member of a 'large' group dining together) as income from the employer -- subject to all the mandatory withholdings and employer matches.
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Re: New IRS policy taxes automatic tips for waiters

Postby LaVidaRoja » Tue Sep 10, 2013 1:31 am

I remember working some of the early tip projects. When the initial tip reporting legislation came in, I wrote my first letter to my Congressman asking him (he opposed the legislation) whether he believed that not all people should have to report all of their income.
I WISH all of the states would follow California's lead (NO reduction in minimum wage for tipped employees) and we could go to the European style "tip included" paying for tipped services.
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Re: New IRS policy taxes automatic tips for waiters

Postby Gregg » Tue Sep 10, 2013 7:20 am

Many years ago working as a serving slave we, even in the late 70s, had a sales report every shift that totalled what we "sold" that night. The rule back then was you had to report 8% of your net sales (food sales NOT including liquer sales, which you had to PAY 8% of to the bartenders) in order to avoid the restaurant getting the IRS interested. Without saying, the amount you claimed every night had to also total enough that you made regular (non-tipped employee) minimum wage.

The thing I remember was the restaurants were all pretty hard core about enforcing this, because the IRS and the State were holding them to some standard and no-one was really interested in hassling servers. One nationally famous place got into some trouble for it sometime around 80-81 maybe, but no employees got in much trouble as I recall.

"Auto tips" were always reported, per se, but if I got X on a big table it just meant, as far as the amount reported went, that I made a bit less everywhere else, because I reported EXACTLY 8% every night. Even when I delivered pizza in Cambridge on a bicycle, which is another story altogether... :oops:
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Re: New IRS policy taxes automatic tips for waiters

Postby JamesVincent » Tue Sep 10, 2013 11:49 am

When I waited tables we ran a Z report at the end of the night, which gave you your total sales amount, any tips owed to the bartender, and gave a recommended, not required, claimed amount for tax purposes. We then filled in whatever we felt like and went home. I never worked for a restaurant that did a mandatory tip amount for large groups, the last one I worked at was Ruby Tuesday's in the early 90s.
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Re: New IRS policy taxes automatic tips for waiters

Postby Number Six » Tue Sep 10, 2013 12:06 pm

It is relatively easy to do tracking with credit card and check tips and other payments, not so much with the cash that I see almost universally proffered and demanded by businesses that claim to not want to pay the %s with non-cash transactions, but in many cases are just trying to operate on the "honor system" that is anything but. And the petty tax cheats are usually quite outspoken on the major tax rip off artists.
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Re: New IRS policy taxes automatic tips for waiters

Postby AFTP » Tue Sep 10, 2013 2:22 pm

Part of the complaint in the video was, suppose I got crappy service and didn't want to leave a tip?

Not only do they get a tip anyway but now the employer has to fork out to the IRS money that otherwise wouldn't have happened.
Sounds unfair to all except the waiter. :?
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Re: New IRS policy taxes automatic tips for waiters

Postby Gregg » Fri Sep 13, 2013 3:18 am

AFTP wrote:Part of the complaint in the video was, suppose I got crappy service and didn't want to leave a tip?

Not only do they get a tip anyway but now the employer has to fork out to the IRS money that otherwise wouldn't have happened.
Sounds unfair to all except the waiter. :?


well, yes and no. I always did, and still do, look at it as having to pay taxes on 8% of the check no matter what tip I (or the server) gets.
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Re: New IRS policy taxes automatic tips for waiters

Postby AFTP » Fri Sep 13, 2013 3:34 pm

But in this case you lose the OPTION not to pay because the service was bad.
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Re: New IRS policy taxes automatic tips for waiters

Postby Judge Roy Bean » Sat Sep 14, 2013 2:24 am

Just in case anyone has forgotten, there is this wonderful thing called folding money that can be used to reward outstanding service. :)
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