All servers must read this!!! Automatic Tips - A Thing of the past? Anyone who has waited tables can attest to the safety feeling of an 18% automatic tip for parties of, lets say, 8 or more. If not for this common practice, the possibility of a 5% tip on a 12 top could ruin a servers night. In the past, many restaurants have had this practice in place, however, beginning in January, the IRS will re-classify automatic gratuities as service charges. This has several ramifications. Service charges are treated as regular wages, and therefore subject to payroll tax, medicare, and social security taxes, as opposed to tips, which restaurants depend on servers themselves to report as income. These changes would create more paperwork and increased costs for the restaurant, which, in these days of cost cutting initiatives spells trouble. In addition, many servers live off of their tips, and dont report them fully, and this would create another financial burden. Lets face it, servers wages can range from minimum wage, down to $2 per hour in some states. Tips are their lifeline, and any changes can seriously affect their bottom line. Also many servers prefer to receive their tips at the end of their shift, this way knowing exactly what they have to work with. With the new rules, servers wouldnt see the automatic tips money until payday, thus complicating monthly budgeting. Stay tuned for other tricks the IRS has up their sleeve....
Posted on: Wed, 30 Oct 2013 16:13:30 +0000
Trending Topics
Recently Viewed Topics
© 2015