Keith Boyer's Blog

This is some blog description about this site

IRS Tips, Service Charge Ruling On Automatic Gratuities Raises Taxes On Servers

An updated tax rule is causing restaurants to rethink the practice of adding automatic tips to the tabs of large parties.

Starting in January 2014, the Internal Revenue Service will begin classifying those automatic gratuities as service charges which it treats as regular wages, subject to payroll tax withholding instead of tips, which restaurants leave up to the employees to report as income.

 

The change would mean more paperwork and added costs for the restaurants and a potential financial hit for waiters and waitresses who live on their tips but don't always report them fully.

Tax Reporting Documents
NYS Sales Tax - Equipment Sales
 
SCROLL TO TOP