New IRS rule could cut into restaurant workers’ tips

money
Fox News: Even as President Obama and progressive activists are trying to sell the nation on hiking the national minimum wage to help restaurant workers and other low-wage employees, the Internal Revenue Service is seemingly determined to make life harder for those same workers.
A change in tax policy implemented Jan. 1 will prevent restaurant workers from collecting automatic gratuities — the added 18 percent fee many restaurants charge to groups of eight or more — as part of their tips. Instead, that added fee will be included in their payroll, meaning workers have to wait up to two weeks to get that extra cash and must pay additional taxes on it.
It means less money in servers’ pockets and more for the federal government.
“We had a lot of nervous servers when they first heard about it,” said Pat Forciea, marketing director for Hell’s Kitchen, an independent restaurant in Minneapolis. “They would have had to go without that extra money in their pocket until it went through the payroll process and showed up in their checks two weeks later.”
Forciea said his restaurant does quite a bit of banquet business for nearby businesses, and used to tack-on an automatic gratuity for those big groups.
He admitted to being confused by the rule change when it was first announced in June 2012, but after consulting with an attorney he was told there was an easy way around it.
Now, Hell’s Kitchen is using a “suggested gratuity” of 18 percent on big groups, but the amount isn’t added directly to the check.
Under the new IRS rules, that’s enough for it to still be considered a tip. But it means the workers don’t have the assurance of a good tip when taking care of a big group.
Way to stick it to the service industry employees Obama!
DCG

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Redbirddeb
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Redbirddeb

This out-of-control THEFT of working Americans ends WHEN?????

Christine Watts C.
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This current duplicitous crowd, who have commandeered our gov’t, is at it again–robbing the poor to pay the rich–every time I hear of something like this, the theme from the tv show, “Robin Hood” begins running through my mind–excuse me, but is the Sheriff of Nottingham somehow running the IRS, or what?! What a horrible joke on us is this bankrupt bunch running our gov’t right now!

tina
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choke the beast= quit paying taxes, period.

Dr. Eowyn
Admin

tina, Have you quit paying taxes? If not, please don’t preach unless you’re practicing what you preach. Ann Barnhardt quit paying taxes. She had to sell her house to pay off the IRS, auction off her belongings — including forks, knives, plates — on eBay (for which her kind supporters paid grossly inflated prices @$100 a fork!), and she is now living, as she puts it, “in an RV by the river” on her friends’ property. Barnhardt is young, healthy, single with no dependents, and can risk everything. Can you? I can’t. I have an elderly sick husband and 7… Read more »

tina
Guest

this is a conversation I could have all day long. Until we know exactly where are tax money is going and what it is being used for, what you describe is “exactly” what they want to hear.

Dr. Eowyn
Admin

tina, I really don’t appreciate you calling me in effect an enabler of “them.” Yes, I’m really helping “them” by working 7 days a week, every day of the year, for the last 4 years on this blog — for no pay — informing millions across America and the world. What have you done? I noticed you also didn’t answer my question: Are you practicing what you preach? Have you stopped paying taxes? – that is, assuming that you are even among the 49% of adult Americans who actually pay income taxes. If you’re not practicing what you preach, then… Read more »

TrailDust
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TrailDust

That is sage advice, Dr. Eowyn.
Thank you for speaking up immediately. I have a family of 2 bipeds and 2 furry quadrupeds, and have no intention of letting my rashness injure any of them. 😀
“Whose image is on the coin?” (Caesar’s)
“Give Caesar what he owns.”
(your tax money)
“Whose image is on you?” (God’s)
“Give God what He owns.”
(your whole self)

joandarc
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joandarc

Traildust, this is a perfect Biblical quote in perfect context. Bravo!

joandarc
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joandarc

Ditto Dr. Eowyn! We pay our taxes so as to protect our six kitties who came to us homeless, a dog, a turtle who was homeless, a parrot who was homeless and an injured pigeon who is now another pet, all dependent upon us. We also have our Catholic Study Group in our home regularly, to study our Faith and its history and writings, to establish love and respect and to nurture them as our fellow brothers and sisters. We have never objected to pay our share of taxes for the good of our country. We must continue to fight… Read more »

operator047
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Life is full of choices. One can make educated decisions on whether or not to pay extra taxes. Rent instead of own. No property tax. No mortgage to the banksters. E mail instead of cell phone. No silly extra fees on your cell phone bill. Public trans or share rides instead of own a car. No property tax. No gas tax. Etc… You get the point. Plan ahead and decide that you are no longer going to let .gov steal your hard earned money. You will be amazed at what you have for things in your life that are important… Read more »

joandarc
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joandarc

Thank you DCG for this important post. I have learned that there are many cheap and thoughtless people in this world, which is probably why the mandatory gratuity was established. Once again, this administration makes life hard for the real workers of our country. I have never been a restaurant server, but I know they work very hard and that tips are so necessary for their income. It is my hope that people remember this when they leave a tip for a food server.

Glenn47
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Glenn47

After working in the restaurant business over 20 years, this sucks. Most people fail to realize, if a diner decides to stiff,(not tip a server), that server is automatically taxed a certain percent on the total of the check. It was 8 per cent when I stopped. Then most restaurants have the server tip a certain amount to bar tenders, bussers, sometimes the kitchen and so on to supplement their salaries. The servers are the backbone of the restaurant and I worked every position as well as manage, owned and corporate trained staff. So a server that might have made… Read more »