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

Rate this post

Please follow and like us:
error0
 

Leave a Reply

avatar
  Subscribe  
Notify of
Redbirddeb
Guest
Redbirddeb

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

Christine Watts C.
Guest

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
Guest

choke the beast= quit paying taxes, period.

operator047
Guest

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
Guest
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
Guest
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 »