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IRS Declares War on Waiters and Waitresses

Via Wall Street Journal:

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

Starting in January, 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. . .


Bail out the banks but make sure a waitress making minimum wage pays her fair share? The IRS doesn't have better things to do? - Greg Pollowitz


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