LVA news of the day on "tipping"

Is showing the IRS ruling in 2012 has gone into effect on Jan 1, 2014.
It states that restaurants can no longer place an 18% tip onto your tab for 8 or more diners.

I have not heard of this ruling until now, (no big surprise)

My question is why can hotels place "mandatory resort fees" onto your tab? With either one you don't have a choice other than staying elsewhere or eating elsewhere.

The IRS has finally done something right. For far to long restaurants have been getting away with this rip off so that they would not have to pay their wait staff a fair and decent wage. Also, now the waitstaff will have to give the service that a tip justifies. I look forward to receiving better service whenever I visit a restaurant. Meanwhile, as long as the hotels and casinos advertise the rip off "resort fees" before one books a room and as long as those who book these rooms continue to agree to pay the "resort fees", nothing will be done. I for one, will never stay and pay the rip off "resort fees" - there are plenty of other places that want my business that do not charge these asinine fees.My advice is "Just say NO" to the rip off "resort fees" by refusing to stay anywhere they are charged.

How did we segue way to resort fees?

They talked about this new rule in a tax tune-up class. I don't have any restaurant clients, so I will not read the fine print.

Resort fees, 6/5 blackjack and Obama birth certificate can never be discussed enough.

The IRS has no jurisdiction over the way a restaurant presents a bill to a customer; restaurants can write what they want, and charge what they want.

You are just a friggin' expert on everything!
I'm soooo intrigued.

Yes, I'm a friggin expert on the FACT that the IRS can't tell you or I what to write, or how to market our services.

During 2012, the Internal Revenue Service issued a new ruling regarding the taxation of automatic gratuities included on the tabs of restaurant guests. The ruling is effective January 2014 and will require automatic gratuities to be classified as service charges, which are treated as regular wages by the IRS. This means the automatic tips are subject to payroll tax withholding. With this new ruling, many restaurants are experimenting with other ways of automatically charging gratuities and many are dropping the practice all together.

It is common practice for restaurants to include an automatic tip of a specified percentage to the bill of large parties to help ensure their servers are not short changed on large tabs. With the new ruling, restaurants will need to factor automatic gratuities into pay and begin withholding Federal and State taxes on the wages. This change will result in increased paperwork and administrative expenses for restaurants, in addition to various financial consequences for wait staff. Some restaurants are starting to include suggested gratuity on tabs, instead of automatically adding it into the bill, to avoid the new tax consequences. This practice still allows the customer to decide on the final tip and, therefore, has not been deemed a service charge by the IRS.

With the increased costs of healthcare reform and other items on the horizon, this is another issue to be considered by restaurants when planning for the upcoming 2014 tax year.

For more information or questions on this topic, please contact your local UHY LLP professional.


Link

This makes sense - it will help the IRS better track tips. Shouldn't there be withholding tax on all wages and tips are wages? I thought this was actually happening today when you charged your bill at a restaurant and add the tip. Why should a certain segment of the population continue to get away without reporting ALL their income while Joe and Jane W-2 pay tax on every dollar earned?