IRS Ruling May Mean Lower Tips for Restaurant Workers

Both servers and restaurants have been on edge in the new year due to an IRS ruling that changed the classification of automatic gratuities from a tip to a wage. Now, automatic tips--such as the common 18% many restaurants charge for large parties—are categorized as wages rather than tips. These service charges now will be processed through the payroll system, which means servers will have to wait up to two weeks to receive their money. In addition, these wages are subject to additional taxes on the employee and employer fronts.

Team PaycheckCityJan 10, 2014

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