I wonder if this is true?!?!?

[Roy Hersh]

Has anybody else heard of this or seen anything that verifies this?

http://www.thebartendingmasters.com/blo ... ks-anymore

[Peter W. Meek]

There may be a new requirement regarding "automatic" tips for large parties, and how they are reported, but whether such tips are taxable has not changed.

Tips have generally been taxable as income. Tips put onto a credit card are generally held by the establishment and held until the next pay period (and taxed as income). Tips in cash are generally kept by the server that day. (They may be required to be shared with non-waiting support staff or even added to tip-pooling to be shared by all wait staff. They must be reported as income by the server. This depends on the honesty of the individual server.) The IRS assumes that tips will amount to a certain percentage of all food and drink sold by a server and insists that their "calculation" be the minimum reported tips, so stiffing a waiter can mean that they are taxed on income that they never received; thus refusing to tip can actually take money away from a waiter.

Since I learned that tips put on credit cards are held until the next pay period, and because such tips are reported to the IRS, have switched to tipping in cash at my regular restaurant.

[Glenn E.]

There may be a new requirement regarding "automatic" tips for large parties, and how they are reported, but whether such tips are taxable has not changed.

Exactly this. All tips have always been taxable as income. All this is changing is who reports the income and when the income is received.

[Eric Menchen]

Yes, this is a change in collection and reporting procedures, but not a change in tax amounts owed; just as foreign banks (presumably with a US presence?) are now required to report to the IRS on accounts held by US citizens overseas above a certain threshold ($100,000? It was some large amount but I don't remember it). That reporting requirement didn't change the fact that a US citizen, regardless of place of residence, must report income earned on foreign accounts. On a variety of issues it is a common cry that we don't need new laws/taxes etc., but just to enforce the existing laws. That's what is happening. The IRS is just trying to increase tax law compliance, and automatically calculated gratuities are an easy target because the restaurant is already calculating the amount.

The last restaurant I worked in was a country club that pooled all the tips and split them up on a point scale. This reporting change would make no difference there.

Now if you believe service workers are underpaid and deserve more money for their work, I think that is a valid and different issue from tax collection.