IRS To Count Automatic Gratuities As Wages, Not Tips : NPR
By Scott Neuman
Gratuity included? A new IRS rule could end, or at least curtail, the practice. The Internal Revenue Service will soon begin classifying automatic gratuities as service charges that are taxable as regular wages and subject to payroll tax withholding. Currently, they’re considered tips, and it’s up to the wait staff to report them 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.” – The Wall Street Journal
Government, looking out for the little guy ;)