10.21.13  

  Law360  

 

Kara M. Maciel wrote an article titled "New IRS Rule Problematic for Hospitality Employers."

 

An excerpt:

 

It's a familiar scenario — a party of eight or more guests enters a restaurant, orders dinner and receives a check with an 18-percent gratuity automatically added to the total bill. This sizable gratuity is included irrespective of the competency of the service to ensure that the waiter or waitress gets a fair tip. Although useful in protecting the earning ability of tipped employees, this method takes away the customer's discretion in choosing whether and/or how much to tip the server. As a result of this removal of a customer's voluntary act, the Internal Revenue Service has decided that it will tax employers on automatic gratuities separately from ordinary tips.