Automatic Gratuities: Service Charge not Tips
Effective January 1, 2014, automatic gratuities in the hospitality industry (for example, an automatic 18% tip for parties of six or more) will be treated by the IRS as service charges rather than tips. Unlike optional tips which the employee bears the responsibility of reporting, these service charges will be viewed as wages and the employer will be responsible for reporting them. Additionally, employers should be aware that any such service charges will be […]