Employment Question 2: Server must claim 15% in tips?

Employment Question 2: Server must claim 15% in tips? (Full Version)

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SugarMyChurro -> Employment Question 2: Server must claim 15% in tips? (7/22/2007 5:04:41 AM)
I'm back again with another question arising from a conversation with my friend. You guys were so great the last time, I thought I'd give you something new to chew on. Here's the situation: The server has to make some kind of "tip declaration" about her earned tips for the day, much of which is pre-calculated based on electronic transactions which can be easily tracked. 3% of sales are automatically withdrawn off the top as a mandatory tip out to other staff (bartender, food expeditor, bus people, etc). With whatever money is left over, the server then confirms a dollar amount as her tips or enters a new amount - this amount is the actual amount she has earned in electronic and cash tips (although I understand few people report the whole amount of their cash tips). This declared tip amount does NOT include the mandatory 3% tip out. On average the server is able to bring home 10-12% of sales in tips. In making this declaration about her tips, the server must answer "yes" to an electronic statement that reads: "I certify that this information is true and correct" - something like that (and which to my mind is a statement probably being digitally signed under penalty of perjury to the IRS). The restaurant is soon to receive new payroll software. The new system will function very like the old system with some changes. Now the server will have to declare 15% or more of sales as her tips without regard for the actual percentage in tips that she earned for that day. The tip out portion will now come directly from this 15%, in a sense as a tip from the sever to the other staff members. And she will still be making some kind of digital declaration to the IRS that the 15% or more tip amount is true and correct under penalty of perjury. Should she try to enter any amount less than 15% as her tips she will not be allowed to clock out (whatever that means). Her concerns are these: 1. That she is being forced to tip out of her own taxed earnings at 3% of sales to other staff members. 2. That she is making a false statement to the IRS because her own tips are not actually always 15% or higher - often her percentage in tips is far below 15% of sales. In discussing the situation with her manager she was informed that anything less than a 15% tip being declared would somehow mean money out of the shift manager's pocket being paid to corporate to cover payroll taxes. 3. She further believes that the other staff members are being taxed for their 3% in tips, so that ultimately that amount of money is being double taxed - or the double tax part possibly being pocketed by corporate. Now, beyond the obvious suggestion that being a server sucks and that she should get a new job, much of this sounded very fishy to me. I can't believe that anyone would force someone else to make false statements for tax purposes. I can't quite believe that she can be forced to tip out from her after tax monies either. Anyway, much of it sounds very odd to me. I'd be grateful for any information others can provide on the topic. Some of you have mad google skills for finding the right codes and such. I was certainly impressed by the replies the last time I had a question on employment as a server. Thanks in advance.

MsSonnetMarwood -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 7:40:14 AM)
When I waited tables in PA, we were required to declare a minimum of 10% of my sales in tips. In MD, I have to declare a minimum of 12% of my sales in tips. Keep in mind that I tip out to busstaff, barstaff 15% of my total tips for the night. Other restaurants may require up to 25-35% of the tips to support staff, or even more depending on how many people get a piece of the pie. Other restaurants may also base tip out on sales rather than total tips. quote: Her concerns are these: 1. That she is being forced to tip out of her own taxed earnings at 3% of sales to other staff members. 2. That she is making a false statement to the IRS because her own tips are not actually always 15% or higher - often her percentage in tips is far below 15% of sales. In discussing the situation with her manager she was informed that anything less than a 15% tip being declared would somehow mean money out of the shift manager's pocket being paid to corporate to cover payroll taxes. 3. She further believes that the other staff members are being taxed for their 3% in tips, so that ultimately that amount of money is being double taxed - or the double tax part possibly being pocketed by corporate. 1. What you're taxed on supposedly takes into account that you're tipping out to other staff so that you're not taxed on what you tip out, which is why it's lower than 15%. 2. What percentage that people tip are VERY culturally and geographically influenced, as well as depending on the general affluence and "experience" they have dining out Some cultures just do not tip well. Some geographic areas don't tip well. I can definately see that if you're in a restaurant in a non-affluent area, that you're not going to make good money. But what you make is what you make at that restaurant, and fighting with management and state about laws isn't going to hel. The restaurant - especially if it's a chain - is going to CYA regarding laws even if the servers get hurt by it. If a server isn't making enough in tips to bring their hourly wage up to mimium wage (servers usually make aroudn $2 an hour from the restaurant - tips are supposed to bring it up to minimum at the very LEAST), then most states require restaurants to make up the difference. Getting them to actully DO that, however.... 3. Yes. Other tipped staff ARE paying taxes on their tips. Again, the required minimum for a server to declare is lower than the 15% "base standard" tip because it takes into account for tipping out. In reality, YES, if you got a really poor tip, you could have to tip OUT more than the amount of tip on that table - and ultimately as a server have to PAY for waiting on that table. It does indeed suck when that happens, and it will definately happen at a restaurant that on average, you are not getting 15% tips. I worked part time as a server for about 8 years (around my full time job), and full time for the last 3 years (once I went back to college). Additionally, I'm working on a degree in hospitality management. Despite the possibilities, I don't think I've ever made actual tips below what the minimums that I was required to tip out. Individual tables and poor tippers have 'cost' me, but my overall averages are very good. As a server, what I look for in a restaurant where I will work is that they are in an affluent area, that they have a higher-priced menu, and that they have good turnover of tables (turnover = getting tables sat, dined, then out and get re-sat quickly). Also, seasonality affects the business greatly - all restaurants have a busy season and a slow season, and you need to know what that is when you get a job there so you can plan how to get through the leaner months. In a lower-priced restaurant, you really need to rely on turning tables quickly to make any money. A $5 tip might well be a 20% tip, but unless you can turn 3-4 tables and hour and get them filled up again, you're just not going to make any money. ~~~~ So I always have to get a plug in for this when talking about tipping: 15% is the minimum for basic service received. ONLY tip less than this if the service was horrible. 18%-20% of the full cost of the bill is more appropriate if the service is good - and yes, it's what MOST people tip. Yes, you still have to tip the same amount on the cost of the alcohol. The "verbal tip" of telling the server how wonderful they are does NOT make up for a lower-than-average tip - while we appreciate the thanks, it DOES NOT put gas in the car. ~~~~ There are some restaurants out there where I honestly can't see how people stay there - if they're not busy and the checks aren't high, they're not going to be making much money. But a good server in a good restaurant that is busy is going to be doing fairly well. So in your friend's scenario - I would just say it's NOT a good place to work, and for her to find another job. If your friend wants to ask me any questions directly, feel free to email me.

OrionTheWolf -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 8:12:04 AM)
Try this link, and then check all the publications mentioned. Ultimately the IRS works with the establishment to determine the percentage, as well as their are GAAP (Generally Accepted Accounting Principles) that cover it as well. http://www.irs.gov/pub/irs-pdf/p3144.pdf Orion

MasterKalif -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 8:35:09 AM)
wow I totally disagree with you guys....there is no law that states that one must tip 15% minimum as far as I am aware of. Why do I have to pay 15% of any meal just because the waiter brought my food? Big deal. I hate it when the waiter is slow, take forever, and literally throws the plate on the table, or better yet, brings out the wrong dish and when you tell them politely, they roll their eyes or something. So tipping 15% is a bunch of bull in my opinion. I am willing to tip that and more if One: I am with a hot date; Two: the service was excellent, the server was a hot girl; Three: the waiter was friendly, flexible with any food changes and brought the food on time. Its all about the experience to the customer. putting on minimums just makes it a pain in the kebaba, like they do in Britain now, and it makes the whole dinning out way too expensive and the service not on par for what you end up paying. Anyways, just my two cents.

SDFemDom4cuck -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 10:25:05 AM)
In California wait staff receives federal minimum wage. At the end of the night an automated system taxes 11% of credit card sales. We are then required to claim 11% of our sales for cash tips. We also tip a % to the bar and bus staff. Our system is similar in that you can't log out of the system until you've claimed that 11%. Where I work there is also an automatic gratuity added to the bill for parties over 8. I've never had to claim more than I made in actual tips. Granted there will be some tables that don't tip at all because of cultural differences. Other tables will tip the usual amount and some will tip more. In the end it always seems to even out.

Archer -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 10:28:24 AM)
Lets see the waiter is in service to YOU for the period of time you are at the resturant. They are supposed to take order, make reccomendations, bring water/appitizers, drinks, refills, entre, desert, etc prebus the table and generally make your dinner an enjoyable experience. Feel that this service isn't worth paying for take yourself to a buffet and get up and get it yourself, LOL. If I recieve good service in all of the above catagories 20% of the bill is usually fair payment for the work done. Higher end resturants generally require more knowledge of food as well as more knoweledge of food/ beverage pairings and thus the % works out to better more knowledgeable service. I'll have no trouble reducing tip% for lack of ability or dilligence, but I realize I am paying for service and I fully expect that the service be good. Food late usually not their fault, but food late without check ins, keeping me updated, making efforts to expedite and or make up for lacking on the kitchen's part and I'll start to deduct. Attitude snotty, I'll go to the manager and ask to be reseated in another server's section. Failing that I'll have the manager bring me the check for existing drinks etc pay and leave without eating.

SugarMyChurro -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 10:36:27 AM)
MasterKalif: They see you coming from a mile away and probably spit in your food. Maybe worse. Archer: I think the assumption is that the service is adequate to good. That gets the 15%. No one is expecting someone to tip well to someone that is a poor server. I find it interesting that when this topic comes up people prefer to complain about poor service or their exceptional high expectations of what service should be rather than address the topic. I have discovered through my friend that there are many ways that restaurants make it very hard to deliver good service. I can provide details but it's off-topic here.

xoel -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 10:50:52 AM)
There is no law that states you have to tip, however the minmum wage by law for servers is $2-$3 something per hour, depending on the region. This does not cover taxes etc, so if you want the restaurant experience to be like the UK, write your congressman/woman, don't take it out on the folks that serve you. We work hard and put up with an ungodly amount of shit as it is. As for the declaring laws...by law you are supposed to declare all you make minus what you tip out. CC tips are trackable, cash obviously is not, and it seems to depend on the computer system in use. One thing i do know is if one server/bartender gets audited, then you can count on the restaurant getting audited.

popeye1250 -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 10:51:15 AM)
And Exon/Mobil paid how much in taxes last year? This is Dickinsonian by the I.R.S. but typical, go after the workingman or woman. I recently had a somewhat parelell situation. I have a management company that rents and "maintains" a condo that I own. I was informed that they'd be taking out a "bank" of $200 for "maintenance" that would be deducted from next month's proceeds. The condo is only two years old. The guy said that participation in the program was "mandatory." I said, "Oh no it's not, I don't work for YOU, you work for ME!" Now, my question would be are waitstaff "full "employees" of the company (restaurant) or are they considered "Independant Contractors?" Having waitstaff who are "Independant Contractors" would really simplify matters for restaurants. And is that system "mandatory?" The IRS sucks and they can put me on their list too along with "Homeland Security" if they want to. FUCK 'EM! As usual, the little guy gets screwed. GO RON PAUL!!! He wants to do away completely with the IRS.

SDFemDom4cuck -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 11:31:21 AM)
quote: ORIGINAL: Archer Lets see the waiter is in service to YOU for the period of time you are at the resturant. They are supposed to take order, make reccomendations, bring water/appitizers, drinks, refills, entre, desert, etc prebus the table and generally make your dinner an enjoyable experience. Feel that this service isn't worth paying for take yourself to a buffet and get up and get it yourself, LOL. If I recieve good service in all of the above catagories 20% of the bill is usually fair payment for the work done. Higher end resturants generally require more knowledge of food as well as more knoweledge of food/ beverage pairings and thus the % works out to better more knowledgeable service. I'll have no trouble reducing tip% for lack of ability or dilligence, but I realize I am paying for service and I fully expect that the service be good. Food late usually not their fault, but food late without check ins, keeping me updated, making efforts to expedite and or make up for lacking on the kitchen's part and I'll start to deduct. Attitude snotty, I'll go to the manager and ask to be reseated in another server's section. Failing that I'll have the manager bring me the check for existing drinks etc pay and leave without eating. Archer. I have to tell you that you are the type of table servers love! You're spot on. Servers are at the mercy of the kitchen. Plain and simple. As a server I can do all the things you spoke of but if the kitchen is behind then service will be slow regardless of what I do. However there's no excuse for not keeping a table informed of what's going on. I have no problem with offering a round of drinks or dessert on the house when things are backed up. My restaurant encourages it in order to keep customers happy. You as the customer have a recourse in dealing with a snotty/bad server. Unfortunately, we as servers have little recourse in dealing with snotty or horrible customers. If someone is consistently getting bad service when they dine out, perhaps they might want to reflect on how they are treating the wait staff. Although we're expected to take whatever a customer dishes out with a smile and being polite I have to say there are some that tend to make that smile just a bit tighter. Yes we're expected to give consistent service to every customer that walks in the door. However I fully admit that if I'm dealing with 2 different tables and both have requested something...I'm going to favor the table that's treating me with respect over the one that isn't. There will always be those customers that simply feel that because a server is there to serve them that they can treat them like sh*t. Example from last night...For some unknown reason one of the customers at a table felt that he somehow had the right to cop a feel everytime I came to the table. I'm talking hand between my legs, pinching my ass etc. At one point I very politely and quietly told him to stop touching me. He laughed. You can guess that once I delivered their dinners I avoided that table as much as was possible. The table mentioned to the management that service wasn't up to my usual par. I don't blame them because it definitely wasn't but I wasn't going to make a scene. Management called me over and I explained the situation. Management was horrified, the rest of the party was horrified yet the "gentleman" in question seemed to think it was perfectly acceptable to put his hands on me since I'm there to provide a service. Trust me that this isn't at all unusual. It happens far more than people realize. Sugar, I apologize for the little rant and hijacking your thread. While your thought on sabotaging certain customers food made me smile, I assure you it wouldn't happen if I was the server in question. Instead they're going to get the kind of "slow" service they enjoy complaining about. Funny how they would never consider that their bad service may be their own fault.

joseph808 -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 11:36:09 AM)
The IRS imposes a "withholding at source" rule on employers with respect to income taxes. The same rule applies to withholding of the employee share of FICA (social security and Medicare taxes (7.65%)), and the employer must pay its own share of FICA (another 7.65%). Gross income for income tax and FICA purposes includes tips. How are the tax withholdings and tax payments to be made when a significant portion of servers' income is in tips? The IRS handles this by requiring servers to report their tip income to their employer. But whatever gets reported by servers, the IRS imposes a default rule requiring the employer to report at least 8% of sales as tips. If servers report receiving less than 8% of sales as tips, then the employer must allocate the difference between the reported amount and 8% to servers under one of three methods. The bottomline, here, is that it looks like the default tax rule on tips for federal purposes is 8% of sales, not 15%. There is an IRS publication that covers tip income. It's publication #531. Go to irs.gov for a copy.

Sinergy -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 11:49:37 AM)
I get the bill and if Im paying with a credit card I figure out 15% and round up and add that to the check. Then I usually throw some extra cash on top of it. A server really has to be a complete dickhead to me or my party for me to not do that. I have been in a service organization helping people and I have to say it really, really sucks. While I suppose I can see the logic behind people who dont like tipping, I have had jobs where I make massive amounts of money (some in tips) doing essentially nothing. I am a Pay It Forward kind of person. What goes around, comes around. Not saying it would work for everybody, but that is my story and Im sticking to it. Sinergy

SugarMyChurro -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 12:37:31 PM)
Here's some stuff I found in my Sunday morning wanderings: "Tips and gratuities" http://www.dir.ca.gov/dlse/FAQ_TipsAndGratutities.html http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=00001-01000&file=350-356 IRS: http://www.irs.gov/faqs/faq4-12.html http://www.irs.gov/taxtopics/tc402.html http://www.irs.gov/pub/irs-pdf/p531.pdf http://www.irs.gov/pub/irs-pdf/p1244.pdf http://www.irs.gov/pub/irs-pdf/p1872.pdf "Supreme Court OKs Gratuity Estimation" http://compensation.blr.com/doc_print.cfm?id=150428 ----- This last article may explain what is going on at the restaurant in question. Basically, they are covering their ass before the advent of being hit with a tax fine. of course, they are going about it all wrong and in a way that hurts their staff.

Archer -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 12:45:41 PM)
quote: ORIGINAL: SugarMyChurro MasterKalif: They see you coming from a mile away and probably spit in your food. Maybe worse. Archer: I think the assumption is that the service is adequate to good. That gets the 15%. No one is expecting someone to tip well to someone that is a poor server. I find it interesting that when this topic comes up people prefer to complain about poor service or their exceptional high expectations of what service should be rather than address the topic. I have discovered through my friend that there are many ways that restaurants make it very hard to deliver good service. I can provide details but it's off-topic here. I went into the expectations based on Kalif's response, addressing the tax issues is not something I can contribute much to. Not in the industry not sure the system is legal or not lacking good information to base a post on that would make any sense I chose to address the off track subject where my tactics have usually resulted in fantastic service on return trips. AVerage service does usually end up with 15% deductions based on those things I mentioned

SugarMyChurro -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 2:18:31 PM)
Archer: I think your first reply was pretty fair. Having reasonable expectations is absolutely fine and I didn't mean to imply otherwise. I should not have said that your expectations were exceptionally high - they're not. I guess I was mentally lumping you in with the guy that tips well only to impress his hot date or because he wants to bed the waitress. That guy now has the pleasure of having told anyone that cares to read his post what a cheap, sexist SOB he happens to be. Smooth...

Griswold -> RE: Employment Question 2: Server must claim 15% in tips? (7/22/2007 5:17:07 PM)
quote: ORIGINAL: Archer Lets see the waiter is in service to YOU for the period of time you are at the resturant. They are supposed to take order, make reccomendations, bring water/appitizers, drinks, refills, entre, desert, etc prebus the table and generally make your dinner an enjoyable experience. Feel that this service isn't worth paying for take yourself to a buffet and get up and get it yourself, LOL. If I recieve good service in all of the above catagories 20% of the bill is usually fair payment for the work done. Higher end resturants generally require more knowledge of food as well as more knoweledge of food/ beverage pairings and thus the % works out to better more knowledgeable service. I'll have no trouble reducing tip% for lack of ability or dilligence, but I realize I am paying for service and I fully expect that the service be good. Food late usually not their fault, but food late without check ins, keeping me updated, making efforts to expedite and or make up for lacking on the kitchen's part and I'll start to deduct. Attitude snotty, I'll go to the manager and ask to be reseated in another server's section. Failing that I'll have the manager bring me the check for existing drinks etc pay and leave without eating. My tips start at 30%. And I *expect* exceptional service. I don't give a shit if it's Denny's or the Taj. When I was a punk (server), at 16, starting at the shithole dive of the century, and moving up....I gave my best...and I didn't always get it in return. But I always gave it. As a server, I learned quickly, those that told you how great you were, left you coins...those that wanted you to burn at least 500 calories...typically paid you accordingly. 10% is appropriate for those that provide an "ok" experience. And you shouldn't give more than that if it was only..."ok". If it was "above average" you should give 20% (+). Exceptional....30%. If it sucked...do what I do...leave a penny. But if the service was exceptional....so should be your tip.

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