Tag Archive: Automatic Gratuities

How the IRS Automatic Gratuity Ruling Impacts Restaurants and Employees

Written by November 14, 2013

This is a followup to an earlier article posted regarding this subject. Beginning in January 2014, the Internal Revenue Service will classify an automatic gratuity—the policy of adding an automatic tip to the bills of large parties of diners—as a service charge instead of a tip. The IRS regards service charges as regular wages, which must be reported for payroll...