New IRS rule could cut into restaurant workers’ tips
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Even as President Obama and progressive activists are trying to sell the nation on hiking the national minimum wage to help restaurant workers and other low-wage employees, the Internal Revenue Service is seemingly determined to make life harder for those same workers.
A change in tax policy implemented Jan. 1 will prevent restaurant workers from collecting automatic gratuities — the added 18 percent fee many restaurants charge to groups of eight or more — as part of their tips. Instead, that added fee will be included in their payroll, meaning workers have to wait up to two weeks to get that extra cash and must pay additional taxes on it.
It means less money in servers’ pockets and more for the federal government.
“We had a lot of nervous servers when they first heard about it,” said Pat Forciea, marketing director for Hell’s Kitchen, an independent restaurant in Minneapolis. “They would have had to go without that extra money in their pocket until it went through the payroll process and showed up in their checks two weeks later.”