Restaurants are rethinking policies on automatically adding gratuity to the bills of large parties, thanks to a new IRS rule effective January 2014.
From the Wall Street Journal: “Starting in January, the Internal Revenue Service will begin classifying those automatic gratuities as service charges—which it treats as regular wages, subject to payroll tax withholding—instead of tips, which restaurants leave up to the employees to report as income.
The change would mean more paperwork and added costs for the restaurants—and a potential financial hit for waiters and waitresses who live on their tips but don’t always report them fully.”
For the full article please visit: http://online.wsj.com/article/SB10001424127887323893004579055224175110910.html?mod=dist_smartbrief.
Davis & Hodgdon Associates has been assisting businesses and individuals in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].