New IRS Ruling on Automatic Gratuities Will Impact Restaurants and Their Employees

By |2021-01-28T20:58:21+00:00August 12th, 2014|Blog, Compensation|

Effective January 1, 2014, the IRS began classifying automatic gratuities commonly added to bills of large parties in a restaurant as service charges instead of “tips.”  According the IRS Revenue Ruling 212-18, gratuities treated as service charges will be classified as regular employee wages and subject to Social Security and Medicare withholdings.  More importantly, restaurants [...]