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