Joseph Henchman, vice president of legal and state projects at Tax Foundation
With the new year came new Internal Revenue Service rules on automatic gratuities that may change how restaurants handle tips for large parties. The IRS’ revised Ruling 2012-18 draws a sharper distinction between tips and service charges. Many restaurants for years have added fixed gratuities to parties of five or more, but the new IRS rules on what constitutes a tip require restaurant owners to treat them as service charges, which are a part of wages. Joseph Henchman, vice president ...
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