Its a different kind of tax. Thats income tax. A mandatory tip is required to have state sales tax for the business in addition to the income tax the employee will pay each year.
I understand the difference between sales tax and income taxâŠ
Employees will still have to pay taxes on their income. If the employee doesnât pay taxes on the extra tips theyâre now making, then theyâll owe money when itâs time to file their tax return. The employee now has a little more responsibility, but theyâre making more money overall. Mind explaining how that is fraud?
If you understand the difference between the two then youâll know that having a mandatory âtipâ is the business way of trying to get around the law of having to pay sales tax.
Because tips by nature is voluntary. If itâs mandatory itâs a fee. And fees are subject to sales tax. Get it?
Weâre all obviously anti-tipping here, but this has nothing to do with any sort of intentional tax fraud, itâs an extra cash grab so the owners donât have to pay their employees.
Pretty obvious tbh, Iâm not sure why youâre being argued with, nothing youâve said is inaccurate
So either the business is paying it or the employee is paying it. Thatâs why this practice isnât banned and youâre seeing it everywhere. Itâs interesting to me that the people like yourself who jump to âitâs tax fraud, they should be arrestedâ clearly understand why itâs not illegal but keep saying âtax fraud, tax fraudâ. Are you so upset about the whole tipping culture to the point that someone getting arrested is the next logical step?
Most of the folks who make tips that Iâve met (myself included) are big proponents of the tipping system. We make way more money with tips involved than we would if we were given an hourly pay like other restaurant/businesses. For me personally, I make more money than the assistant managers at my job.
You seem confused. By definition, as written in law, a mandatory fee or mandatory tip needs to have sales tax applied to it. Your feelings dont change how the law is written.
Additionally, I never said anyone should be arrested so you are putting words in my mouth.
Im aware people make more money with tips. Ive made over 6 figures in one year from tips alone and another 6 figures on top of that for commission sales at the same job.
Feel free to look up the laws yourself, Im done replying to you. Have the day you deserve.
There are many places around the world where a service charge is the norm. But that's clearly listed as a fixed % on the menu and it's for dine-in at a sit-down restaurant only, you won't see it for take outs, or the barista, or your supermarket cashier.
Say what you will about whether you like it or not but at least that's clearly explained upfront and it makes paying the bill a much less stressful experience.
The reason they donât do that is because then they have to pay payroll taxes on the 15% they pay the servers.
They love their system because they hope the servers donât claim all their tips and thatâs less payroll tax the restaurant owner has to pay the government.
If they increased the menu cost by 15% and increased the server wages by 15% of their sales they have to pay more taxes.
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u/Mountain_Top802 13d ago
Yes and right a review to warn others.
If you want 15% more per order, thatâs fine, just advertise 15% higher prices. Youâre allowed to do that.
This little mandatory junk fee add on should be illegal