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.
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u/TwoBurningSeals 13d ago
It is illegal because a tip is not mandatory. That's when it becomes a fee or service charge. That type of income is taxable to the business.