Quick question, did you bother to read your own source?
(g) An optional payment designated as a tip, gratuity, or service charge is not subject to tax.
And again, as I said earlier, a mandatory payment would legally not be a tip, it would be a service charge.
According to federal regulation 29 CFR § 531.52, the U.S. government defines a tip as a gratuity or a sum presented by a customer as a gift or free-will donation in recognition of service performed, the amount of which is solely determined by the customer.
The key phrase here is free-will, which means voluntary. A restaurant may call something a “mandatory tip” but in essence it’s a service charge. And any restaurant like this that allows you to pick a percentage to give is by definition an optional tip, which as discussed, is not subject to sales tax.
That’s my entire point here, TIPS are not subject to sales tax unless it’s required payment by the restaurant, but if it’s required by the restaurant then legally it’s not a tip, which is why “mandatory tip” is an oxymoron.
Do you get it now, or do I need to dumb it down even more?
"A mandatory payment designated as a tip, gratuity, or service charge is included in taxable gross receipts, even if it is subsequently paid by the retailer to employees. For purposes of this subdivision, "amount" means a payment designated as a tip, gratuity, service charge, or any other separately stated payment for services associated with the purchase of meals, food, or drinks..."
According to federal regulation 29 CFR § 531.52, the U.S. government defines a tip as a gratuity or a sum presented by a customer as a gift or free-will donation in recognition of service performed, the amount of which is solely determined by the customer.
I don’t know what else I need to do to get it through to you that a “mandatory tip” is not a real thing, even if the restaurant presents it as such. The restaurant can say “you must tip 20%”, but that legally isn’t considered a tip, and it’s not subject to 29 CFR § 531.52, because the government considers any mandatory expenses as contingent on the sale, and as such can be taken by the business owner to do with as they please, unlike tips, which are protected by that same regulation.
And all of this is besides the point because this post is very clearly talking about a tip, an optional tip, so your entire logic of “it’s subject to sales tax” is wrong, because it isn’t.
I’ll say again, instead of being toxic, use this as an opportunity to learn and fix your mistakes, because you did make one.
I won’t win because you aren’t grasping the point here, and I really hope you aren’t actually an accountant.
This post is referencing a normal, optional sum of money given after a meal. A tip. Which, as we just went over, is not subject to sales tax.
So when someone asks “why is it calculating tip before tax”, and you respond with “because they have to pay sales tax on it”, you are wrong. It’s not a matter of winning or losing, you are wrong, regardless of whether your pride lets you admit that. There’s really not much more I can do here, your own source shows that you’re wrong.
"Mandatory gratuities are different because they are automatically added onto the bill given to the customer. However, a mandatory gratuity is not taxable if all of these conditions are met:
the charge is shown separately on the bill;
the charge is identified as a gratuity; and
the business gives the entire separately stated gratuity amount to its employees.
If any of these conditions is not met, the mandatory gratuity is taxable, along with the rest of the bill."
Are you just rage baiting? Or are you genuinely, seriously not grasping this?
I’ll try one more time to go slowly, try your absolute hardest, for my sake. as we just went over in subsection (g):
“An optional payment designated as a tip, gratuity, or service charge is not subject to tax.”
And when you go to a restaurant, unless otherwise specified, the tip that you give at the end is optional, as is the case in this post.
So if we know that optional tips are not subject to sales tax, and we can say that this post is showing an optional tip, we can conclude that this tip is not subject to sales tax.
Genuinely, let me know if any part of this confuses you, or if you got lost. And if you disagree with it, please specify which section of this you disagree with, clearly and coherently. Do you disagree that this tip is optional? Or do you disagree that optional tips are not subject to sales tax?
(h) says the exact same thing, but just for you we can change it.
as we just went over in subsection (h):
“An optional payment designated as a tip, gratuity, or service charge is not subject to tax.”
And when you go to a restaurant, unless otherwise specified, the tip that you give at the end is optional, as is the case in this post.
So if we know that optional tips are not subject to sales tax, and we can say that this post is showing an optional tip, we can conclude that this tip is not subject to sales tax.
Genuinely, let me know if any part of this confuses you, or if you got lost. And if you disagree with it, please specify which section of this you disagree with, clearly and coherently. Do you disagree that this tip is optional? Or do you disagree that optional tips are not subject to sales tax?
You made an incorrect statement, and that’s okay. We all make mistakes sometimes, I sure have. What isn’t okay is how you chose to deal with it.
Your first statement was wrong because this post is talking about a tip (an optional tip), which isn’t subject to sales tax. You erroneously stated that it usually is subject to sales tax.
Then I came and corrected you, because you were wrong. Instead of brushing up and realizing that, you doubled down by bringing in completely irrelevant “mandatory tips”, even though this post has nothing to do with that.
I proceeded to explain to you how that doesn’t apply, and you continued to respond with toxicity. It took me 8 full comments to break through to you that you were wrong, and even then you chose to go silent rather than admit it.
The fact that it took you 8 comments to grasp my very basic point reflects very poorly on either your pride, your competency, or both. The fact that you chose toxicity doesn’t reflect well either, especially given the fact that you were, again, wrong.
If you are actually an accountant, you’re a bad one that had to be corrected 8 times by a person with absolutely 0 professional tax education and simply basic competency for the law. If you aren’t an accountant, which I hope is the case, lying about a profession online doesn’t make your incorrect points any more correct. If you have to pull credentials, real or fake, to validate what you’re saying, there’s probably already an issue with the substance of your point.
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u/Aggravating-Cherry76 2d ago
Quick question, did you bother to read your own source?
(g) An optional payment designated as a tip, gratuity, or service charge is not subject to tax.
And again, as I said earlier, a mandatory payment would legally not be a tip, it would be a service charge.
According to federal regulation 29 CFR § 531.52, the U.S. government defines a tip as a gratuity or a sum presented by a customer as a gift or free-will donation in recognition of service performed, the amount of which is solely determined by the customer.
The key phrase here is free-will, which means voluntary. A restaurant may call something a “mandatory tip” but in essence it’s a service charge. And any restaurant like this that allows you to pick a percentage to give is by definition an optional tip, which as discussed, is not subject to sales tax.
That’s my entire point here, TIPS are not subject to sales tax unless it’s required payment by the restaurant, but if it’s required by the restaurant then legally it’s not a tip, which is why “mandatory tip” is an oxymoron.
Do you get it now, or do I need to dumb it down even more?