[Sca-cooks] Taxing Stuff, was Re: food manners/tipping OOP/OT

Terry Decker t.d.decker at worldnet.att.net
Mon Nov 6 15:00:19 PST 2006

I work in a small business, so I know about that. BUt I was rather shocked 
see the tax authorities to base the burde they place on the wait staff on a
figure that is to some extent arbitrary and on which the people in question
have very little influence. That was why I suggested using a similar 
to a segment of society more able to fight back. Not that I would encourage
tax fraud, but iot appears the most stringent measures are applied to get
small amounts ot of people who can often ill afford to pay them.



The real problem is the employer's are ducking the cost of paperwork by 
shifting over to allocated tips.  Employees are responsible for keeping a 
daily tip log and reporting their tips to their employer each month on Form 
4070.  The employer is responsible for properly reporting and paying payroll 
and withholding.  Rather than do all the paperwork, the employer allocates 
tips as being 8% of food and drink sales and shifts the recordkeeping and 
filing costs to the employee.  I suspect that the tips are also calculated 
with the sales taxes thrown in so the employer can shave the minimum wage 
pay out.

The allocated tip rate can be set by the IRS on a case by case basis in a 
range of 2% to 8%.  A petition to change the allocated tip rate can be filed 
with the IRS by either the employer or the employees.  The basic details can 
be found in IRS Pub. 531.



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