Woman banned for bad tipping

[SaraJayne]

My dad did the same thing! He went to the local diner almost every day for coffee, eggs and toast. The first time I went to breakfast with him I noticed that he only left a couple of dollars for the tip. I know he thought that was a good tip. I did the same thing as you. After he walked away from the table I added to the tip. They all loved him at the diner, but I was horrified that he left the girls such a small tip. I agree with you, I think it was the era they grew up in.

For just coffee, eggs and toast, a few dollars is more than adequate for a tip.

 

[3prettyprincesses]

As far as the IRS goes, tipping is definitely not voluntary. Restaurants must report server's sales to Uncle Sam and every server is legally bound to pay a percentage of assumed tips in taxes to the government. It used to be around 9% when I was waiting tables in college in the early 90's.

Sadly, the overwhelming majority of customers don't realize this. When you don't tip a server, you just don't stiff them their gratuity, you also force them to pay a percentage of their own cash out of pocket to the IRS to cover the difference. I can't imagine any diner considering that a fair punishment for forgetting a side of fries.

What most people should do instead of stiffing their servers is to pay the server a minimal tip (say 15%), grow a pair, and on the way out, ask to speak with management and express your displeasure. It's the only way to truly solve a "poor service" problem.

I don't think I'm understanding here. If the servers have to report their assumed tips what would it matter if they were tipped less? They're only being taxed on what they've actually been tipped, yes? Am I misunderstanding.

 

[Laugh O. Grams]

I don't think I'm understanding here. If the servers have to report their assumed tips what would it matter if they were tipped less? They're only being taxed on what they've actually been tipped, yes? Am I misunderstanding.

If a server shows a bill totaling $100.00, the government automatically taxes them on $9.00 of that total, whether they were tipped or not. If you didn't tip them, they not only made no money on your table, but they also had to pay around $3.00 out of pocket for the pleasure.

That's why I said that the IRS doesn't consider tipping voluntary.

 

[OceanAnnie]

If a server shows a bill totaling $100.00, the government automatically taxes them on $9.00 of that total, whether they were tipped or not. If you didn't tip them, they not only made no money on your table, but they also had to pay around $3.00 out of pocket for the pleasure.

That's why I said that the IRS doesn't consider tipping voluntary.

I guess I don't understand either. Why is a server showing a bill of $100 on a bill they didn't get a tip for? Do they have to show the receipts for every table they have waited on? That wouldn't make sense.

 

[Laugh O. Grams]

I guess I don't understand either. Why is a server showing a bill of $100 on a bill they didn't get a tip for? Do they have to show the receipts for every table they have waited on? That wouldn't make sense.

That's just it, they do!!

At the end of every shift, each server reports gross sales to the restaurant manager. The restaurant reports those sales to the IRS and the IRS assumes that, at a minimum, the server made 9% tips on those sales and taxes those servers on those assumed tips. If I had $1000 in sales for a shift and made zero money in tips, I would owe the IRS around $30 in taxes because the IRS assumes that everyone tips...

Besides, why wouldn't it make sense that servers need to show gross receipts? The restaurant needs to figure out how much money it's making, doesn't it?

 

[OceanAnnie]

As far as the IRS goes, tipping is definitely not voluntary. Restaurants must report server's sales to Uncle Sam and every server is legally bound to pay a percentage of assumed tips in taxes to the government. It used to be around 9% when I was waiting tables in college in the early 90's.

Sadly, the overwhelming majority of customers don't realize this. When you don't tip a server, you just don't stiff them their gratuity, you also force them to pay a percentage of their own cash out of pocket to the IRS to cover the difference. I can't imagine any diner considering that a fair punishment for forgetting a side of fries.

What most people should do instead of stiffing their servers is to pay the server a minimal tip (say 15%), grow a pair, and on the way out, ask to speak with management and express your displeasure. It's the only way to truly solve a "poor service" problem.

What should the servers do that stiff the customers?

 

[OceanAnnie]

That's just it, they do!!

At the end of every shift, each server reports gross sales. The restaurant reports those sales to the IRS and the IRS assumes that, at a minimum, the server made 9% tips on those sales and taxes those servers on those assumed tips. If I had $1000 in sales for a shift and made zero money in tips, I would owe the IRS around $30 in taxes because the IRS assumes that everyone tips...

So the restaurant reports to the IRS every sale for every server? That's a lot of totals to keep track of.

 

[Laugh O. Grams]

What should the servers do that stiff the customers?

It's simple. If they're horrible servers, they should be fired.

So the restaurant reports to the IRS every sale for every server? That's a lot of totals to keep track of.

Yeah...keeping track of sales is kinda what every business is required to do. Restaurants are no exception.

 

[chobie]

So the restaurant reports to the IRS every sale for every server? That's a lot of totals to keep track of.

Yes, 15+ years ago when I was waiting tables, we each had a key with a number on it (our employee number), we signed in with that key and would put all orders in with that key, then get the bills for our tables with that key. At the end of the night we would get a print out with our total sales, which was how we based what we were tipping out on (bussers, bartender, hostess etc.). Yes the restaurants report all the sales made by each server to the IRS. Really not that difficult with computers and such...

 

[dansamy]

Don't the servers also have to report to the management their total tips for the night? It was my understanding that the restaurant was required to bring the server's wage up to minimum wage if the server's tips didn't total up to enough to equal minimum wage.

 

[chobie]

I don't think I'm understanding here. If the servers have to report their assumed tips what would it matter if they were tipped less? They're only being taxed on what they've actually been tipped, yes? Am I misunderstanding.

No they are taxed on an assumed amount based on their total sales.

 

[OceanAnnie]

It's simple. If they're horrible servers, they should be fired.

On that we agree. But I respectfully disagree with rewarding them with a tip for bad service.

Yeah...it's kinda what every business is required to do. Restaurants are no exception.

Not disputing it. Just seems kind of odd.

Replies bolded.

 

[Laugh O. Grams]

Don't the servers also have to report to the management their total tips for the night? It was my understanding that the restaurant was required to bring the server's wage up to minimum wage if the server's tips didn't total up to enough to equal minimum wage.

You are correct. However, if you consistently report less than that 9% minimum, it automatically triggers an IRS audit because the government assumes that you're getting higher tips. Crazy? Yes, but that's life in the restaurant business...

 

[merryweather20]

If a server shows a bill totaling $100.00, the government automatically taxes them on $9.00 of that total, whether they were tipped or not. If you didn't tip them, they not only made no money on your table, but they also had to pay around $3.00 out of pocket for the pleasure.

That's why I said that the IRS doesn't consider tipping voluntary.

Its not that they consider tipping to be voluntary, its that they consider not reporting tips to be fraudulent. Servers were so incredibly non compliant that they had no choice but to take action. Based on previous threads it sounds like every restaurant does it differently, it was popular for deductions to be taken on all tips reported on credit card receipts for example.

The 9% you are quoting is substantially less than the 20-25% servers were insisting was necessary on the last thread we had like this. And I'm certainly not paying out of pocket for someone not to bring me silverware, and than take more than an hour for the bill.

 

[dansamy]

You are correct. However, if you consistently report less than that 9% minimum, it automatically triggers an IRS audit because the government assumes that you're getting higher tips. Crazy? Yes, but that's life in the restaurant business...

Maybe if you consistently report less than 9%, you really suck as a server and need to find something else to do?

(This isn't to indicate that I tip poorly. I tip based on the service I receive. It's usually anywhere from 10-20%. For exceptionally outstanding service, I'll tip 25-30%. For atrocious service, you're getting a couple cents on the table and a letter to the management.)

 

[chobie]

Its not that they consider tipping to be voluntary, its that they consider not reporting tips to be fraudulent. Servers were so incredibly non compliant that they had no choice but to take action. Based on previous threads it sounds like every restaurant does it differently, it was popular for deductions to be taken on all tips reported on credit card receipts for example.

The 9% you are quoting is substantially less than the 20-25% servers were insisting was necessary on the last thread we had like this. And I'm certainly not paying out of pocket for someone not to bring me silverware, and than take more than an hour for the bill.

There is some truth to the bolded statement, but in the end many servers from days of old suffered by having very little in social security because they did not report tips.

BTW, every tip made on a credit card (which is the majority these days) is reported, so servers are reporting much more than 9%, it is probably much closer to what they are actually receiving especially when you figure they have to tip out. At lease it was for me 15+ years ago.

 

[Laugh O. Grams]

Its not that they consider tipping to be voluntary, its that they consider not reporting tips to be fraudulent. Servers were so incredibly non compliant that they had no choice but to take action. Based on previous threads it sounds like every restaurant does it differently, it was popular for deductions to be taken on all tips reported on credit card receipts for example.

The 9% you are quoting is substantially less than the 20-25% servers were insisting was necessary on the last thread we had like this. And I'm certainly not paying out of pocket for someone not to bring me silverware, and than take more than an hour for the bill.

I think society as a whole has determined 18% gratuity to be appropriate. 20-25% is considered generous. However, I'm certainly not the spokesperson for the service industry. I'm just pointing out that in looking at it's tax policies, the IRS does not see tipping as voluntary. AFAIC, a far better way to deal with poor service is to complain to management and have the server reprimanded.

 

[OceanAnnie]

Its not that they consider tipping to be voluntary, its that they consider not reporting tips to be fraudulent. Servers were so incredibly non compliant that they had no choice but to take action. Based on previous threads it sounds like every restaurant does it differently, it was popular for deductions to be taken on all tips reported on credit card receipts for example.

The 9% you are quoting is substantially less than the 20-25% servers were insisting was necessary on the last thread we had like this. And I'm certainly not paying out of pocket for someone not to bring me silverware, and than take more than an hour for the bill.

That makes sense.

 

[Laugh O. Grams]

There is some truth to the bolded statement, but in the end many servers from days of old suffered by having very little in social security because they did not report tips.

BTW, every tip made on a credit card (which is the majority these days) is reported, so servers are reporting much more than 9%, it is probably much closer to what they are actually receiving especially when you figure they have to tip out. At lease it was for me 15+ years ago.

Agreed...

 

[Laugh O. Grams]

That makes sense.

What...assuming the worst in people? I'm sensing a lot of anger at the restaurant service industry from you and merryweather20. What gives?