IRS officials change the way food service workers receive gratuity tips
Officials with the IRS have a New Year's resolution that changes the way waiters and waitresses receive some of the tips you leave behind.
WILMINGTON, NC (WECT) - Officials with the IRS have a New Year's resolution that changes the way waiters and waitresses receive some of the tips you leave behind.
Automatic gratuity tips at restaurants are taxable service charges starting in 2014, meaning waiters and bartenders won't receive that money at the end of their shifts.
Gratuity tips at Casey's Buffet are done on a volunteer bases, but with the IRS changing automatic gratuities to taxable service charges more restaurants could follow.
"The restaurants that have a policy of automatic gratuity it's going to create a little more red tape," said Larry Casey owner of Casey's Buffet.
It's the feds way of making sure taxes are being deducted from those tips.
"It could hurt and could help," explained Casey. "If you got a waitress that's not reporting all their tips they may save a little bit and not pay in taxes. But then again, it may hurt themselves if later on if they're going to get social security one day. If it's still there. That's the amount of money you report toward wages is what they base that on as well."
According to reports, large chains like Olive Garden could switch from automatic gratuity to voluntary. The owner of Casey's believes that's best for customers and business owners in general.
"If you automatically got the tip in there, there's no real motivation to provide the best possible service," said Casey. "Some people automatically leave 15 percent, but if they got a really great waitress who's doing a great job they may leave even more. So I'm not sure if automatic helps at all."
Many accounts believe since more people are using debit cards it's helping the government keep a better record of tips those in the food industry receive.