New Law Cheats Servers out of 10% of Income Per Year
Amend Revenue Ruling 2012-18
On January 1st 2014 the IRS started enforcing a new ruling that servers will no longer be responsible for self-reporting their income from automatic gratuities to the IRS.
Instead, restaurant owners will have a choice: they can start adding those automatic gratuities into a server’s wages (which would mean more paperwork), or they can stop charging customers for automatic gratuities altogether.
As a result of this ruling the vast majority of restaurant owners have discontinued the practice of adding automatic gratuity to large parties.
This is incredibly bad news for servers who depend on tips because their hourly wages are usually far below the minimum wage. Here is a list of why this new ruling is so catastrophic to a servers income:
1. Large parties usually spend 2 to 4 hours at a restaurant (the average serving shift is 5 to 8 hours).
2. Large Parties take up a servers entire section (which means no tip income from other tables).
3. Large parties usually pay separately (often times when individual people contribute to one bill, tax and tip are miscalculated or not added).
This “perfect storm” results in a huge amount of missed income! The average server works 3 to 4 shifts per week and serves 2 large parties per week. If each large party were to miscalculate the servers tip and tip 5% instead of 18% a server can potentially miss out on approx. $35 per week. They also miss out on the opportunity cost of serving other tables (which would be made up by an automatic 18% gratuity) approx. $20 per week.
This new ruling could cost servers nation-wide an average $2,640 per year! According to Jobs.com the average server makes $26,350 per year.
That means we are losing 10% of our income per year!!!!!!!!
When the restaurant where he works stopped charging automatic gratuities, server Michael Turney, who spoke with USA Today, noticed a significant change in his income. “I feel like larger parties don’t tip as well as they should for the amount that they spend at the restaurant,” Turney said. “When they spend $200 and leave $20, you’re losing out on about $16 or $17.” He went on to say that some servers at the restaurant are now hesitant to take on large parties, because they can make more tips on smaller groups.
Sign the petition to Amend Revenue Ruling 2012-18 and give us back 10% of our money!!!
-Chris (CEO BreakRoomStories.Com)