The Restaurant Group Blog

IRS Restaurant Service Charge vs Tips (REV. Ruling 2012-18)

Photo by: VXLAVXLA
Photo by: VXLA

How does the 2014 IRS Rev. Ruling 2012-18 affect restaurant service staff and restauranteurs?

2014 has brought many changes to the restaurant industry and one of the most buzzed about topics is Rev. Ruling 2012-18 according to news channel WFAA. This ruling implies that restauranteurs must differentiate between automatic gratuities and voluntary tips which can ultimately cost restaurants big bucks. Any sort of gratuity that compels patrons to automatically pay an additional percentage on their meals and services is no longer considered a tip and must be calculated as part of a server’s wages.

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