By Amy E. Feldman
PHILADELPHIA (CBS) – Is it really a tip if you have to give it? The IRS says no.
Eagles running back LeSean McCoy is not getting a great reception – neither from Eagles fans who are finding this season’s performance less than stellar – or from the waiter who received the twenty cent tip he left on a $60 tab. And, if you think waiters are unhappy about receiving a bad tip, imagine how unhappy they’ll be about the new tax rules on tips.
The IRS ruled that a tip requires a customer’s freedom to choose whether and how much to tip and an automatic tip of 18% that a restaurant will add to the bill of a party of six or more does not allow the customer any choice in the matter. As a result, the IRS will now consider that charge a so-called “service wage” – and as a wage, a restaurant will have to pay payroll taxes on it and deduct withholding from a waiter’s paycheck.
That means that the restaurant will now be paying more payroll tax and the server, whose taxes come off before he receives his tip, will have less money up front for that LeSean McCoy jersey he was saving up for.