Restaurant computed 20% tip based on costs + taxes (chinese, cheap, vanilla)

[Hopeful for Life]

Is this right? I’ve always understood that a tip is based on the total amount BEFORE taxes, not AFTER. This event was paid for through a company card, but I still don’t think that it was right to base tip on food and drinks PLUS the taxes. It seemed to me like a padding of the bill.

[mainebrokerman]

I went for Chinese take out last week and when ringing up....it asked for the size tip.... 18-20-25% ...for take out????

ive always based tips to servers on the total....usually its before taxes.....as it should be..

we've had restaurants close early ...this tourist season....not because the business was slow...but because they couldn't find servers ….and dishwashers..

[elnina]

You surely could disregard whatever restaurant was computed and figure out yourself what you want to give the wait staff as a tip.
I don't care for anyone trying to make the math for me, I can do the math myself. Giving whatever they think you should give is not mandatory.

[Medtran49]

Tip is supposed to be figured pre-tax, but where it's printed as a suggestion on receipts I've noticed that it's after tax. It is padding and I'd challenge it. Restaurants need to stop doing this.

I'm guessing this was for a large party where you were forced into paying a minimal tip? Depending on size that could be quite a substantial difference once tax is added in the computation, making a 15% tip 20% in actuality or even more of some %. As above, I'd definitely challenge it unless you would have added the extra anyway because of exemplary service.

[elnina]

A tip, it ruled, must be voluntary in every sense of the word. Customers must feel free to leave any amount they choose — or nothing at all. But restaurants are still free to add a mandatory fee if they wish, but they can't typically add a gratuity to your credit card without your permission.
To legally do so, the restaurant must communicate this policy ahead of time through signage or on menus.

In 2012 IRS issued its ruling: by classifying mandatory “tips” as a service charge, it is now the employer’s duty to monitor and record them and it is the employer’s obligation to make all withholding and send it to the IRS. So, actually the "mandatory" tips are good for the employers and IRS but not good for the wait staff.
https://pocketsense.com/restaurants-...ard-18702.html

Voluntary gratuities aren't subject to sales tax.
Mandatory gratuities aren't subject to sales tax if the charge is noted separately on the bill, clearly identified as a gratuity, and the entire gratuity is passed on to employees. If these conditions are not met, the gratuity is subject to sales tax. In other words service charges or other charges not specifically listed as gratuities on a bill or invoice are subject to sales tax.

And in plain English:
If this is a voluntary tip, you calculate the amount before taxes and 100% of it goes to the server.
If this is a mandatory tip - the restaurant calculates it after taxes, and the money is included in the server's paycheck (minuss taxes)
https://yourbusiness.azcentral.com/r...tax-12954.html

[ccm123]

It’s pretty common practice here to add a tip to the final total including the tax. I compute the tip on the final bill without the tax using the calculator on my phone.

[jlawrence01]

I have seen the suggested tip calculated in a number of ways:

Based on the total INCLUDING TAX
Based on the total AFTER TAX
Based on the TOTAL before specials
In some way that I cannot determine how it is calculated.

Generally, I ignore the suggestion and give the tip on the level of service.

[PriscillaVanilla]

Originally Posted by Hopelesscause

It seemed to me like a padding of the bill.

It was.

[elnina]

Originally Posted by PriscillaVanilla

It was.

Maybe or maybe not. Depends on how it was worded.

[blueherons]

Originally Posted by Hopelesscause

I It seemed to me like a padding of the bill.

For whom? The IRS?

The server is getting the tip and the tax is going to the government so who is the padding going to?

I tip post tax. That extra couple of dollars I'm throwing in (if tax is 10% of the total bill of $100 and I'm tipping 20%, it is an extra $2) isn't going to make or break me and I look petty and cheap by not tipping the entire amount.