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Old 09-04-2019, 11:02 AM
 
1,142 posts, read 572,860 times
Reputation: 1559

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We visited a restaurant on Monday with 4 other people. Six of us total, with each couple having separate bills.

We each were charged 15% gratuity AND 3% charge plus another fee on our credit cards.

We will not be back.

The only notice ahead was the small strip stating the CC charges which arrived inside that folding thing you open to see the receipt and pay. Seems illegal.

No notice regarding the gratiutiy

The service was awful. Our drinks stayed empty, the free bread never showed up to begin with then when we asked, got one tiny half bread size cup up for the entire table. It wouldn't be enough bread for just two of us. We do not eat alot either, we are thin

 
Old 09-04-2019, 11:22 AM
 
18,758 posts, read 27,189,710 times
Reputation: 20107
Quote:
Originally Posted by elnina View Post
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

This is a contradiction.
If tip is voluntary in any sense - then it can't be mandatory and vice versa.

Besides, it leads to a broader question.
Everyone pays tax and fees. Everyone. Right? wrong.

Why then provider fees and taxes are passed onto consumer? Federal tax, franchise fee, local tax, you just take a look at your energy or phone bill.
Someone somewhere down the road created a sweet life for businesses, by allowing them to do this - at everyone's consent.
 
Old 09-04-2019, 11:55 AM
 
17,376 posts, read 14,906,688 times
Reputation: 22604
I work in the POS field. We had to add an option. When we wrote the program, we calculated the suggested tip percentage off the subtotal, which is pre-tax. had enough people moaning and whining that we had to add a setting so that they could choose what it calculated off of.


I will say, any of the places where the pinpad is offering the tip suggestion, in general, it will always be off the total, because that's all that is sent to the pinpad. usually don't send a subtotal and then tax.. It just gets the amount to be charged, so the full amount is all it knows to calculate against.
 
Old 09-04-2019, 12:55 PM
 
Location: Location: Location
6,727 posts, read 9,888,472 times
Reputation: 20481
I try to make it a point to have enough cash with me that I can decide how much to tip and always pre-tax.

I may charge the meal to my card but the tip goes to the server.

I haven't seen the 3% CC recovery fee so far at any restaurant but my doctor's office is now charging it. I write a check so it doesn't apply to me.
 
Old 09-04-2019, 02:04 PM
 
Location: Tricity, PL
61,036 posts, read 85,858,261 times
Reputation: 130683
Quote:
Originally Posted by ukrkoz View Post
This is a contradiction.
If tip is voluntary in any sense - then it can't be mandatory and vice versa.

Besides, it leads to a broader question.
Everyone pays tax and fees. Everyone. Right? wrong.

Why then provider fees and taxes are passed onto consumer? Federal tax, franchise fee, local tax, you just take a look at your energy or phone bill.
Someone somewhere down the road created a sweet life for businesses, by allowing them to do this - at everyone's consent.
Somehow it is, but that's IRS and their rules. The IRS hopes it will lead to less cheating and more taxes for the federal coffers. They classified mandatory "tips" as a service charge and taxed it Their rule states that mandatory gratuities, also known as service charges, are no longer considered tips, but should be treated as non-tip wages.
Common examples of mandatory gratuities are: Large Party Charge (restaurants), Bottle Service Charge (restaurants and nightclubs), Room Service Charge (hotels and resorts), Contracted Luggage Assistance (hotels and resorts) and Mandated Delivery Charge (pizza or other retail deliveries).

The restaurant owners might or might not adopt those rules. This ruling has caused many restaurants to rethink mandatory gratuity on customer bills and are switching to the practice of including three suggested tip amounts for the customer at 15%, 18%, and 20%. (tip suggestion policy). Customers would then have the option to tip more or less than the suggested amount, or not tip at all.
https://www.apspayroll.com/blog/how-...ratuity-rules/

Look at the link and the 2012 IRS rule. It doesn't make much sense to me, but the IRS wants to tax everyone, and a dollar gets taxed many times.

I was just trying to explain the difference between a "tip" and mandatory surcharge. Next time look closely at the disclaimers and the bill to pay.

BTW: not everyone pays taxes and fees. Cash tips and "under the table payments" are usually not imposed to such, that's why IRS ruling.

Last edited by elnina; 09-04-2019 at 02:27 PM..
 
Old 09-04-2019, 05:56 PM
 
17,300 posts, read 13,047,011 times
Reputation: 32597
Quote:
Originally Posted by SaraR. View Post
We visited a restaurant on Monday with 4 other people. Six of us total, with each couple having separate bills.

We each were charged 15% gratuity AND 3% charge plus another fee on our credit cards.

We will not be back.

The only notice ahead was the small strip stating the CC charges which arrived inside that folding thing you open to see the receipt and pay. Seems illegal.

No notice regarding the gratiutiy

The service was awful. Our drinks stayed empty, the free bread never showed up to begin with then when we asked, got one tiny half bread size cup up for the entire table. It wouldn't be enough bread for just two of us. We do not eat alot either, we are thin



I would have challenged it immediately. This is just plain slight of hand and theft
 
Old 09-04-2019, 06:07 PM
 
Location: U.S.A., Earth
5,511 posts, read 4,439,683 times
Reputation: 5764
Quote:
Originally Posted by Hopelesscause View Post
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.
In some circles, people will say it's pre-tax. In others, they say it's post-tax. For me, I typically take the total, "eye it down" to 16% to 20%, and round up.

That said, I eat out faaar less then vs. 10 years ago. Nowadays, I'll only eat out when I'm with others. I actively avoid places where tips are expected because there's always that psychology that you're being "nickel and dimed".
 
Old 09-04-2019, 06:07 PM
 
Location: DFW
12,229 posts, read 21,378,476 times
Reputation: 33264
Quote:
Originally Posted by ccm123 View Post
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.
I tip pre-tax too. It’s easy to calculate tips without the calculator though — just move the decimal. 10% of a $23.60 tab would be $2.36. Double it for a 20% tip of $4.72.

Love,
The math prof’s daughter
 
Old 09-04-2019, 06:11 PM
 
Location: Tricity, PL
61,036 posts, read 85,858,261 times
Reputation: 130683
Quote:
Originally Posted by ccm123 View Post
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.
Lol... seriously? That's basic math. It's much faster to do it in the head than take the phone out, turn it on, look for the app and type the numbers on the phone.
What people would do without their gadgets???
 
Old 09-04-2019, 06:20 PM
 
16,174 posts, read 32,329,827 times
Reputation: 20577
No more tip threads please. This forum is for food and drinks, not tips.
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