Quote:
Originally Posted by redwitch
and remember that the server not only makes well below minimum wage, but must help pay the salaries of co-workers such as the hostess, barback, busboy, etc. and that is figured at 18% of the tab regardless of the actual tip. Plus the IRS figures the income at 18% percent of the total tab.
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The 18% figure is inaccurate. Here is the direct rule from the IRS tax regulation for 2014:
How were your allocated tips figured. The tips allocated
to you are your share of an amount figured by subtracting
the reported tips of all employees from 8% (or an
approved lower rate) of food and drink sales (other than
carryout sales and sales with a service charge of 10% or
more). Your share of that amount was figured using either
a method provided by an employer-employee agreement
or a method provided by IRS regulations based on employees'
sales or hours worked.
http://www.irs.gov/pub/irs-pdf/p531.pdf
As long as a servers are reported to receive 8% of sales the IRS gives the establishment a pass. Clearly this invites fraud as it is very unlikely any establishment has such a poor tip rate.