Quote:
Originally Posted by Bill14564
That depends on how the machines were programmed; I have seen the calculation done both before and after tax.
By the way, this has nothing to do with the IRS - sales tax is collected by the State.
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I agree, but do the math. If a restaurant has $1,000,000 in gross sales and receives 15 percent of it in tips, that is $150,000. So, if they program their receipt machine to incorrectly collect a 7 percent sales tax on the tip income, they will be overpaying their sales tax bill to the state by $10,500. I cannot imagine that many restaurants would be foolish enough to do that.