Quote:
Originally Posted by Bill14564
I understand it that way too which is why I dislike the practice so much. I believe the restaurant is allowed to use any or all of the mandatory service charge as part of the tipped-minimum wage that they are required to pay the servers. Essentially, the mandatory *service* charge becomes a "because we don't want to raise our prices" charge. To me that is dishonest and deceiving and I would have a very hard time going back to that restaurant.
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I don't think the IRS would agree with you. I will need to look up the IRS rules, but I am pretty sure that they consider a tip to be a voluntary payment to a "tipped" employee from a customer. That is why they give special tax treatment to tipped employees.