Automatic Tip Charges for Large Parties in Restaurants: New Classification as “Service Charges” Not Reported on Form 8027
In January of this year, the IRS changed a long-standing rule on automatic gratuities in restaurants for large parties. Typically for parties of 6 or more guests, a restaurant will charge an automatic 18 to 20 percent to make sure that the gratuity is adequate to compensate the server. These automatic tips have always been […]
