Restaurants take note. New IRS rules on tips may greatly affect you!

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The IRS is implementing a new law on tips that goes into effect on January 1, 2014.

In the past, it was commonplace to have a gratuity automatically added to the check for large orders. If this is common in your restaurant, you may want to re-think it.


Under the new IRS guidelines, in order to be considered a tip ( gratuity) it must be completely voluntary from the client. If you have automatically added a gratuity to the check, this means that it is no longer a voluntary action on the part of the customer. Now it has to be treated as income/wages, and you as the business owner will be required to do the necessary paperwork and filings to account for this.

I would suggest that you research this issue and discuss it with your accountant now, instead of waiting and finding out the ramifications.

For more information, you may wish to visit the following link-