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 Peregrine wrote:
I think you're misreading that. The employee pays the credit card processing fee on the tip amount, not the entire purchase amount (which could, with a small tip, leave the employee with a negative tip). So in your example the employer deducts 5% of the $10 tip, giving the employee $9.50. That's a loss, sure, but not a crippling one. The actual reason to pay cash is that it's tax-free income.

And its more like 0.5% to 1.5% card charge.

It used to be in the UK that employers were also able to add a handling charge, but that was stopped.

XuQishi wrote:
How did they do that? Pull a number out of their butt? I mean if we are talking cash nobody knows what went where when.

I would presume they estimate it. Generally not in favourable terms to you so even without fine you would have been better off paying them originally...

SirWeeble wrote:
Waiters are always paid at least minimum wage (federal minimum $7.75(?)/hr, but most states are higher) regardless of tips.

When tips are included, the number varies by state. In my state, if tips exceeding minimum are received, they receive something like 4.50/hr.

So if they receive $10 in tips in an hour, they earn $14.50 that hour. If they receive $2 in tips in an hour, they receive at least $7.75 (in this case - $5.75 + $2 in tips).

It's often repeated around the internet that waiters make $2-3 per hour, and thus are making only 80-120 a week and you're horrible for not tipping. It's not true.

Personally, I think it's a crappy system.

I was not aware of this! Thanks for sharing that insight.


Automatically Appended Next Post:

 Steve steveson wrote:

nareik wrote:
For curiosuty, in the UK, many places are not supposed to take tips.

I have never been anywhere in the UK that does not accept tips.

I'd wager you have, even if unwittingly.It seems the general practice at no-tips establishments is for the staff to take the tips anyway. /boggle

We had an employee audited by the IRS because she grossly under reporter her tips. Our general rule at my store is "report at least $3 per hour in tips." That keeps the IRS off your but while you keep a good portion of your income off the books.


Automatically Appended Next Post:

XuQishi wrote:
How did they do that? Pull a number out of their butt? I mean if we are talking cash nobody knows what went where when.

Some people so massively under report tips the IRS knows something is up. What they assume you make is still a drop in the bucket compared to what you actually made.

 Ouze wrote:
Which is the other problem with tipping as an American institution - it's an enormous bastion of tax evasion.

Well, perhaps a small bastion. The people evading taxes in this manner are still making very little money, tax evasion just lets them do a bit better than minimum wage. I honestly can't find any motivation to care about it compared to the much greater issue of the obscenely rich avoiding taxes so they can be even more obscenely rich.

 Peregrine wrote:

 Ouze wrote:
Which is the other problem with tipping as an American institution - it's an enormous bastion of tax evasion.

Well, perhaps a small bastion. The people evading taxes in this manner are still making very little money, tax evasion just lets them do a bit better than minimum wage. I honestly can't find any motivation to care about it compared to the much greater issue of the obscenely rich avoiding taxes so they can be even more obscenely rich.

Well, that and the previously mentioned fact that the whole tip system is basically a way for employers to bypass wage laws and have a ridiculously underpaid service industry. But Applebees has to make money somehow!

As someone in the industry, I can tell you that there isn't exactly a high profit margin. About 25% or more of every item ordered is spent on food materials. About 25% on payroll. Then add in utilities, taxes, credit card fees, insurance, and maintenance. On a good month you have a 10% profit. On a bad month you're in the red.

 Peregrine wrote:
Well, perhaps a small bastion.

OK, lets call it "widespread", instead. There are nearly 3 million of them in the US, and I have to imagine the percentage of them accurately claiming their actual taxable income is exceedingly low.

I'll readily agree that the It's not the biggest concern with how tipping is screwed up in general, and that the bajillion dollar companies that somehow pay no corporate taxes are a bigger problem then the people making "bank" at $19k a year, but if we're making a list of how tipping sucks and why, it should be mentioned.

 cuda1179 wrote:
We had an employee audited by the IRS because she grossly under reporter her tips. Our general rule at my store is "report at least $3 per hour in tips." That keeps the IRS off your but while you keep a good portion of your income off the books.

ITT, helpful advice on how to commit tax evasion.


To reiterate, tipping is dumb and everyone would be better off if it didn't exist.

I'll mention that I've known people who worked as servers and if they recieved less than min. wage the employer made up the difference. A couple of days of slow business/tipping they were warned they would be fired for underperforming. Not because they were slacking off or missiing shifts, but because the employer had to pay them.

*edited for spelling

How did they do that? Pull a number out of their butt? I mean if we are talking cash nobody knows what went where when.

That's exactly what they did. They came up with an average hourly wage based on the region and went after them for tax's from the difference between what they claimed and what the IRS decided they should have claimed. Like people above said as long as you claim something in cash earnings the IRS generally wont come after you. Like I said in our case a disgruntled former employee called them and once they show up I guarantee they are not going to think your employees paid enough.

Its funny that the IRS doesn't have to prove that you evaded paying tax...they just need to say they *think* you didn't and make you pay anyways.

Sounds very much like a Monty Python sketch....

I reported all my taxable income.

No you didn't.

Yes I have.

All of it?

Yes. All of it.

No you didn't!

Yes I did!

You didn't!

I did!

You didn't!

I'm telling you, I did!

You did not! (makes you pay anyways)

Oh, it sucked, but what are you going to do. You can't really fight the US government. Just make sure she claims some cash tips. If they see she is making tips on charge cards but no tips in cash huge red flag.

In Spain tipping is common but not obligatory, and more in tourism zones. In a normal restaurant of a town you aren't supposed to tip.

But we have here common tips. Its unfair for the waitress to have all the tips where people in the kitchen or a waitress that for any reason that day is doing other kind of job (Because yeah underpayed jobs do all kind of crappy stuff that they aren't supposed to do, just like they work 12 hours a day in summer with 0 free days).

But in general Hostelry in Spain is horrible. Don't take our example for anything related to hostelry.

 KingCracker wrote:

KTG17 wrote:
As a waiter all thru college, I tip closer to 20%, but what really annoys me are tip jars in places like coffee or donut shops or tip lines on credit card slips. If you are bringing me my food and refilling my drink, I am going to treat you as well as you treat me. I am not going to tip you for ringing me up at a register. I hate it.

What is next? Tipping the cashier at Walmart?

Thats my thoughts on it. MAYBE at a coffee shop but only if the coffee maker is really pleasant but even then Im not a fan for the reason you mentioned

The most onerous parts of their jobs have nothing to do with coffee. Most baristas deserve a tip just for managing not to strangle some dingleberry who desperately deserves it.

Also, around here there seems to be a lot of rogue poopers to clean after.

I tip 20%. If I do a pickup order from somewhere, I tip 10%; 20% is for service at a sit down table. $1 per drink is appropriate in a bar, but I agree that tip jars in a supermarket is the most ridiculous thing ever. I also don’t like tipping for gas pump attendants; they usually take WAY longer than I would myself, and are more of an inconvenience. But some states don’t allow you to pump your own gas (Oregon and New Jersey come to mind). But when I’m not allowed to pump my own gas and I’m forced to wait for someone else by law, well...no. I’m not tipping for inconvenience.

I totally don't tip when I'm picking up food. Handing me a bag doesn't seem like a tipping situation regardless if it's from a restaurant or a supermarket.

Looks like the OP's question has been, for the most part, answered.

So, with that...