Can a restaurant tax on the tip for a large party?

Question

I live in California if that makes a difference.

Thanks!

They've already added a 20% gratuity & they want to tax not only on the food and beverage but the gratuity. I thought you couldn't tax on service. Am I wrong? ~ Confused in California

Answer 1

Yes, I think they can. I was planning a party at our clubhouse and the owner was giving me an estimate of the cost and she told me that the gratuity was taxable but she didn't call it gratuity, I forgot what she called it.

Answer 2

Most of the answers to this question don't answer the question. The question is not asking whether a restaurant can automatically add tips for large parties. The question is whether they can tax the gratuity and the answer to that is no.

Restaurants typically add a 15% gratuity to larger parties. It should be noted that they can only do so if they state so up front or in the menu. The reason they do it though, is because most larger parties require more attention but usually give lousy tips.

As for the answer, a gratuity is something that is a voluntary payment for the quality of the service given. The tax on the bill would be and should be for food/drinks only. Taxes are not placed on something that is considered a voluntary payment. The reason why it may be added is just how the receipt items are calculated at the register. As they add it to the bill, the register would consider it like any other menu item and add the tax automatically.

Answer 3

NO. Tax is added on the total food and beverage amount. Gratuity is added after. There is no such thing as tax on gratuity. If it is being done the restaurant's accounting person is paying too much tax and erroneously over charging the customer. If someone got savvy to this they could report them to the Consumer Affairs department of the Attorney's Office. I would not like to be in the restaurant owner's shoes. They are in for a mess of trouble. First they have to reimburse all the customers. Then they have to petition for sales tax over payment. Good Luck. It could take years to get credit.

Answer 4

I don't know about CA but in Canada the restaraunt can add 10% to the bill for gratuity so the server automatically gets a tip.

Answer 5

15% gratuity for parties of 5 or more

no tax

Answer 6

It's rare to find a restaurant that doesn't add tip for a large party. THe problem is that most parties split the check, and no one tips the server. If your service is so horrible that the server(s) don't deserve a tip, ask to see the manager.

Sorry, I didn't read the question well enough. My thought is that it is considered a fee for a large party rather than a tip.

Answer 7

I may be tired but it should be the same amount
Bill $100.00 Tax@8% 8.00
sub-total 108.00
Tip @20% 21.60
Total plan A 129 .60

Bill $100.00
Tip@ 20% 20.00
sub -total 120.00
tax@8% 9.60
Total plan B 129.60

Did I mis-understand your question ?
BTW I have no idea why then tax is next to the bill I
didn't write it that way

Answer 8

I don't believe they charge tax on food unless its in a fast food restaurant. They usually charge the gratuity up front so there is no reason to add it at the table.......but as for sales tax....they aren't supposed to charge on food......ok, now ya got me thinking twice!

Answer 9

yes it called gratuity which is when a party is at a place and they put a amount that you have to pay for a tip

Answer 10

Yes....usually on parties of 6-8 or more, they can add on the tip automatically.