I have been a part time delivery driver since I have started college and as a driver I have always been told to claim my tips at the end of the day as $1 per delivery.
I have done this for the past three years now my company is changing their policy and saying I have to claim $1 per cash delivery, and claim all tips on checks and credit cards in full, which lately has been averaging me anywhere from 50% - 85% of my tips and is taking chunks out of my paycheck. There have even been nights where managers have made me claim more than what I have actually made because the new policy is flawed where I don't average $1 on all deliveries. The new policy has only been enacted for about a month and we have lost 5 employees over it.
My question is what is the legality of them forcing me to claim tips and what is a more proper tip claiming policy that I could bring up to my managers. Any direction to posted documents on the web would be appreciated.
2007-07-30 19:06:01 · 4 answers · asked by erectuswow 2 in Business & Finance ➔ Taxes ➔ United States
The legality of it is that you've both been breaking the law up to now. My guess is that they've been audited and the axe is about to fall on you as well for failure to claim your tip income. This could get ugly and expensive.
The law states that you must report ALL tip income received to your employer every month. Anything less and you leave yourself open to the wrath of the IRS. I hope you've been saving your money as the IRS is about to take a good chunk away from you.
2007-07-30 19:46:28 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Legally you are required to claim ALL of your tips. Obviously you haven't been. If you are audited, you could be in trouble with the IRS over this. The proper policy for your manager would be that you have to report what you actually got - anything less than that is illegal. The policy of just claiming $1 per delivery is having you do something illegal.
One of the things the IRS would look at in an audit of your employer is the tips on checks and credit cards, since those are provable - then they'd assume that the tips on cash deliveries was somewhere in the same ballpark.
2007-07-31 05:45:54 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
This is a somewhat grey area at the moment.
First the only legal method is to claim all your tips.
Now, the grey area comes in because people haven't been doing that and the IRS is forcing eating establishments to allocate tips based on an average that is based on total sales.
However, if you keep an honest record of your tips there is no way they can make you pay tax on what you didn't make. Notice that word "honest". I find it hard to believe that you average a dollar a delivery.
It is news to me if this the allocation rule applies to delivery drivers...but, it is very possible that it does. The IRS is doing studies on every occupation to insure compliance and suggest changes to insure it.
Oh...if your a driver for Pizza Hut...they have started to add a delivery fee and yes that is your problem.
It has always amazed me why some people think they shouldn't pay taxes on their income (yes tips are income). I usta' be married to one...she made over $200 a night in tips and just wanted to claim $20.
However, there is no way I believe that the difference is 50 to 85% of your tips. I've been a tax professional for 20+ years...and those numbers just don't add up to what I know to be a reality.
And, if I know this...your can bet the IRS can prove it.
Welcome to the real world...I have to give Uncle Sam 43 cents of every dollar I make...and I have a large investment in equipment too (Sam didn't invest anything and didn't do any work at all). This isn't one hundred percent true it was to make a point 28% tax rate and 15.3% self employment tax rate.
The point is forgive me if I don't weep for you that you can no longer cheat on reporting your tips.
If you want to know my position on tips...they should be illegal. However, if they do that they would have to raise the wages for services based people...but that is just my opinion. But, I do know it is the business owner transferring a tax burden to his employees. And, that is the reason for new rules.
2007-07-30 20:17:55 · answer #3 · answered by Russ B 6 · 1⤊ 1⤋
A lot of people are inconsiderate and rude. I'm a server/bartender, I can serve someone for 2 or 3 hours soon as they walk into the door, spend all my time making sure they enjoy everything and get tipped nothing.. Last week I had a table of 10.. Ran me back and forth for an hour just on drinks and appetizers. Then complained that I wasn't taking their order fast enough. Then once I took the order and was ringing it in, I had a guy rudely come up to me and say "Are we going to get more chips or what? What's the problem?" ... so I had to stop what I was doing, get more, then ring it in all over again. 10 minutes later they started complaining that their food wasn't ready yet. By the time it was ready (15 minutes after ringing it in) they were leaving. $150 check dropped down to $26 and change (the cost of liquor) .. needless to say, they left $27 on the table. Impatient people rock.
2016-03-16 03:39:00 · answer #4 · answered by Anonymous · 0⤊ 0⤋