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As an employer you are supposed to pay your share of FICA and unemployment taxes on tips earned by employees as well as withhold income tax on them. Frequently
by snuxoll 8y ago
As an employer you are supposed to pay your share of FICA and unemployment taxes on tips earned by employees as well as withhold income tax on them.
Frequently it seems tips go under the radar and end up as unreported income, at least for cash tips, but all it would take is the IRS cracking down on restaurants and that would quickly end.
- javagram 8y agoThe IRS would need to crack down on the individual servers, who are the ones misreporting their tips. As we move from a cash based to a card based transaction economy this seems less relevant. Credit card transactions are recorded and it seems unlikely they don’t show up on the employee’s pay stub.