This isn't an IRS change. It was a public behavior change. The owners always had to withhold taxes from their wait staff, just as your taxes are withheld by y

This isn't an IRS change. It was a public behavior change. The owners always had to withhold taxes from their wait staff, just as your taxes are withheld by your employer. The difference is that since almost all tips are now on credit cards, the business owner doesn't need to assume the % sales to withhold, and withholds based on virtually all of their employees tips. The end result is that the wait staff can't commit tax fraud by not reporting tips. The business owner didn't have to report cash tips, only withhold based on a % of sales. They still withhold on % of sales if actual tips are less than the % of sales.