Stephen Sprunk wrote:

In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

The reporting threshold, employee to employer, is $20 per month.
The employee is required to keep a daily log of tips and split tips,
reporting tips both received and paid out to the employer. The employee
aggregates cash and credit tips separately. Of course the employer knows
tips from credit slips, and would check to see if there is an inexplicable
difference in the cash tipping rate. IRS checks this, too.

The employee's daily log is his proof.

The employer assumes a tipping rate at 8% (or possibly a lower amount
if it enters into an agreement with IRS) and allocates that amount among
the waiters, and compares what they've reported monthly as their net
tips. If the employee has reported significantly less than the allocated
amount, he'd damn well better be able to back it up.

Payroll taxes are withheld at the usual rates on both wages and tips.
A waiter with very good tips may have to pay estimated taxes.

wrote:

Tipping in restaurants is largely optional here in Britain and the
amount is completely up the patron's discretion.

Do your restaurants pay much higher straight wages than US restaurants do?
In the US, it's largely understood that the waiter is compensated in
part by the restaurant through straight wages and in part by the customer.

On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:
In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

... IRS checks this, too.

Due to perennial underfunding, the IRS now almost exclusively focuses
its limited audit resources on individual taxpayers claiming an income
less than reported by others (via W2 or 1099) and self-employed
taxpayers claiming business losses three-plus years in a row. Either of
those situations pretty much guarantees an audit, but nearly any other
income tax fraud by individuals will go undetected.

Payroll taxes are withheld at the usual rates on both wages and tips.

.... except the employer doesn't _have_ the cash tips, so they may end up
withholding the employee's entire wages to get enough. Of course, they
will ensure employees report at least enough tips to match the normal
minimum wage, otherwise the employer has to make up the difference.
Above that, though, they don't seem to care.

S

--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking

Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:

In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

Payroll taxes are withheld at the usual rates on both wages and tips.

... except the employer doesn't _have_ the cash tips, so they may end up
withholding the employee's entire wages to get enough.

In the bit you cut out, I already explained that a waiter who receives
high tips may have to pay estimated taxes. But thanks for clarifying
remarks that didn't require clarification, if you hadn't deleted them.

On 29-Feb-12 17:06, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:
In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

The _law_ may require them to report all tips, but what _actually
happens_ is often quite different.

As one waitress I know put it a few weeks ago when discussing taxes, "if
I reported all my tips, I wouldn't get food stamps, child care and
Medicaid; it'd be worse than not working at all." This is the natural
result of Republican policies that penalize the working poor.

S

--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking

John Levine wrote:
The MTA's Metrocard already works on four agencies' transit, MTA,
PATH, NICE, and Beeline.

Also the JFK Airtrain (run by the Port Authority, but not part of
PATH), and the Roosevelt Island Tram (run by the Roosevelt Island
Operating Corporation, a really strange state agency that runs the
dystopian residential development on that island).

Jimmy

Stephen Sprunk wrote:
On 29-Feb-12 17:06, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:

In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

The _law_ may require them to report all tips, but what _actually
happens_ is often quite different.

You are still missing the bit that they are required to report ALL tips,
not just tips received in cash. ALL tips, including those via credit cards.
At the very least, the employer will compare the credit card tip reports
with his own records to see if they match.

As one waitress I know put it a few weeks ago when discussing taxes, "if
I reported all my tips, I wouldn't get food stamps, child care and
Medicaid; it'd be worse than not working at all." This is the natural
result of Republican policies that penalize the working poor.

Fine. She'd probably still get EIC.

On 29-Feb-12 18:31, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 17:06, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:
In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

The _law_ may require them to report all tips, but what _actually
happens_ is often quite different.

You are still missing the bit that they are required to report ALL tips,
not just tips received in cash. ALL tips, including those via credit cards.
At the very least, the employer will compare the credit card tip reports
with his own records to see if they match.

The employee doesn't _need_ to report credit card tips to the employer
since the employer is the one that collects and passes on (minus
withholding) those tips to the employee. There may be some obscure
regulation requiring the employee to report that information back to the
employer, but all they would have to do is hand in copies of their pay
stubs, so it's just a waste of time.

The discussion above was obviously about _cash_ tips, which are an
entirely different matter. The employer (and therefore the IRS) only
knows what the employee _reports_, not what they actually _received_.

S

--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking

Stephen Sprunk wrote:
On 29-Feb-12 18:31, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 17:06, Adam H. Kerman wrote:
Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:

In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

The _law_ may require them to report all tips, but what _actually
happens_ is often quite different.

You are still missing the bit that they are required to report ALL tips,
not just tips received in cash. ALL tips, including those via credit cards.
At the very least, the employer will compare the credit card tip reports
with his own records to see if they match.

The employee doesn't _need_ to report credit card tips to the employer
since the employer is the one that collects and passes on (minus
withholding) those tips to the employee.

Yes he does, Stephen. This is why you are so beloved. You get something
wrong, then keep arguing about it. This is now your third followup,
still repeating the same error.

There may be some obscure regulation requiring the employee to report
that information back to the employer, but all they would have to do is
hand in copies of their pay stubs, so it's just a waste of time.

It's not "some obscure regulation". It's the law. 26 U.S.C. 6053(a)

Would you like to own up to your error, or keep repeating it in
several more followups?

The discussion above was obviously about _cash_ tips, which are an
entirely different matter. The employer (and therefore the IRS) only
knows what the employee _reports_, not what they actually _received_.

Again, also in 6053, the employer is required to impute tips at the rate
of 8% (unless he's allowed to impute a lower rate) and allocate said
imputed tips. It's all reported on schedules filed with IRS, and analyzed.
It may not result in a personal visit by an auditor, but the computer is
quite capable of generating nasty letters and beginning the process of
assessing penalties for underreporting and interest for underwithholding.

This analysis will check for something simple like waiters reporting
a much lower tip rate for tips received in cash versus on credit slips.
Again, these are aggregated separately for reporting.

IRS doesn't go solely by what's reported by the employee. The law requires
that specific assumptions be made about income earned as tips. An employee
may get away with a small amount of underreporting, but not an amount
significantly less than 8%.

Do you understand yet? There's still going to be underreporting, but
there'll be a lot less than there used to be.

Roland Perry wrote:

In my experience, standard shipping for a $10 book might be $2, two day service
might be $10 and overnight might be $15.

Which of those are tracked or signed-for?

The two day and overnight are. Standard delivery by UPS is as well. Postal
service media deliveries are not. Hybrid deliveries where DHL or Fed deliver to
the nearest bulk mail center (not the local post office) for final delivery are
tracked as far as the bulk mail center.