Gratuity tax?

Has anyone ever seen a line item charge of gratuity tax on a restaurant bill? There was “mandatory “ added gratuity and the next line was tax on that gratuity.

Kinda odd.

CA?

Would not surprise me.

Yep. Bay Area.

Seattle?Would not suprise me.Next thing up tax the air you breathe! The most disconnected city council in the US.

Wonder if you could put a negative number if the service sucked

The handful of restaurants I’ve dined at that have a “mandatory gratuity” - Next and Alinea in Chicago and I believe one or two others in other states- have all calculated tax not just on the food but also the service.

Wouldn’t surprise me that a taxing authority decided that any mandatory gratuity was part of the overall service and needed to be taxed. Does that fit with your situation?

Yes, California taxes mandatory gratuity (basically, doesn’t consider it a gratuity).

-Al

I am restaurant exec and sales tax is required to be charged on any mandatory gratuity in CA. The restaurant can’t just say it’s optional (including by giving customers the right to ask to have it removed)…if it’s printed on the check vs filled in by hand, it’s considered mandatory. This includes things like a service charge for parties of X or more. Things get very complicated when mandatory gratuities are then distributed to employees in lieu or in addition to direct tips (workers comp, wage rates, tax credit for tip reporting, etc). Additional issues around disclosure to guests.

Thanks all! Never seen that line item even with large part gratuity. Surprised me is all

Line out the mandatory gratuity and tax, then write in a voluntary gratuity without tax. Perfectly legal.

what irritates me is the “x% added for employee health care.” Add it to the cost of food and pay the employees’ benefits yourself. Let me then decide if I want to order the item. Just grates on me.

I’m pretty sure that California Board of Equalization expects tax to be paid on the mandatory gratuity even if the customer lines it out. I think they even state it should be collected on bills that list suggested gratuities. My understanding is that if the restaurant listed it on the bill, it’s taxable.

-Al

This. I mean… shouldn’t you factor in your costs to your products? Nope, just gonna add it later.

Mandatory gratuity is not taxable if you’re not paying it. However the restaurant may insist, given the idee fixee of driving economic activity and business out of CA

I agree. They are just making a political statement at this point. Never seen that for any other regulation or taxes that increase the costs to run a restaurant. It sometimes makes me reconsider if I want to give my business to that restaurant.

My practice is in the City of San Francisco. When I see a “Celebrity Chef” in my office I have been known to ask a 4% surcharge to help pay for the health insurance that I have offered my employees for the last 30 years because it is the right thing to do.

^ haha. That’s pretty good

I would never patronize any restaurant that did that BS.

If a restaurant includes a mandatory tip, that is all the server is going to get. They have effectively taken that decision away from me. As a very generous tipper the server loses out.

Anyway, I thought that whole healthcare issue was resolved 6 or 7 years ago

So does that mean they also have to tax the mandatory health care x% also?