Gratuity tax?

WINE TALK
21

This is surely wrong. A mandatory gratuity sets a minimum, not a maximum. In France, where there has been service compris since I first was there in the 60s, people still frequently add on a 5% tiip if they think they have had good service.

22

My feeling is that if Restaurants fully disclose what they are doing and why, then I have no problem with it and just make my decision on what the total cost will be versus what they provide. Same as I have no problem with a delivery fee when I order something to my house or a fuel surcharge from Delivery companies when gas prices go up.

23

I noticed this once. May have happened many times, who knows. We were dining out in a restaurant and it was a party of 8 (or 10?). There was Compulsory Gratuity tax plus Tax because of ‘Large Party’. We were not having BYO wines, using standard stemware , drinking restaurant wines, and we did order enough to make it worthwhile for the restaurant ti have us dining there. Not that we had extra staff waiting on us. But we have extra tax levied because were large party! We should be getting a discount!!! I happened to glance at the bill and was shocked to see how many extra surcharges were levied. The ‘standard tip’ was also added at the bottom of everything else. Some else was picking up the tab so it dod not hit my hip pocket so the angst was lessened.

I live in Australia where we do tip if required but not like in USA. At our offlines we ALWAYS tip because of having a private room , BYO, extra glassware. Bt a 10% is considered OK.

24

They’ll be adding a “resort fee” next, they just haven’t thought of it yet. [basic-smile.gif]

25

Personally I have never been a fan of tipping, in any situation. There is a restaurant in Oakland called Camino where they got rid of tips. Obviously the food prices got higher but in the end I actually preferred that to the concept of tipping. IMHO tipping is bad for waiters and staff in general because it gives the restaurant the justification to pay their employees below minimum wage (or a very low salary) in most places.

It was actually quite a refreshing change when I last dined at Camino:

http://www.caminorestaurant.com/about

I wish ALL restaurants followed this model (I guess I could always move to Japan [neener.gif] )

26

I believe there is conflicting case law on that one. Back in the 2000s, some folks in NY and Penn were arrested for Theft of Service however charges were dropped in those cases. Then there was a lawsuit a bit later against Darden. That was someone not that was arrested however did sue seeking remedy and the judge sided with Darden in that case for a variety of reasons, mostly failing to show injury. That was most likely dead on arrival. The IRS later changed it up so that is now considered more a service charge (and could be considered enforceable) to the restaurant and not the server; the IRS was just aiming to ensure they get their share of taxes however Service charges are not the same as gratuity, so there’s that as it takes the server out of the mix.

I go back to talking with the manager if service is not going well, requesting a change if necessary. If all still fails, punish them publicly and cut out them off from your business. If they truly do suck, do not do the right thing, the rest works itself out in a Darwinian manner.

27

By definition there is no such thing as a mandatory gratuity. It is a service charge. No different than being quoted a hotel room rate only to find out there is a resort fee.

28

And Service Charges can be enforceable if disclosed (i.e. you can’t just cross it out). Gratuity on the other hand, yes you can walk away .

I’ll agree with the resort fees, You can argue the hotel might, just might, throw you a bone. I had to do it on a fee that my company took issue with on an expense report.

Try arguing that with various service fees on your cell phone bill, same ballpark, not so much luck to be had there. They will not give one shit.

Depends on how much they want to dig in and they can be enforced as not gratuity.

29

From California Board of Equalization Publication 115: “It is presumed that an amount you [restaurant] add as a tip to the bill or invoice you present to the customer is mandatory. A statement on the bill or invoice that the amount is suggested, optional, or may be increased, decreased, or removed by your customer does not change the mandatory nature of the charge. This presumption may be disputed by documentary evidence maintained in your records showing that your customer specifically requested and authorized the gratuity be added to the bill.”

Not sure whether it’s been addressed by California courts. But, as I noted earlier, I’m pretty sure the CA BOE considers it taxable if you cross it out and add it back.

-Al

30

This ;
A one percent (1%) Homeless and Domestic Violence Tax is collected on all food and beverage sales by establishments that are licensed by the State of Florida to sell alcoholic beverages for consumption on the premises, except for hotels and motels. Only businesses that make over $400,000 in gross receipts annually are obligated to collect this tax.

The Homeless and Domestic Violence Tax is collected throughout Miami-Dade County with the exception of facilities in the cities of Miami Beach, Surfside and Bal Harbour. Eighty-five percent (85%) of the tax receipts goes to the Miami-Dade County Homeless Trust, and fifteen percent (15%) goes to Miami-Dade County for domestic violence centers.

For more details, read about the Homeless and Domestic Violence Tax on Sale of Food and Beverages.

31

Interesting, Ned. While I support the focus, and am a liberal bastard, I really don’t understand the connectivity between the tax and the cause, and the carve-outs. Did this really pass? And challenges?

32

The carve out for Miami Beach and Bal Harbour is likely because Miami Dade already has a 2% Tourist Development Tax in those areas.

33

SI,señor !

34

I would agree if the menu plainly states there will be a mandatory gratuity. But absent this, the customer is not contractually obligated to pay an undisclosed gratuity, and can delete it.

On a related topic, don’t forget the aptly-named California use tax on wine ordered from out of state:

https://www.ftb.ca.gov/individuals/use-tax.shtml

35

Ah good, they’ve found a way to make the US tipping system even more absurd and arcane.

36

Well played! [cheers.gif]

37

I think the problem is simply hangover terminology. Mandatory gratuity is a contradiction in terms and taxing it raises hackles. If the bill just charged a price and said service and tax included, no one would blink and they would be paying the same money.

38

I understand taxing so-called mandatory gratuity but the restaurants really should not call it a gratuity if it is mandatory. How about “service charge”?

There is also more than one way to look at a restaurant health care surcharge. Yes, restaurants could simply raise their prices and pay these costs, but consumers then would be unaware of why the increase occurred and might object to the higher prices without understanding their cause. For my part, I consider a stated heath care charge an example of transparency that I want to encourage. I want employers to provide health care for their employees, and I like to know that is happening even if the cost is passed on to me. If i don’t want to pay for it, I can take my business elsewhere. But at least the facts are on the table.

39

The American system of tying health care to employment creates a lot of distortions, but this is a fairly minor one. And why should restaurants be the only ones to do this. Virtually everything you buy goes through the hands of employees with health care. Why not break it all out? The price tag would get long indeed.

40

California or at least the Bay Area have made it so that there is no longer a restaurant minimum wage and that restaurants have to pay their employees the standard minimum wage (hopefully) as their base wage. Maybe this is why you are seeing more mandatory gratuities…