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New IRS policy taxes automatic tips for waiters

Photo of Patrick Howley
Patrick Howley
Political Reporter

A new Internal Revenue Service (IRS) policy will classify many waiters’ tips as taxable income instead of self-reported tips, leading to increased costs for restaurants.

The IRS will begin classifying automatic tips at large restaurant tables — which are built into the bill, and which currently count as tips that are not subject to payroll tax withholding — as taxable service charges, according to the Wall Street Journal.

Darden Restaurants, which owns Olive Garden and Red Lobster, is considering eliminating automatic tips altogether, and Texas Roadhouse is already planning to enact that policy before the end of the year, eliminating a program that helps waiters who make less than minimum wage get paid at least minimum wage.

Waitstaff will now have to rely on customers to tip the correct amount, despite the fact that many customers that waitresses are forced to smile cheerfully at are drunken, whooping, hollering Wall Street rejects who make sexually suggestive remarks to them and act like bigshots for condescendingly tipping them anything.

The new rule will make waiters even less likely to split their tips with the busboys, who often get cheated out of those tips anyway despite making less than minimum wage to clean tablecloths, fold napkins a certain way, and eat scraps in the kitchen while getting made fun of by the dishwashers.

Restaurants will be saddled with more tax costs, which will make them even less likely to hire new waiters and waitresses, many of whom get fired or have their hours cut by greasy-haired managers named “Dave” for arbitrary personal reasons or for complaining about sexual harassment.

I’ve got more.

You go work as a waiter, acting IRS commissioner Danny Werfel.

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