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When a Fee is a Fee and a Tip is a Fee …

Effective January 1, 2014, IRS Revenue Ruling 2012-18 provides restaurants guidance concerning the use of automatic gratuities, or 'service charges' charged on the basis of table size. Generally, gratuities are not includable in the income of the establishment and are reported separately by employees.  The revenue ruling states that 'auto grats' are considered fees collected by the restaurant and should be included in income.  The resulting pay-out to employees should be added to wages and taxed accordingly. The revenue ruling defines a gratuity as one which is paid out subject to the following: the payment must be made free from [...]

2016-10-27T16:55:01-07:00September 9th, 2013|Accounting, Business Tax|Comments Off on When a Fee is a Fee and a Tip is a Fee …

IRS’s “common law” test to determine independent contractor/employee status

It’s critical for an enterprise periodically to review the status of its workers and see if they are properly classified. An enterprise must withhold federal income tax, social security taxes, and federal unemployment taxes on wages it pays workers who are employees. It also may have to provide them with the same fringe benefits and retirement plan coverage available to its other employees. There may be state tax obligations as well. By contrast, these responsibilities don’t apply for workers who are independent contractors. The business simply cuts them a check for their services and sends them a Form 1099-MISC. [...]

2016-10-27T16:55:02-07:00June 28th, 2013|Business Tax|Comments Off on IRS’s “common law” test to determine independent contractor/employee status
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