When it’s a service charge. Revenue Ruling 2012-34 was issued by the Internal Revenue Service to provide guidance to employers and employees on the difference between tips and service charges as well as on certain reporting requirements. The ruling states, among other things, that service charges paid to employees are taxable as regular wages and not as tips. Although the IRS initially delayed enforcement
We have all lived in a highly regulated, pro-employee environment for years. Moreover, there is no hiding it; employers are bombarded by news about the hazards of having employees which illustrate the various pitfalls, often in painful detail. Yet, I continue to hear from employers desperate to terminate a problem employee, an employee who has been unacceptable “forever”, but whose personnel file reads