US restaurateurs back new law on tips

02 October 2002 by
US restaurateurs back new law on tips

The USA's National Restaurant Association (NRA) is backing proposed legislation aimed at clearing up a long-running dispute on reporting workers' tips.

Currently, employees have to report tips to their employer, who then submits the information and due taxes to the Internal Revenue Service (IRS). A recent Supreme Court ruling allows the IRS to conduct employer audits if they believe workers are under-reporting tips.

The NRA believes this puts an unfair burden on employers, turning them into "tip police". The new law would make the IRS responsible for collection.

NRA chairman Xavier Teixido said the current law put restaurateurs in an "untenable position", having to report on their own employees. An NRA spokeswoman said there were ramifications for all tipped employees, including hotel workers.

The NRA has been battling the issue for years and helped finance a long-running court case between a California restaurant and the IRS.

Source: Caterer & Hotelkeeper magazine, 3-9 October 2002

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