Automatic gratuity at restaurants no longer considered `tips` - Mid-South News, Weather, Traffic and Sports | FOX13

Automatic gratuity at restaurants no longer considered `tips`

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    Friday, October 4 2013 3:43 PM EDT2013-10-04 19:43:45 GMT
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The days of restaurant servers walking away with some of their tips appears to be over.

Starting Jan. 1, the IRS is treating automatic tips added to large parties as taxable wages. 

"Our lives, our well-being is dependent on being tipped and being tipped well," says Michael Korte who has been a server for three years. At most restaurants he's worked at larger tables of six or more people automatically had gratuity tacked on.

Now restaurants will "not" be able to do that.

"I certainly met it with trepidation, but we're being forced to have faith and have faith in the customer that they will reward those of us that do a quality job," says Korte.

The new rules in the New Year are also causing restaurants to change their policies. 

Now instead of being an "auto gratuity" it will be a "service charge."

That means tips for large parties, room service, and delivery charges that used to go directly to workers will instead be included in their paychecks to be taxed.

The owner of La Cantina Grill in the South Loop said he's working on those changes, but he feels for his staff who won't be receiving their tips in hand.

"The server got their money at the end of the night, they didn't have to wait to get the money in their paychecks. So it's going to take them an extra week to get paid," John Muro, owner of La Cantina Grill, said.

For many servers it's a change they're not looking forward to.

"We do not make minimum wage…many of whom, many of my co-workers they don't even receive any kind of a paycheck. It's just the money we make in that single shift that we take home," Korte said.

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