New tipping tax laws affect SWFL restaurants
Video by fox4now.com
CAPE CORAL, Fla. - A new year is not just a change in the calendar but a change of laws.
Those in the service industry are feeling the effects of one in particular when it comes to tipping.
Local restaurant,s like Dante's Coal Fired Pizza in Cape Coral, say they're watching this one closely.
"Hopefully its not going to be too bad," laughed Julio Rodriguez. He is the executive chef and trainer at the pizza restaurant. His job is to focus on the dough. But, right now it isn't the pizza, but the pay that is on his mind.
"Anytime there's a tax increase in any way there's certain repercussions that affect the employees and the employers," he said.
Many restaurants are speaking out about new IRS tax laws for 2014.
Automatic gratuity tacked onto large parties is now considered a 'service charge' instead of a tip.
That means servers can't take that money home at the end of the night. They'll have to wait for it to be taxed in their paycheck as wages.
At Dante's there's an even bigger concern.
"The new tax rates, we're going to basically have to match more," said Rodriguez. "That affects everything from workers comp to liability."
The way those at the pizza restaurant understand it, servers now have to declare at least 8% of their tips. If they don't, the business has to pay the rest.
That could add up to thousands of dollars for the business not even a year into it.
"Especially being a new restaurant, you don't want to make a whole lot of changes right off the bat because the more changes you make in the beginning the more likely you are not to succeed in a very strenuous industry," said Rodriguez.
These new laws are forcing restaurants to put more faith into their customers to take care of those who take care of them.
"We're just going to ride it out to see how it affects the employees and us in general," Rodriguez said.
Dante's will be having staff meetings with servers in the coming weeks to talk about the new laws.
This past week Darden Restaurants, owners of chains like Red Lobster and Olive Garden, announced they will get rid of the automatic gratuity for large tables and instead offer suggestions on the bill for 15%, 18% and 20% tips and let the customer decide.