It really depends on the establishment and how the customers pay.

An ex of mine spent years working at a high level chain in Southern California where corporate automatically reported 10% of all bills to the IRS no matter what the actual tip was. In her case the averages where much higher but the effective impact before any actual claims was that her minimum wage pay got taken away for taxes before she ever got the check.

From talking to other servers I'm hearing that this has become the norm and often even at higher assumed withholding. What was an acceptable risk for a local dinner doesn't work in an age of chains and brand names.

And, while I've heard less stats on it, even the dinner type servers have had to adjust to a degree due to the mass use of plastic and the realization by owners that that if the server doesn' claim the income, the restaurant is going to have too -- paper leaves an ugly trail.

The best "under the table" tips I've heard about in recent years were actually from coffee shop employees. The morning shift has a lot of regulars who know their drink costs perfectly and know the game enough to tip cash, be it the change from the order or more. For years I had friends who would pay for dinner in one dollar bills, and yes, they got a lot of looks.

That said, I've been taught [by former servers no less] that tipping is about the service first and the economics of the location. To me this makes the most sense... If you're working at a place that pays nearly nothing as a base and do an eh job, I'm not going to ignore it... I'll still tip but it won't be 20%. On the other hand if you're doing a great job at a coffee shop, sub store or other place where tipping isn't the general practice, well, you went above and beyond and I'll leave something -- to thank you for the attention, not because it should be expected, if you want a regular tip, work in a place where compensation is based on service level.