Originally Posted by
PTravel
What you read is wrong. Waiters' tips, for income tax purposes, are estimated based on the take of the restaurant -- whether they are tipped or not, the waiters are required to pay tax on this amount. Restaurants (and other businesses) that do not take credit cards do so .
"Estimated" is the operative word here. Waiters are not "required" to pay taxes on someone's estimate or guess of what they made. When April 15th comes around, they are required to pay taxes on their
actual income. Good documentation can easily overcome any inequity caused by a faulty estimate. Documentation is the responsibility of both the employer and the employee. In order to avoid IRS problems, some restaurants provide their servers with a printout of all of their invoices on a daily basis. The employee is then required to annotate any tips received in cash.
The problem with taxes on tips is underpayment due to underreporting, not the other way around.