The IRS nixes automatic gratuity - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

The IRS nixes automatic gratuity

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Amarillo, TX - When you eat out at restaurants, you won't see any automatic gratuity charges added to your bill thanks to a new policy from the Internal Revenue Service.

The IRS said automatic gratuity no longer fits their definition of a "tip," which is now something that must be voluntarily added by a customer.

This change has serious consequences for servers who depend on extra cash from large parties like Amarillo resident Christi Ashley. She has been serving for the last 18 years and relies on tips to make ends meet. "$2.13 an hour doesn't go very far, so we really depend on the gratuities that we receive," said Ashley. Ashley is responsible for tipping out bartenders and bussers and said automatic gratuities help her do that and still make money. "Being able to add that gratuity helped with being able to pay everyone else," said Ashley. "So that's the major thing right now is that we don't want to end up in a situation where we're responsible for paying them, and then we don't make any money off the tables. We don't want to work for free."

Automatic gratuities help servers ensure they don't get stiffed by large parties, but now there is no guarantee. Some said working large parties will be a gamble, and that gamble affects their ability to provide for their families.

"It means taking care of my daughter. I'm a single mom," said server Kylie Patterson. "That's money that I could use to take care of her and be able to provide a better life for her. So taking a gamble with our income is hard because we never know." Restaurants can charge a "service charge" for large parties, but servers will be taxed for the added gratuity and they won't see that extra cash until their paycheck.

Some said this stipulation cancels out the benefits of a service charge in the first place.

Madison Alewel - NewsChannel 10

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  • Madison Alewel

    Madison Alewel

    Madison joined NewsChannel 10 as a reporter in October 2013. She comes from Las Vegas, Nevada but has strong Midwest roots.
    Madison joined NewsChannel 10 as a reporter in October 2013. She comes from Las Vegas, Nevada but has strong Midwest roots.