Automatic gratuity at restaurants no longer considered `tips`

Automatic gratuity at restaurants no longer considered `tips`

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Waitress (Photo courtesy of Joi via Wikicommons) Waitress (Photo courtesy of Joi via Wikicommons)
CHICAGO (FOX 32 News) -

Servers used to be able to claim their gratuity income to the IRS and still walk away with cash in hand.

Starting Jan. 1, the IRS will enforce a new rule that may cause servers to go home empty handed.

Michael Korte 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, with the new IRS rule, 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," Korte said.

The new rules in the new year are also causing restaurants to change their policies on tipping.

Now instead of being a "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.

This change will also affect bartenders and those who bus tables.

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