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New tax law impacts servers

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Serving in a restaurant as a waiter or waitress is one of the more common jobs among students. In 2012, more than 2.3 million people worked as servers, making $8.92 per hour. Unfortunately for these workers, the Internal Revenue Service passed a new law in January 2014 that discourages servers from charging service charges and states that service charges are treated as income rather than a tip.

A service charge is different from a tip. A “tip” is money left by a guest to thank a server for their service. Some restaurants add a “service charge” or a required gratuity of a set amount, such as 15 percent of the ticket total, to large parties or special occasion groups.

Instead of getting “service charges” in cash at the end of the night like a “tip,” a server will not recieve service charge money until their next paycheck.

Haley Stammen is an English major who works as a server at Elmer’s. She, like many other servers regularly serves banquet groups and large parties. She is concerned about the new law. “I don’t think it’s right. It seems like they’re always trying to tax us more and more,” Stammen said.

Please Tip Your Server :-)
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Tips motivate the server to do an excellent job and show appreciation of the server’s hospitality. “People aren’t required to tip me. It’s like a gift. They’re thanking you for taking care of them. It’s considered polite,” Stammen said.

While Oregon’s minimum wage rose by 15 cents on Jan. 1, 2014, the new IRS law required servers to process all service charges through payroll.

When tips are added into payroll, workers go without that extra cash for two weeks (or more) while they wait for their paychecks. That means that workers who are used to living off tips will now need savings until their full paycheck arrives.

“I don’t like the new process. I would rather receive all of my tips at the end of the night,” Stammen said.

That wait for servers who lack savings is frightening when rent and other bills are still due. “We had a lot of nervous workers when they first heard about it,” Pat Forciea, who works for Hell’s Kitchen in Minneapolis, told Fox News.

In the past, servers collect all their tips and service charges at the end of their shift. “What the new tax law does is force service charges to be treated as income. A server will have to wait until they get their next paycheck to get all their tips should they chose to add a ‘mandatory’ service charge,” Stammen said. “It’s a safety net. When we have large parties, checks are higher so we pay more taxes on it.”