Restaurants asking for tips to be left in cash

[disneysteve]

We dined at two restaurants this past week and when they brought the bill, there was a little note saying something to the affect of "It is greatly appreciated if gratuities are paid in cash". That wasn't the exact wording but you get the idea. I guess the issue is if I tip my server $10, the restaurant has to give her $10 even though they might have to pay the credit card fee on that money.

At the first place, our tip was almost exactly $10 so I left cash. At the second place, I was paying with a gift card so didn't really want to put up anything out of pocket and the tip was $64. I'm thinking they don't have the processing fee on a gift card like they do with a credit card anyway so it's not as big a deal. Even if I had been paying by credit, I probably would have charged the tip. I had enough cash on me but would rather not use it if I don't have to plus it would mean not getting the reward points on that money.

Has anyone else encountered this? And if so, did you use cash or still put the tip on your card?

[Jluke]

I tend to tip in cash.

solely because my uninformed belief is that the server gets the tip quicker if it is cash.

[Keshet]

I've been leaving tips in cash for a couple of years now. An investigation in our area found that some restaurants were short changing servers on tips via debit or credit cards.

[disneysteve]

I've been leaving tips in cash for a couple of years now. An investigation in our area found that some restaurants were short changing servers on tips via debit or credit cards.

That's a really good point. I may change my habit for just that reason. I want the staff to get what I leave them.

[mumof2]

we don't tip over here...I wouldn't even know how much to tip if we were over there...but our servers are paid a decent wage

[corn18]

My guess is tax avoidance.

[disneysteve]

My guess is tax avoidance.

Hadn't thought of that. I was thinking of the credit card fee issue but you may be right.

[Keshet]

My guess is tax avoidance.

What interest would the owners have in helping the waitstaff avoid taxes?

[~bs]

it's because the waitstaff can avoid taxes. If you get tipped $100, it's the difference between pocketing that amount and pocketing maybe $60-70, depending on your tax rate.

It's in the owner's interest for waitstaff to keep more of their tips because it's easier justification to pay them $5/hour or whatever the minimum wage is for servers.

[bjl584]

I'm sure it has to do with the wait staff not having to claim it on taxes.
I haven't personally seen this, but I normally tip in cash anyway, so I may just not have noticed.

[disneysteve]

$5/hour or whatever the minimum wage is for servers.

Minimum wage for servers is $2.13.

Tip your servers well folks.

[Smallsteps]

Minimum wage for servers is $2.13.

Tip your servers well folks.

It really depends on where you are there are different tipped employee wages in many states. Is that NJ?

When I was younger I did a stint working as a server it was easier to to be iffy on full amount of tips on taxes,

I believe now the IRS has stricter rules of assuming x% amount on the amount of tickets you are listed as server etc.
If IRS assumes 10% for example......... and a server was tipped 20% they would have a paper trail on electronic CC transactions. If tipped in cash the assumption of x% would be accepted and server would pay tax on half.

[disneysteve]

It really depends on where you are there are different tipped employee wages in many states. Is that NJ?

That's the Federal number. States and cities can set it higher, just as with regular minimum wage. Here in NJ, it's $2.63 - woo hoo.

[rennigade]

Pathetic that restaurant owners put the burden on the patrons to foot the salary of their employees. This really needs to be stopped. If restaurants close because of this, so be it. Or if food prices skyrocket, good...ill eat at home.

[disneysteve]

Pathetic that restaurant owners put the burden on the patrons to foot the salary of their employees. This really needs to be stopped. If restaurants close because of this, so be it. Or if food prices skyrocket, good...ill eat at home.

I don't know how the US tipping system got started but I've always thought it was a lousy system. Just raise the food prices to cover paying the staff a normal wage and be done with that nonsense. It's not like tips actually get you better service.