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(TaxProf)   30 year old's last wish: "leave an awesome tip (and I don't mean 25%. I mean $500 on a f***ing pizza) for a waiter or waitress." Of course, the IRS wants its slice   (taxprof.typepad.com) divider line 137
    More: Interesting, The Last Wish, Aaron Collins, Weekend Edition Sunday  
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13688 clicks; posted to Main » on 07 Jul 2013 at 12:44 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-07 01:42:48 PM
Err Here in Washington state the minimum wage is $9.19 and they make tips on top of that.
 
2013-07-07 01:43:29 PM

Farkenhostile: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Here in Washington state is minimum wage is $9.19 and they make tips on top of that.


Curious whether customers know that and scale back tips accordingly.
 
2013-07-07 01:44:45 PM
It's a bad idea to leave really big tips. It fosters the sense of entitlement that many servers seem to have.
 
2013-07-07 01:49:47 PM

Sleeping Monkey: Most servers report credit card tips or 8%, whichever is most.


Oh, so you are telling me that it is OK to only tip 8% because that is all the server is reporting to the IRS? Thanks, I'll remember that.
 
2013-07-07 01:51:04 PM

one-in-the-chamber: how many times of "how we tip/pay waiter/waitresses" until it gets it's own tag and day like "caturday"?
/waiterday?


Duesday?
 
2013-07-07 01:55:21 PM

cameroncrazy1984: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?


So you didn't read the article, eh?

As a tax professional, if one of my clients came to me and told me that they received a $500 tip because of someone's last wish, I'd consider it a bequest excludible under Section 102, just like the commenter on the article. There is no way that such an amount can be considered ordinary tips in the course of business, so it is clearly a gift, which has supporting documentation from the man's last wishes as spelled out in his will. The IRS would have a tough time proving that this was income in the taxable sense. It really is no different than a regular joe getting a cash payment from the disposition of a will.
 
2013-07-07 01:55:54 PM

Kozaru: ZAZ: If one of my waitresses gets a $500 tip I make sure to report it to the IRS as a tip. The IRS assumes that restaurants with low tip receipts are cheating on taxes.

I tip in cash so the IRS doesn't see the funds.  Maybe if you didn't pay waitstaff shiatty wages I wouldn't feel inclined to do so.  Ass.


I generally tip cash so my server doesnt necessaraly have to pay "the man" the full amount (or anything for that matter)

On the rare occasion I forgot to get cash and have to pay with card I usually round up a little more than Id leave if I was leaving cash just because I know "the man" is gonna steal some of the money the 2.13 an hour wage slave makes.
 
2013-07-07 01:56:58 PM

thamike: one-in-the-chamber: how many times of "how we tip/pay waiter/waitresses" until it gets it's own tag and day like "caturday"?
/waiterday?

Duesday?


Whinesday.
 
2013-07-07 01:58:07 PM
media.twirlit.com
 
2013-07-07 01:58:11 PM

WhippingBoy: thamike: one-in-the-chamber: how many times of "how we tip/pay waiter/waitresses" until it gets it's own tag and day like "caturday"?
/waiterday?

Duesday?

Whinesday.


I always thought Breitbart Wednesday had a better ring to it.
 
2013-07-07 01:58:49 PM
How about a tip that DOESN'T typically go to people who already make more than they're worth?
 
2013-07-07 02:00:13 PM

puffy999: How about a tip that DOESN'T typically go to people who already make more than they're worth?


You must get a lot of phone numbers.
 
2013-07-07 02:00:23 PM
And upon further reading of articles on this story, it appears that the money didn't come from the deceased's estate, but rather from outside donations. This complicates the issue and may cause rise to taxable income to the waiter/waitress. If it had come from his estate, there would likely be no question about it, but people gave the brother money, which he then used to give to someone else.
 
2013-07-07 02:01:28 PM

jake_lex: I love when people act like paying some tax on income invalidates it. If I'm a server, and someone leaves me a $500 tip, even if I "only" get to keep $350 or so of it after taxes, hell, that's $350 more than I had before.

I mean, Fox News ran a piece the day after Phil Mickelson blew the US Open talking about how he was lucky because he would have had to pay another $250K or so in tax on the more than $1 million additional prize money he would have gotten had he held on. I'm sure that cheered Phil right the fark up.


I'm assuming you mean Winged Foot '06...Just goes to show: If you're going to choke away a major, do it in New York and let some poor sap like Geoff Ogilvie take it in the shorts from the taxmen in both DC -and- Albany.
 
2013-07-07 02:07:10 PM

The_Six_Fingered_Man: cameroncrazy1984: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?

So you didn't read the article, eh?

As a tax professional, if one of my clients came to me and told me that they received a $500 tip because of someone's last wish, I'd consider it a bequest excludible under Section 102, just like the commenter on the article. There is no way that such an amount can be considered ordinary tips in the course of business, so it is clearly a gift, which has supporting documentation from the man's last wishes as spelled out in his will. The IRS would have a tough time proving that this was income in the taxable sense. It really is no different than a regular joe getting a cash payment from the disposition of a will.


I, for one, defer to the tax pro.  Thanks for stopping by.
 
2013-07-07 02:08:41 PM

Yes please: Everyone should always tip at least 2200% unless the service was particularly wretched.  Only cheapskates tip 15% any more.


You joke, but the reason the "standard" tip has gone from 15 to 20% is that real wages have declined while subsidized food has stayed flat. The buying power of that average tip hasn't increased.
 
2013-07-07 02:09:20 PM

The_Six_Fingered_Man: And upon further reading of articles on this story, it appears that the money didn't come from the deceased's estate, but rather from outside donations. This complicates the issue and may cause rise to taxable income to the waiter/waitress. If it had come from his estate, there would likely be no question about it, but people gave the brother money, which he then used to give to someone else.


Wow, a professional who admits he may been hasty and has doubt after further reading!

Who in Hell let you in here? :-)
 
2013-07-07 02:12:00 PM
It wasn't altogether clear what the article was talking about in terms of the IRS's interest: the $500 to each server or the $60,000 that the fund has amassed. Is that money taxable since it wasn't part of the original estate? Who's responsible for it? What if he gives it all away, is it still taxable?
 
2013-07-07 02:12:26 PM
"U.S. Internal Revenue Service: an agency modeled after the revenue raising concepts of the 19th century economist, Jesse James". --Robert Brault

"If you make any money, the government shoves you in the creek once a year with it in your pockets, and all that don't get wet you can keep". --Will Rogers
 
2013-07-07 02:13:06 PM
mr.

www.candlesandsupplies.net
 
2013-07-07 02:20:35 PM

TopoGigo: Yes please: Everyone should always tip at least 2200% unless the service was particularly wretched.  Only cheapskates tip 15% any more.

You joke, but the reason the "standard" tip has gone from 15 to 20% is that real wages have declined while subsidized food has stayed flat. The buying power of that average tip hasn't increased.


"Subsidize food?"   Are you saying that menu prices have remained flat?  Because that is what tips are based upon.  That's plausible in the "value" restaurant market, such as Denny's, but IDK about the "fine dining" market.

Strippers have been suffering real wage losses worse and longer than food servers  We need to eliminate the dollar bill.
 
2013-07-07 02:21:08 PM

BarkingUnicorn: Farkenhostile: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Here in Washington state is minimum wage is $9.19 and they make tips on top of that.

Curious whether customers know that and scale back tips accordingly.


Nope- in my experience it's why hipsters can work 3x a week and still afford rent in expensive areas of downtown.
 
2013-07-07 02:25:13 PM

BarkingUnicorn: Farkenhostile: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Here in Washington state is minimum wage is $9.19 and they make tips on top of that.

Curious whether customers know that and scale back tips accordingly.


9.19 still isn't a living wage. There is no way you can afford rent, healthcare, a car/insurance/gas/food that isn't ramen. Sure you could get a roommate or two, and walk/ride a bike a few miles a day to work instead of driving (if at all possible/feasible), eat ramen, and live on a wish and prayer as far as healthcare goes. What I don't get is how people go, "No reason to pay the wage slaves anymore, that would be bad" yet customer service has gotten worse not better because people with half a brain get the hell out of that line of work. Especially Walmart has this notion that squeezing their employees more and more every year will somehow end up with more profits. Not you know, less competent workers.

Oh, and lets not forget that Walmart workers turn to welfare/food banks/etc just to make enough. Yet that's perfectly OK somehow. >.> Anyway, I just wonder what our society will be like when all the people who are smart enough to get out of working at Walmart, etc get out. Yet our society still expects the same sort of service. We haven't quite bottomed out yet, but its ridiculous for us to both ridicule the lower working class while expecting the same service/etc from them.
 
2013-07-07 02:30:13 PM
 
2013-07-07 02:38:20 PM
His will said tip. His will should have said gift. It was a simple accounting error. Theoretically, my grandchildren are a little better off because of it.
 
2013-07-07 02:40:18 PM
Sleeping Monkey: Most servers report credit card tips or 8%, whichever is most. If someone gives a cash tip of $500, the IRS should never know about it.

Agreed! I was a pizza delivery driver and at the end of the night I reported either my credit card tips (which are hard to pretend don't exist) or 8% of my order total.  I did it for six years and never had a problem.   Also, this is my Weeners, so if my formatting is off, I'm sorry.
 
2013-07-07 02:41:43 PM
What I'm hearing is that 8% seems to be the standard tip amount.

imokwiththis.jpg
 
2013-07-07 02:45:52 PM

Sleeping Monkey: Most servers report credit card tips or 8%, whichever is most. If someone gives a cash tip of $500, the IRS should never know about it. Unless of course their bosses micro-manage their money or take their tips like Amy's Baking Company.


Or unless the tipper posts a video of it and makes it a huge deal on the internet.
 
2013-07-07 02:46:29 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


You know, I've worked in restaurants, and I am SICK of the poor me schtick from waiters.

Both restaurants I've worked in, waiters walk out with over a hundred dollars in cash per shift. That's more than I make working full time for better than minimum wage.
 
2013-07-07 02:48:15 PM

puffy999: How about a tip that DOESN'T typically go to people who already make more than they're worth?


You sound fun.
 
2013-07-07 03:06:02 PM

Crinklepouch: Sleeping Monkey: Most servers report credit card tips or 8%, whichever is most. If someone gives a cash tip of $500, the IRS should never know about it.

Agreed! I was a pizza delivery driver and at the end of the night I reported either my credit card tips (which are hard to pretend don't exist) or 8% of my order total.  I did it for six years and never had a problem.   Also, this is my Weeners, so if my formatting is off, I'm sorry.


One of us, one of us
 
2013-07-07 03:07:35 PM
Most likely A. Factually, the $500 tips cannot be a bequest from the late Aaron because the money does not originate from his estate; rather, Seth has collected the funds via donations from the public. (To the extent any of the $500 tips actually came from Aaron's estate, there may be a solid argument the payments are bequests excludible under section 102, but this does not seem to be the fact pattern.)

Seth could argue that the portion of the $500 payment exceeding a commercially normal tip (20% or 25%) is a gift excludible under section 102. Obviously the payment far outstrips any normal tip for a pizza. Arguably, giving motivation the primacy it is due under Duberstein, "a detached and disinterested generosity" most logically accounts...


Every once in a while, I'm subtly reminded why I hated law school. This is one of those times.
 
2013-07-07 03:19:21 PM
I wonder how things would be like if all income was taxed at 100%. Would we all just simply stop working? Or would we all finally come to realize the fact that the State is glorious and just keep on working anyway?
 
2013-07-07 03:20:34 PM

theBigBigEye: I wonder how things would be like if all income was taxed at 100%. Would we all just simply stop working? Or would we all finally come to realize the fact that the State is glorious and just keep on working anyway?


well teh people in NYC would keep working
everyone else
meth
 
2013-07-07 03:22:06 PM

gameshowhost: OH GOD THIS ONE TIME I HAD A RUNNY NOSE AND A HEADACHE
SO I WAS DRIVING ON THE INTERSTATE AND I STILL HAD TO PAY A TOLL
FASCISM IN AMERICA


Toll roads are a regressive tax and a way for the wealthy elite to eschew their fair tax burden for roads of which they gain a much higher benefit from than the average commuter.  It kinda is fascism.
 
2013-07-07 03:22:51 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


People aren't siding with the IRS; they're siding with America. I'm glad my country has safe food and water, free education, social workers, police, fire fighters, national parks, scientific research... and I feel that it is absolutely patriotic to pay my fair share to support those things. There are also people who are patriotic in refusing to pay taxes -- such as pacifists who would prefer to go to jail than to support the military -- but refusing to do your patriotic duty just because no one will catch you if you don't is pretty low.

In this particular case, I have no idea what the legal right answer is. Olk v. United States by itself doesn't make it clear that this isn't "detached or disinterested generosity," but on the other hand, "receipts by taxpayers engaged in rendering services [...] are taxable income when in conformity with the practices of the area and easily valued," which this seems to be. $500 is certainly more than expected practices, but it is not unheard of, and was given at a completely appropriate time for such. My guess is that the money was indeed meant to be an extravagant tip, and thus taxable, but I am by no means a tax attorney.
 
2013-07-07 03:26:50 PM

theBigBigEye: I wonder how things would be like if all income was taxed at 100%. Would we all just simply stop working? Or would we all finally come to realize the fact that the State is glorious and just keep on working anyway?


Dude, those windows aren't gonna lick themselves. Get back to work.
 
2013-07-07 03:34:53 PM

Starry Heavens: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

People aren't siding with the IRS; they're siding with America. I'm glad my country has safe food and water (agreed), free education (agreed), social workers (agreed), police (agreed)

 , fire fighters (agreed) , national parks (agreed) , scientific research (agreed) ... and I feel that it is absolutely patriotic to pay my fair share to support those things. There are also people who are patriotic in refusing to pay taxes -- such as pacifists who would prefer to go to jail than to support the military -- but refusing to do your patriotic duty just because no one will catch you if you don't is pretty low.

In this particular case, I have no idea what the legal right answer is. Olk v. United States by itself doesn't make it clear that this isn't "detached or disinterested generosity," but on the other hand, "receipts by taxpayers engaged in rendering services [...] are taxable income when in conformity with the practices of the area and easily valued," which this seems to be. $500 is certainly more than expected practices, but it is not unheard of, and was given at a completely appropriate time for such. My guess is that the money was indeed meant to be an extravagant tip, and thus taxable, but I am by no means a tax attorney.


While me, along with most others, will agree with those things we support through our taxes, also remember that the IRS doesn't give one flying farking shiat about them, too. If everything had gone straight to hell, they'll still want their money and hang you upside down to wring whatever is left out of your pockets if that's what it took.

And also remember that this is the same entity who has no compunction against specially investigating certain political groups (I don't care if they're far-right OR far-left), seemingly because Taxman just don't like them.
 
2013-07-07 03:49:39 PM
I kinda feel that if the restaurant splits it up among the waitstaff and busboys, it's a tip, but if it goes directly to the one waiter/waitress, it's a gift. I'm just an Accounts Specialist, though, so I don't make those kinds of decisions in the course of my job-my boss with four degrees does.
 
2013-07-07 03:49:47 PM

FourPetesake: The restaurant I work in automatically taxes servers on a percentage of their sales (percentage varies based on location).  A server who consistently gets 25%+  tips gets taxed on much less, and a server who makes a lower percentage may be taxed on  more than they are actually making.  So if someone handed me $500, I'm not obligated to report anything, I get taxed on what the customer spends.



I don't think you understand how the tax system works. What your employer withholds is irrelevant to your tax liability and what income is to be reported. It is simply an advance payment. You are required by law to report any tips. If the tax is less than was withheld, you get a refund, if it is more you pay the difference. Now, you may make the decision to break the law on the assumption that you will not get caught, but you are still legally obligated to report it.
 
2013-07-07 03:52:31 PM

Djorra: I kinda feel that if the restaurant splits it up among the waitstaff and busboys, it's a tip, but if it goes directly to the one waiter/waitress, it's a gift. I'm just an Accounts Specialist, though, so I don't make those kinds of decisions in the course of my job-my boss with four degrees does.


it's PF Chang's, so it goes to teh statue guy

t0.gstatic.com
 
2013-07-07 03:52:41 PM

TopoGigo: Yes please: Everyone should always tip at least 2200% unless the service was particularly wretched.  Only cheapskates tip 15% any more.

You joke, but the reason the "standard" tip has gone from 15 to 20% is that real wages have declined while subsidized food has stayed flat. The buying power of that average tip hasn't increased.


Nah, the real reason is that it hasn't.
 
2013-07-07 03:58:49 PM
jake_lex:
I love when people act like paying some tax on income invalidates it. If I'm a server, and someone leaves me a $500 tip, even if I "only" get to keep $350 or so of it after taxes, hell, that's $350 more than I had before.

I have a boss who won't sell one of his companies because he keeps biatching about capital gains on the transaction.

He goes, "if I sell it, I'd get a million, but instead I will only get 700,000 because of taxes, hence I don't want to sell".  What the fark?! Your other companies are going under because you don't have capital, and yet you're irrationally biatching about taxes?  Idiot.
 
2013-07-07 04:05:07 PM

SirEattonHogg: jake_lex: I love when people act like paying some tax on income invalidates it. If I'm a server, and someone leaves me a $500 tip, even if I "only" get to keep $350 or so of it after taxes, hell, that's $350 more than I had before.

I have a boss who won't sell one of his companies because he keeps biatching about capital gains on the transaction.

He goes, "if I sell it, I'd get a million, but instead I will only get 700,000 because of taxes, hence I don't want to sell".  What the fark?! Your other companies are going under because you don't have capital, and yet you're irrationally biatching about taxes?  Idiot.


Those other businesses are losses to offset tax obligations on his profitable businesses.
 
2013-07-07 04:09:02 PM

The_Six_Fingered_Man: cameroncrazy1984: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?

So you didn't read the article, eh?

As a tax professional, if one of my clients came to me and told me that they received a $500 tip because of someone's last wish, I'd consider it a bequest excludible under Section 102, just like the commenter on the article. There is no way that such an amount can be considered ordinary tips in the course of business, so it is clearly a gift, which has supporting documentation from the man's last wishes as spelled out in his will. The IRS would have a tough time proving that this was income in the taxable sense. It really is no different than a regular joe getting a cash payment from the disposition of a will.


Wouldn't the 60,000$ fund muck with that whole exclusion though?
 
2013-07-07 04:11:28 PM
Yes Please:
Those other businesses are losses to offset tax obligations on his profitable businesses.


That's a good explanation except his businesses are a combination of break even and losers (it's a bad year).  None of them are profitable (or barely profitable).  He needs to sell.
 
2013-07-07 04:13:40 PM

ElLoco: cameroncrazy1984: Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.

The sentimentality clause, btw:
http://www.gpo.gov/fdsys/granule/USCODE-2011-title26/USCODE-2011-tit le 26-subtitleA-chap1-subchapB-partIII-sec102/content-detail.html

cameroncrazy1984: Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?

The free gambling pass:
http://www.irs.gov/instructions/iw2g/ar02.html


Not much sentimental about that.  It does say that gifts and inheritance aren't taxable to the recipient as income.  However, they are still taxable...just not to the recipient (but to the donor or decedent/estate) and under an entirely different area of the tax code.  The gov't always gets you.
 
2013-07-07 04:14:05 PM

SirEattonHogg: jake_lex:
I love when people act like paying some tax on income invalidates it. If I'm a server, and someone leaves me a $500 tip, even if I "only" get to keep $350 or so of it after taxes, hell, that's $350 more than I had before.

I have a boss who won't sell one of his companies because he keeps biatching about capital gains on the transaction.

He goes, "if I sell it, I'd get a million, but instead I will only get 700,000 because of taxes, hence I don't want to sell".  What the fark?! Your other companies are going under because you don't have capital, and yet you're irrationally biatching about taxes?  Idiot.


He's a double idiot. Cap gains aren't taxed at 30%
 
2013-07-07 04:26:51 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


I'm siding with the IRS. At least in the state of Ohio, if a waiter/waitress does not make enough tips to make state minimum wage, the establishment must pay them enough to put them at minimum wage, which means they probably dilly around and pocket some of their tips that are cash and get paid minimum wage plus the cash they pocketed.  So, play by the rules, tax their asses.
 
2013-07-07 04:37:01 PM
I don't quite understand the hate for the IRS. I get it, they force you to pay your taxes. They exsist because they collect money on our behalf and for our use. Too many cretins act like the IRS keeps the money for hookers and blackjack.

Just an observation. How strong is the correlation between people that biatch about the IRS and people that biatch about potholes, long lines at the DMV, and vigorously salute our soldiers, police and firefighters?
 
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