Ryan Williams
Jeremy Julian

2014 IRS Forced Gratuity Reporting Requires POSitouch Changes

December 4, 2013

Many of you may be aware that in 2012, the IRS changed the distinction for forced gratuities on the guest receipts. These forced gratuities are now considered service charges and are entitled to be taxed and reported on.

Please see the delineation on what is considered a tip on the National Restaurant Association Website.  http://www.restaurant.org/News-Research/News/IRS-grants-more-time-for-some-businesses-to-comply.  With all of this being changed, the IRS gave some extra time for restaurants to comply if they didn’t have systems in place to report on these forced gratuities.  Here are a number of articles that will provide more information:

http://www.irs.gov/irb/2012-26_IRB/ar07.html

http://www.npr.org/blogs/thetwo-way/2013/09/05/219290573/irs-to-count-automatic-gratuities-as-wages-not-tips

http://www.usatoday.com/story/news/nation/2013/10/12/irs-tip-ruling-could-prove-taxing-to-servers-restaurants/2972869/

Within the POSitouch system, there is now newer software that can report the tax on the forced gratuities.  This information shows on the Sales Journal report on the tax page.  Additionally it shows up for individuals on the TRAC report which is an option within the Sales Journal report through reports and batches.

2014IRSgratuity1

The reports will look like the pictures below.

Reporting tax on Gratuities that are applied to Guest Checks
Software version 5.37 & higher
Psneww.exe dated 11/4/13 or newer – (this file is backward compatible to earlier versions of software, but gratuity reporting for checkfiles earlier than 5.37/6.37 is estimated)

2014IRSgratuity2

The Trac report shows information by employee:

2014IRSgratuity3

Many restaurants have also turned on a newer feature of suggested gratuities on large parties rather than forcing the gratuity.  That setup is found in the same place as your gratuity setup in setup-payment-gratuity/service chg.  You can flag the setting for suggested gratuities and it will display as a suggested gratuity on the credit card receipt and can even display on the guest check if desired.

2014IRSgratuity4

 

 

 

 

 

 

 

 

 

CBS does not claim to understand the tax laws in your local regions.  POSitouch is used as a tool for the customer to ring up sales and collect taxes.  If you are unclear about the procedures to change taxes, please call our support center.  If you are unclear about the tax law changes, please call your local tax board for clarifications.  This is the way CBS understands the law change and is subject to change if there are changes to the law or different interpretations from the Internal Revenue Service

These changes go into effect January 1, 2014.

 

 

 

 

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