Section R15-5-1708. Gratuities (Tips)

A.      A restaurant’s gross receipts from gratuities that are separately stated on the check or bill are not included in the restaurant’s tax base if:

1.        The exact amount charged on a check for gratuities is segregated on the seller’s records for the account of the employees actually providing the services; and

2.        The amounts so segregated are distributed directly to the employees providing the services for which the charges were made.

B.       If a restaurant cannot specifically segregate the charges for gratuities or if any portion of the amounts charged for gratu- ities is not distributed to the employees involved, the total gross receipts from the gratuities are included in the tax base under the restaurant classification.

Historical Note

Amended effective December 16, 1997 (Supp. 97-4).