Question, please help us!!

DeniseMang Posted: Oct 15, 2002 12:40 PM

Question, please help us!!

Does anyone know if halls are allowed to tax the gratuity? My sister is looking to book a hall for her wedding and the manager told her that they take the base price, add on the gratuity and THEN tax that amount. I don't think they are allowed to tax gratuity. I have never heard of that. When I got married at JA's, they didn't do that. It was the base price ($68) plus tax ($5.78) = $73.78. Then go back to base price ($68) and figure out 18% gratuity which is ($12.24) and add that to the $73.78 which equals $86.02. Does anyone know?? Thanks,

Denise

curly2003 Posted: Oct 15, 2002 12:46 PM

Re: Question, please help us!!

My Hall does it the way you explained it. WHY would they charge tax on a tip?????

susans Posted: Oct 15, 2002 12:50 PM

Re: Question, please help us!!

At my place it's called a 'mandatory 20% service charge' not a gratuity.
(a gratuity would imply that it's OPTIONAL and also not taxable)
Since it's a 'service charge' as opposed to a gratuity, it's taxable.

karen32 Posted: Oct 15, 2002 12:52 PM

Re: Question, please help us!!

It's illegal for the halls to tax the tip (I'm a CPA). I was told they do this so that tips are properly allocated to the waitstaff, dishwasher, bathroom attendant, etc.

All of the halls tax the tips and unfortunately there is nothing you can do about it. The catering business is a cash business (the tax on tips has to go somewhere - and probably not on their tax returns).

It's an extremely common (yet technically illegal) practice. It's frustrating because it adds lots of $$ to the bottom line of an already expensive event.

Good Luck!!!

Edited to reply to Susan - in NYS personal services are not taxable. They can call it whatever they want (gratuity, tip, service charge) - it's still not technically taxable.

DeniseMang Posted: Oct 15, 2002 12:58 PM

Re: Question, please help us!!

Ok, ladies. Thanks. I understand now. She will have to find out how they 'phrase' it, I guess. Not a big deal but x so many people, it can add up. Thanks as always! :-))

OctBride03 Posted: Oct 15, 2002 12:58 PM

Re: Question, please help us!!

I'm not sure how my hall does it... I dont think they tax the tip... let me see... they gave me a base price, then told me to add 8.5% tax (or whatever it is) and 20% gratuity. I do not think they added the gratuity and then the tax... I do not think that should be the case! I'd tell your sister to look into this more!

Sassy Posted: Oct 15, 2002 01:00 PM

Re: Question, please help us!!

I think mine added the tax first, then gratuity. When I get home, I'm looking at my contract !!

karen32 Posted: Oct 15, 2002 01:07 PM

Re: Question, please help us!!

Just to further clarify - if your hall calculated tax first and then tip - your tip # is now artifically high since you're paying 20% tip on the food, plus the tax.

Unless the contract specifically says to calculate tax on the base and then go back to the base and calculate gratuity, you're still paying more you really should.

It's all very sneaky - definitely read the fine-print in your contract.

MichelleW Posted: Oct 15, 2002 01:26 PM

Re: Question, please help us!!

Denise,

Maybe you can directly ask the brides who have already booked there.. Just a thought

jenny11.9 Posted: Oct 15, 2002 04:45 PM

Re: Question, please help us!!

I never learned percents.
I am going to the hall tonite to give $. Say the per head is $5. then there is tax and gratuity. So you are saying that you add the tax to the $5 and then add the gratuity? untaxed? is that right?

nylisa Posted: Oct 15, 2002 04:52 PM

Re: Question, please help us!!

Here is the way that the hall calculates everything (at least this is the way mine does):
$X (the amount per person) times the amount of people you have plus the service charge (it might be 18% but someplace it is 20%) plus the tax (everyplace it is 8.25%) = the amount owed to the hall.

DeniseMang Posted: Oct 15, 2002 05:05 PM

Jenny11.9

Yes. You add the tax only to the $5. Then you go back and figure out what the grat. would be on $5 and you add that (but with no tax), that is the legal way!

nylisa Posted: Oct 15, 2002 05:07 PM

Re: Question, please help us!!

That might be the legal way but that is not the way that the halls do it.

Betty Posted: Oct 15, 2002 06:25 PM

Re: Question, please help us!!

Denise- when you said JA's did you mean John Anthony's? I never even thought about this, but I'll be married in August @ John ANthohnys and I'll be happy if they do it the right way.

Sassy Posted: Oct 15, 2002 06:31 PM

Re: Question, please help us!!

I got home, and looking at my contract, I'm still not sure. There is a spot that says Price per gues XX+tax. Then somehwere else, where it list things included (bartenders, waiters, liquor service, linen, etc. . . ) that column is headed by the title 'Services' and it says 18%.
But it doesnt say what's added first. So I don't know. Either way, you're right, they still get their money.

Marcela1654 Posted: Oct 15, 2002 06:40 PM

Re: Question, please help us!!

My hall taxes me on the per person price NOT the per person price plus service charge.

jennbaby Posted: Oct 15, 2002 07:13 PM

Re: Question, please help us!!

what karen said is 100% right

spel Posted: Oct 15, 2002 08:24 PM

Re: Question, please help us!!

north ritz is taxing the 'service charge'. they said that in the past they have not but got in trouble with the IRS about it (yeah, ok). so we're paying more now.

DeniseMang Posted: Oct 16, 2002 09:55 AM

Betty and Karen

Betty: Yes, when I say JA's I mean John Anthonys. They did it the legal and in my opinion, fair way. When you go to a restaurant, do you tax the gratuity??? No..... Well, besides that you are going to love JA's. Food was great and service was immpecable! The only thing we were not happy with was they starting clearing up the tables and setting up for the next wedding before mine was done and I had a few guests leave thinking it was over.

I spoke to Angelo about this and I am pretty sure he raised hell over there so hopefully it won't happen to another bride.

Karen: No that didn't happen to me. When they charged the 18 grat., they went back only to the base price, not the base price and tax amount. So we only paid 18% on the price per head, then the tax only on the price per head. JA's in my opinion, did things the right, legal way!