Sales Tax on Catering hall bill question

jeanrtco

Hi, Quick question-

The catering hall is giving is giving a total for the food and then adding 22% gratuities and then taxing that total = I didn't think that gratuities could be taxed?

for example 200 guest x 125 = 25000 22% grat is 5500 and then taxing 7% on total of 30500, tax of 2135 for total of 32635

BUT if you are not allowed to tax on the gratuity, only the meals tax is $1750 and total
would be 32250 a difference of $385.  If more guest or more money/meal, then the tax savings would be even greater.

Does anyone know the rule, is it legal to tax on the gratuities, in regular restaurants, they tax the meal and then you add the gratuity?? This question pertains to New Jersey law..
thanks for the help.
jean

tinabarrina

What you are describing is what every venue I looked at said.

bereasonable2

Just Googled it - if the venue/restaurant automatically adds the gratuity it's considered a "service fee" or "service charge" which is taxable.

jeanrtco

thanks for the answers

mariasemail86

If you pay cash a lot of places will waive the tax.

bereasonable2

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_new-jersey_sales-tax-catering-hall-bill-question?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:90Discussion:a1db0093-921a-4f83-89e4-d535742fb4a1Post:f85f9205-77e5-4357-a47c-cf29cdb9cc71">Re: Sales Tax on Catering hall bill question</a>:
[QUOTE]If you pay cash a lot of places will waive the tax.
Posted by mariasemail86[/QUOTE]

I guess the assumption here is that the venue is not going to report the income and thus not pay the tax. Which is obviously illegal.  Any legit place will charge you tax because someone has to pay Uncle Sam.

cindyn9178

Our venue required the gratuity in cash.. and I believe it was not taxed.
I would assume that while the venue is not reporting that money, the people receiving the gratuity need to report it. I was a waitress for many years, and I had to claim my tips to be taxed on them.. the restaurant didn't claim my tips.

xxstardust

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_new-jersey_sales-tax-catering-hall-bill-question?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:90Discussion:a1db0093-921a-4f83-89e4-d535742fb4a1Post:811694c3-782b-4fdd-83be-42e61ee56cdf">Re: Sales Tax on Catering hall bill question</a>:
[QUOTE]Our venue required the gratuity in cash.. and I believe it was not taxed. I would assume that while the venue is not reporting that money, the people receiving the gratuity need to report it. I was a waitress for many years, and I had to claim my tips to be taxed on them.. the restaurant didn't claim my tips.
Posted by cindyn9178[/QUOTE]

While you claimed your tips, how many people actually do? Most of the people I work with don't claim their tips.

Also, there are more than a few catering halls (the one I work for is among them) for whom a "service charge" is not a gratuity but is how the staff gets paid, though they'll often let the client believe it's a gratuity ... which is why it gets taxed. Check with your venue to be sure.

cindyn9178

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_new-jersey_sales-tax-catering-hall-bill-question?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:90Discussion:a1db0093-921a-4f83-89e4-d535742fb4a1Post:237394b8-3cb6-4c57-b46c-4f45b350f9e0">Re: Sales Tax on Catering hall bill question</a>:
[QUOTE]In Response to Re: Sales Tax on Catering hall bill question : While you claimed your tips, how many people actually do? Most of the people I work with don't claim their tips. Also, there are more than a few catering halls (the one I work for is among them) for whom a "service charge" is not a gratuity but is how the staff gets paid, though they'll often let the client believe it's a gratuity ... which is why it gets taxed. Check with your venue to be sure.
Posted by xxstardust[/QUOTE]
Well as a waitress, I was required to pay taxes on 10% of my sales... so even if I didn't claim it that night, I was taxed on 10 % of whatever sales I made that year (which is reported)..
My venue referred to it as a "Gratuity" not a service charge, so therefore, it is not taxed.

sfennell1

I'm not really sure what other venues are doing but my wedding was at the Richfield and they charge 20% Service charge which is taxed and is considered the waitstaff's tip & then a 5% Gratuity which is payment to the Maitre D which is paid in cash and not taxed. 

cindyn9178

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_new-jersey_sales-tax-catering-hall-bill-question?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:90Discussion:a1db0093-921a-4f83-89e4-d535742fb4a1Post:9e9fc8a8-e6c5-431a-89c2-8d05ff6917b6">Re: Sales Tax on Catering hall bill question</a>:
[QUOTE]I'm not really sure what other venues are doing but my wedding was at the Richfield and they charge 20% Service charge which is taxed and is considered the waitstaff's tip & then a 5% Gratuity which is payment to the Maitre D which is paid in cash and not taxed. 
Posted by sfennell1[/QUOTE]
that's really weird, because that is not what we had.
We had a 20% gratuity paid in cash, which covers all waitstaff and the maitre d.. no service charge that was taxed. I wonder why it was different for you.

The breakdown of the contract was:
$xx per person x 125 people + tax = paid with certified check
20% gratuity based on total before tax - paid in cash