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Payment of Charged Tips and Wages by the Las Vegas Hilton
Petitioner received a paycheck biweekly from the Las Vegas
Hilton. Petitioner’s paycheck would reflect his hourly wage plus
his gratuity from the hospitality function.
In contrast, at the end of each work day, petitioner would
receive, in cash from the hotel’s cashier, his tips from the room
service function that had been charged by guests to their credit
cards.
Tip Compliance Agreement
For a number of years, specifically including the taxable
year 2002, a tip compliance agreement has been in effect between
the Las Vegas Hilton and the Internal Revenue Service.
Tip compliance for room service food servers at the Las
Vegas Hilton is a percentage of sales by the employee. For 2002,
the agreed-upon rate was 15.4 percent, to be applied against an
employee’s sales on a daily basis.
The payroll manager of the Las Vegas Hilton implements the
tip compliance agreement as follows:
Our room service food servers work a combination of
hospitality functions and standard room service
functions on a daily basis. With a hospitality
function a gratuity is included on the guest’s bill and
is paid out to the food server on his biweekly
paycheck. For the standard room service function,
gross sales are accumulated by [an] employee throughout
the day. The 15.4% of sales is calculated and posted
to the employee’s paycheck at the end of each pay
period. Those employees on tip compliance have a
combination of percentage of sales and hospitality
gratuity posted to their paychecks each pay period.
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Last modified: May 25, 2011