In essence, Revenue Ruling 2012-18, is designed to provide guidelines to employers and employees for imposing taxes on tips under the Federal Insurance Contributions Act (FICA). However, in application, this translates to a loss of income for service industry employees. The majority of restaurants are eradicating gratuity on large parties due to it being considered a service charge under this Ruling. Servers, in most restaurants, earn an hourly wage well below the minimum, are taxed on claimed tips, which often results in no pay check due to taxation, and are required to pay a percentage of their sales to supporting employees. Without ensured gratuity, this results in loss of income. In conclusion, servers depend on gratuity for fair wages. Abolish Revenue Ruling 2012-18.
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