Legal Question in Tax Law in Illinois

Gratuity taxed?

Is it legal to tax gratuity that is figured in on the sale/service of a banquet event (i.e. wedding reception, class reunion).

Asked on 10/21/03, 5:29 pm

1 Answer from Attorneys

John Pembroke John J. Pembroke & Associates LLC

Re: Gratuity taxed?

I'm not sure which tax you are asking about. The sales tax on the banquet should be limited to a tax on the restaurant's charges for food and beverage, not service, whether the gratuity is added into the total or handled separately for cash.

If you are asking about payroll taxes on gratuities for private parties, as opposed to regular restaurant meals, there is a FICA and other payroll taxes on gratuities, regardless of what the underlying event is.

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Answered on 10/21/03, 6:27 pm

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