What to do if a private business owner/employer is taking a cut out of the employee’s tips and claiming that it is not tax related?

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What to do if a private business owner/employer is taking a cut out of the employee’s tips and claiming that it is not tax related?

The tips and wages come in the form of personal checks, is this legal? The owner of the service business takes 20% out of the employee’s tips for “IRS purposes” which he claims have nothing to do with filing taxes. No W2 was ever filled out for any of the employees. The owner claims a form will be filled out at the end of the tax year stating all of the income the employee has made with no taxes having been deducted yet. Then what is that 20% being taken out for? Is this the correct process for private businesses?

Asked on August 22, 2012 under Employment Labor Law, Florida

Answers:

Catherine Blackburn / Blackburn Law Firm

Answered 9 years ago | Contributor

It is difficult to answer this question without knowing the type of business, the way you are paid, and how your employer collected the tips.  However, this does not sound appropriate.  I would suggest that you contact the United Stated Department of Labor, Wage and Hour Division for help.  They can be very effective.


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