Small business and human resources need-to-know.
Excerpt: The IRS issued Rev. Rul. 2012-18, which provides question-and-answer guidance for distinguishing between tips and service charges for FICA tax purposes, the credit under Sec. 45B for the excess employer Social Security tax an employer pays on tips, and the rules for employer reporting of tips under the notice and demand provisions of Sec. 3121(q).
To determine whether a payment is a tip or a service charge, the IRS cites the factors in Rev. Rul. 59-252:
Read full article via IRS distinguishes between tips and service charges, explains notice and demand for payment. From Journal of Accountancy