Bill would limit restaurant liability if workers don\'t report tips

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JEFFERSON CITY - The Missouri House passed a bill Thursday that would make it so mandatory gratuities imposed at restaurants are not subject to state and local sales tax. 

It would also liability on restaurants if employees fail to report tips as wages for tax purposes.

Rep. Galen Higdon (R-St. Joseph) said he became interested in the subject after a restaurant manager called explaining his moment of crisis.

"A friend called me and told me he had to pay $7,200 to the Department of Revenue because one of his employees did not report the sales tax on tips," Higdon said.

If this bill is passed restaurant owners would not be responsible to pay in this situation, the servers would. 

Xavier Jackson, a manager at Smokehouse Barbecue, said although they got rid of automatic gratuity last year, he likes the idea of that part of the bill.

"It does relieve a little bit of pressure on my side of things," Jackson said. "This is now shifting the responsibility to the server or the waitstaff person to handle things... In a way it's helping us make sure we're not paying taxes on someone else's wages."

KOMU 8 reached out to the Department of Revenue; however, a spokesperson said the department does not comment on pending legislation. 

The bill was read a third time in the House and perfected Thursday. It will now move to the Senate.

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