Local kitchen and bartender unionists rallied Thursday outside the Foley Federal Building in downtown Las Vegas to urge the IRS to lower a tax method for tipped workers that they say was unfairly increasing without consulting organized labor had been.
The IRS lowered the gratuity allocation rate — which estimates how much a tipped employee typically makes in a shift and therefore at what rate they should be taxed — in 2020 and 2021 because of the pandemic. But rates were raised again in early 2022, in some cases above pre-pandemic levels, unions said.
“These are good jobs,” said Ted Pappageorge, secretary and treasurer of Culinary Local 226. “These people make a decent living, but these are average working-class jobs that the IRS is looking for them instead of the big corporations and billionaires out there.” outside.”
The IRS had not responded to a request for comment as of the time of publication.
Gratuity allocation rates vary by hotel, location and venue within a resort. The IRS recommends employers determine the tips to be assigned based on factors such as reported tip income, a percentage of gross earnings, or other factors. The increases, unionists say, could result in a sharp cut in net wages and even a zero paycheck for some.
Julie Wolfe, a cocktail server at Boulder Station, said her new allotment rate is $24 an hour.
“If I make $130 a day, you know what? I’m still taxed at $196,” said Wolfe, who has worked at Boulder Highway Casino for 21 years. “They don’t come here to visit like they used to, so it’s a big slump. (The IRS is) not listening. We don’t get our voice out there. We’re here to tell the IRS, ‘You need to sit down with us.'”
Several servers at Ruth’s Chris Steak House in Harrah’s were at the downtown Las Vegas rally because their tipping rate had increased from about $32 to $119 an hour, they said. It’s an overestimate of what they typically make on a shift and doesn’t take into account working off-peak hours of the day, the elimination of automatic tips for large groups, collecting tips with other restaurant employees, and the increasingly common practice of tipping from customers.
“We definitely don’t make that much money. It’s kind of our best day,” said Jennifer O’Donnell.
Rally-goers said it was particularly painful because inflation, high gas prices and housing costs had weighed even thinner on paychecks. Meanwhile, casino resorts are boasting a quick comeback with record gaming wins.
“Then they brag about it every month. ‘Oh, we made over a million dollars,'” said Darcel DeSchambeau, a server at Ruth’s Chris. “Well, we get zero.”
Unions are seeking a bargaining meeting or other opportunity to meet with the IRS and industry leaders, Pappageorge said. Nevada Sens. Catherine Cortez Masto and Jacky Rosen, both Democrats, sent a letter to the IRS on March 2 to request a meeting with the Culinary Union and seek clarity on how the rate changes were determined and announced. The senators asked for an answer by April 1st. A spokesman for Cortez Masto’s office confirmed they have not yet received a response.
“What we want to do with it is throw out these new rates and go back to some sort of lowering,” Pappageorge said. “We know there may be less to cut, but we’re still in this pandemic and economically, Vegas, we’re still struggling. So we need some kind of relief.”
McKenna Ross is a Corps member with Report for America, a national service program that places journalists in local newsrooms. Contact them at email@example.com. follow @mckenna_ross_ on twitter.