A state law signed Monday represents a victory for small business, particularly restaurateurs, and for fairness.
The new law signed by Gov. Jay Nixon specifies business owners are not responsible to pay taxes owed by tipped employees who fail to report cash tips as income.
Business groups — including the Missouri Chamber of Commerce and Industry and the Missouri Restaurant Association — sought the new law in response to a Missouri Department of Revenue requirement that business owners make up for the lost revenue when workers failed to report total income from tips.
According to the state chamber, the revenue department “was calculating the tip percentage on credit card receipts and comparing that to the cash tips employees were reporting as income. When the percentages showed a discrepancy, the department went after restaurants to make up the difference.”
Daniel P. Mehan, the chamber’s president and CEO, characterized the revenue agency’s actions as “nonsensical and as hostile to small business.” He added: “Missouri business leaders understand the importance of paying taxes and contributing to state revenue, but it’s way over the line to expect businesses to pay their employees’ personal tax bills.”
Greg Hunsucker, chairman of the restaurant association’s government relations and public policy committee and president of V’s Italiano Ristorante, was more charitable toward the state agency. He praised Revenue Director Nia Ray and her staff, “who worked with us toward an equitable resolution.”
And he characterized the new law as “sound and balanced public policy.”
The bill was sponsored by Sen. Will Kraus, R-Lee’s Summit, and state Reps. Galen Higdon, R-St. Joseph, and Ron Hicks, R-St. Charles County.
Owning and operating a small business, particularly a restaurant, can be an uphill battle.
Requiring owners to pay a calculated amount of taxation not reported by tipped employees is an onerous and unfair burden.
We’re pleased business interests and state officials were able to work together toward a reasonable solution.