Ariz. Admin. Code § R15-5-1708 - Gratuities (Tips)

A. A restaurant's gross receipts from gratuities that are separately stated on the check or bill are not included in the restaurant's tax base if:

1. The exact amount charged on a check or bill for gratuities and any amounts attributable to credit card fees for gratuities, are segregated on the seller's records for the account of the employees actually providing the services; and

2. The amounts so segregated less any amounts attributable to credit card fees for gratuities, are distributed directly to the employees providing the services for which the charges were made;

B. If a restaurant cannot specifically segregate the charges for gratuities and amounts, if any, attributable to credit card fees or if any portion of the amounts charged for gratuities less amounts attributable to credit card fees, is not distributed to the employees, the total gross receipts from the gratuities including any amounts attributable to credit card fees, are included in the tax base under the restaurant classification.

Notes

Ariz. Admin. Code § R15-5-1708

Amended effective December 16, 1997 (Supp. 97-4). Amended by final rulemaking at 26 A.A.R. 2894, effective 11/6/2020.