Remember, service charges do not receive the same tax treatment as
tips. Service charges are non-tip wages, and employers must treat them as such
for tax withholding and filing requirements. Tips are payments made to
employees by customers at the customer's discretion. Service charges are extra
fees a customer must pay to a business. Examples of service charges are fees
imposed by restaurants for parties of six or more, cruise ship package fees,
and hotel room service charges.
