Core Product: Aloha Quick Service, Aloha Table Service
Complimentary Products: No
Separate License Required? No
Other References: Aloha Quick Service Reference Guide, Aloha Quick Service Report Guide, Aloha Table Service Reference Guide, Aloha Table Service Report Guide
About Tip Declaration
In the hospitality industry, tip declaration is the act of an employee declaring the tips they receive as income, including employees who receive indirect tips (tip share) from another employee. Depending on the region or country in which you reside, tips or gratuities are considered taxable income. In some countries, gratuity is included in the price of the item while other countries either discourage tipping or consider gratuity a service charge.
Note: Consult the laws in your region or country to ensure you set your system up for compliance.
The Internal Revenue Service (IRS) mandates that employees declare no less than 8% of their total tips and this percentage has become a benchmark in the industry; however, the percentage does not exempt employees from audits and resulting tax evasion fines. This minimum percent threshold allows restaurants to pay their tipped employees lower than minimum wage with the purpose that the income from tips supplements, and many times exceeds, what the employee would normally earn. Unfortunately, some employees do not accurately declare their tips, since the more tips they declare, the lower the net pay of their paycheck. In the United States, the IRS requires restaurant owners to ensure employees declare a minimum amount of tips or face being audited and possibly fined for non-compliance.
As a result, some restaurants use various innovative strategies to ensure employees declare tips within a safe range. The Aloha® Point-of-Sale (POS) system supports a wide range of threshold types in support of these strategies, such as a straight percentage of total sales, a fixed amount, a specific amount per time worked, and more. With configurable tip declaration thresholds, you can prohibit employees from declaring too little and include a message to guide the employee during the process. Since tip declaration is part of the clock-out process, you can configure the system to accept the declaration as is, or in the case where the declaration is outside the threshold, allow re-entry until the amount is either within the threshold or require manager approval to continue.
Configuring Tip Declaration
The following sections detail the configuration requirements within NCR Aloha Configuration Center (CFC) or Aloha Manager for Tip Declaration:
- Allowing employees to declare less than their charged tips
- Creating a custom tip declaration threshold message
- Choosing the tip declaration threshold type
- Refreshing the data
Reporting Tip Declaration
You can use the Front-of-House (FOH) and Back-of-House (BOH) reports found within the Aloha POS system to help you manage the tip declaration from your employees. The FOH reports include data for the current day only. The BOH reports include data for the current day or any dated subdirectory. You can use the following reports:
- Viewing the FOH Clock In/Out report
- Viewing the BOH Labor Report
- Viewing the BOH Audit Report
- Viewing the BOH Employee Tip Report
- Viewing the Tip Income Report
Reference: Refer to the Aloha Table Service or Quick Service Report Guides for complete information on using the reports in the Aloha system.