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The Restaurant Industry is Nobodys Parent

Editor’s Letter

The Restaurant Industry
is Nobody’s Parent

When you got into this business, did you ever think that parenting skills would be a large and necessary part of the job? Certainly, those skills do come in handy, but when you’re put in the position of having to treat your employees and customers like children, something is terribly wrong.

Apparently, the Supreme Court doesn’t think so, and neither does the Center for Science in the Public Interest. Both weighed in recently, putting the industry on the defensive.

Just weeks ago, the U.S. Supreme Court, in a 6-to-3 decision, ruled that the I.R.S. could send you a tax bill if it believes your employees have underreported their tips. Though employees are responsible for paying taxes on their tips, a majority of the High Court was willing to blame you if your employees are deemed naughty. Children, have you picked up your clothes? Have you paid all your taxes?

Peter Kilgore, general counsel and senior v.p. of operations for the NRA, says the Supreme Court’s decision basically condones the I.R.S.’s unfair and unjust tactics to pit restaurateurs against their own employees. You, in essence, will be turned into "tip police" by the government, he says.

Kilgore says the NRA will surely take its case to Capitol Hill. The ruling is not only a nuisance, it could put thousands out of business. Slim profit margins can’t bear the weight of unfair tax bills.

This entire issue arose from a suit the I.R.S. filed against San Francisco-based restaurant Fior d’Italia. The government claims that its employees did not pay nearly enough of the tip taxes they owed in 1991 and 1992. The restaurant owner, who got a bill for "unpaid taxes," fought the I.R.S. and won in both the Federal District Court and Federal Appeals Court, saying the I.R.S. doesn’t have the right to make an employer responsible for taxes employees don’t pay.

By the way, the I.R.S. never detailed which employees failed to pay their full tax bill and by how much.

"This is sad news for the restaurant industry, said Bob Larive, owner of Fior d’ Italia. "Hopefully, this won’t open up a Pandora’s Box of audits, whereby the I.R.S. can come in and decide what they think the proper number is for tips, and therefore assess FICA taxes on some random number they have invented."

Mr. Larive, this is sad. And so is the latest attack on the restaurant industry by the Center for Science in the Public Interest. It says the industry’s large portions and "value marketing" have contributed to the rise of obesity in America.

"Americans are constantly induced to spend a little more money to get a lot more food," says CSPI’s Margo Wootan. "Getting more for you money is ingrained in the American psyche. But bigger is rarely better when it comes to food."

That may be the case, but I’ve never seen anyone in this industry force food upon people. People have a choice. They can eat as much or as little as they want. They make that decision, not restaurants. As important as you and the restaurant industry are in this country, you’re not the public’s parent.


EDITOR-IN-CHIEF [email protected]

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