§ 26-672. Gratuities and service charges.

(a)

Where the purchaser of a meal provides a gratuity for an employee of a seller and the amount of the gratuity is wholly in the discretion of the purchaser, the gratuity is not subject to the tax imposed by this article, whether paid in cash to the employee or added to the bill and charged to the purchaser's account, provided in the latter case the full amount of the gratuity is turned over to the employee by the seller.

(b)

An amount or percent, whether designated as a gratuity, tip or service charge, that is added to the price of the food and beverages by the seller and required to be paid by the purchaser, as a part of the selling price of the food and beverages, is subject to the tax imposed by this article.

(Code 1993, § 27-180; Code 2004, § 98-365)

State Law reference— Similar provisions, Code of Virginia, § 58.1-3840.

(Code 1993, § 27-180; Code 2004, § 98-365)

State law reference

Similar provisions, Code of Virginia, § 58.1-3840.