Make Tips In Montana? Get Ready To Be Taxed

A new senate bill has many service workers feeling a bit on edge. Do I personally agree with it? Not really. But I don't get to make the rules, I think I am just supposed to follow them. Seems fair enough.

Senate Bill 399 was passed in 2021 but it didn't take effect until January 1st of this year. In a nut shell, because no one wants me to try and explain government, the bill basically states that employees who receive tips have to claim them. Meaning if you are a server, the government wants to know how many tips you make so they can tax it.

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This wouldn't be that big of a deal if the wages were higher for service industry workers, but it's typically not. Those workers are usually making less than $10 dollars per hour. So, these servers take the risk of getting paid less in hopes of people still tipping so they can survive.

The other question many workers are struggling with is the fact that they "tip-out" non tipped employees who are making above minimum wage. For example table bussers, bar backs, taxi/shuttle drivers, bellman, etc. Are they all going to be required to claim their tips at the end of the year?

Tips are not guaranteed. If you are on any sort of government assistance programs, and you make $5 too much one month, you could be struggling for the entire month. That $5 may take away $100 in food assistance, put you over for qualified health insurance for the next year, or even worse, put you on the streets. This non-guaranteed income could essentially put many families in a state of poverty.

How about all the fast food restaurants that have tip jars? Do you think the sandwich makers, who are making $18-$22 per hour are going to claim the tips they receive? Highly doubtful.

So how can this law make it fair so the people who have 'chanced it' and taken an extremely low minimum wage be sure that the other employees, who are not considered 'tipped employees' are going to also claim their tips? Pretty soon there will be hiring signs for table bussers, drivers, and everyone else who has been getting tipped from the actual 'tipped employees'.

It's an honor system that will most likely be not honored, with the exception of tips received on credit cards.

I say, good luck to Senate Bill 399.