Taxes and gratuity?

Is it legal in California to tax gratuity? For example, principal owed is $1,025.00. Gratuity is mandatory 18% = $1,209.50. Tax is 7.75%, so grand total is $1,303.24. Company is taxing gratuity, which doesn't seem right to me. Any help is much appreciated.

No gratuity shouldn't be taxed, it is the waitress that has to pay taxes out of her gratuity, not you paying it for them but I am not sure if there is an actual law about it. Can an accountant... In cal tax is .0825

it isn't right. your gratuity should be on the amount before taxes. that is how it is. i was born and raised in cali... and my husband's an accountant so i am sure for two reasons! seems the company is being greedy...

Other posters are questioning computation of the gratuity, not taxability. I don't think the gratuity should be calculated on the amount including sales tax but that is not my call or yours. If the customer wants to complain about the amount being charged, he or she should take it up with management. It is computed however it is computed and whatever it is is compensation to the server and subject to withholding and employment taxes at normal rates.

The gratuity can be subject to sales tax. It depends on how the law is written.

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