S. 2780: No Tax on Large Party Tips Act

This bill, known as the **No Tax on Large Party Tips Act**, aims to clarify how certain tips are treated for tax purposes under U.S. tax law. Specifically, it addresses tips that are added to a customer’s bill or suggested by a business when serving large parties.

Key Provisions

The bill stipulates the following:

• Automatic Tips: Any tip that is automatically added to a customer's bill when they make a payment will be classified as a tip that is paid voluntarily.
• Suggested Tips: Any tip that is suggested by a business (for instance, through signage or prompts on a bill) will also be seen as voluntary.

This change in classification is important because it affects eligibility for tax deductions related to tips, making it more favorable for businesses that rely on these automatic or suggested tips, especially in service industries like restaurants and catering.

Implications

The implications of this bill could lead to adjustments in how businesses report tips for tax purposes, potentially resulting in tax savings for those in the hospitality and service sectors that often deal with large parties or events.

Relevant Companies

• DLR - Digital Realty Trust: As a company that accommodates large-scale events and gatherings, they could see an impact from this law in how tips are handled at venues.
• CMI - Cummins Inc.: While not directly in the hospitality sector, any large events involving their services might indirectly benefit from the bill’s provisions on tips.
• BKNG - Booking Holdings: This company, which operates travel and booking services, may experience indirect benefits as their users may engage with more services that implement automatic or suggested tipping.