Journal of Undergraduate Research
Keywords
FICA tax liability, restaurants, aggregate estimate, taxes
College
Marriott School of Management
Department
Finance
Abstract
In the past year, a landmark Supreme Court decision changed the way restaurants calculate social security taxes related to employee tips. In the case of the United States v. Fior D’Italia, Inc. [2002-1 USTC ¶50,459], the Supreme Court ruled against Fior D’ Italia, Inc. by concluding that the IRS properly computed their social security tax liability, even though the IRS utilized a new “aggregate estimate” method. This new aggregate estimate method puts restaurants at risk of paying higher social security taxes. From examining data of restaurants in the Salt Lake area, there is no conclusive evidence that this ruling has affected restaurants negatively.
Recommended Citation
Jackson, Terry and Worsham, Dr. Ron
(2013)
"Will the New “Aggregate Estimate” Method Affect the FICA Tax Liability of Restaurants?,"
Journal of Undergraduate Research: Vol. 2013:
Iss.
1, Article 2443.
Available at:
https://scholarsarchive.byu.edu/jur/vol2013/iss1/2443