Always tip in cash. Make sure the waitress shares with the bartender and busboy, but not with the IRS.
That does not work anymore. If the IRS determines the average tips based on the sales reported by the restaurant, then it will investigate wait staff for not reporting their cash tips.
For example, if the restaurant had sales revenue of $1 million for the year, the IRS determines that the employees should have reported about $150,000 in tips (15%). If the employees who worked during the year there did not report a total near this amount, then the IRS will look at each employee's tax returns to see who reported properly and who did not.
When I operated my own business it was expected that I report and pay taxes on my income. I don’t really understand why this mindset is not applied to folks working for tips.
People should not pay a penny more than the law states; but a poor waitress has the same obligation as a small business owner.
Since we no longer go out to eat, I only have to tip my Beautician, And do it in Cash. She is well worth the $40 a month to was and dry my waist lenghth haie, the Small Rotator tear is spared pain.