Businesses Add 'Obamacare Fee' to Customer Bills
Some businesses -- mainly restaurants -- "are asking customers to help foot the bill for Obamacare" by adding an Affordable Care Act surcharge on their tabs, CNNMoney reports.
Case in point: At least eight Gator's Dockside restaurants in central Florida are now charging a so-called "Obamacare fee" that amounts to 1 percent of a customer's check.
Should your business include an Obamacare fee or surcharge on customer bills?
Surcharge or Raise Prices?
A surcharge is an added liability imposed on something that is already due, such as a tax on tax. A valid surcharge requires full disclosure of the fee that will be charged.
Adding surcharges for employee health care costs isn't a terribly new phenomenon. For example, restaurants in San Francisco have been adding health care surcharges on patrons' bills for years now, following the 2008 passage of the city's Health Care Security Ordinance, a program commonly known as "Healthy San Francisco."
But not every restaurateur went that route. Instead of taking on a surcharge, "we just rejiggered prices across the board in a way that we didn't price ourselves out of the market," one San Francisco business owner explained to the San Francisco Chronicle.
Deciding between a surcharge or menu price hike seems to be a matter of preference.
In San Francisco, businesses in favor of the surcharge say it lets diners know that the extra money is to be used toward employee health care. But others say they "didn't want to bring politics into the dining experience."
Surcharge Fraud?
San Francisco's experience with the "Healthy SF" surcharge reveals a potential issue that "Obamacare fee" chargers should beware: potential surcharge fraud.
Audits of San Francisco restaurants revealed discrepancies in the amount collected in the surcharges versus how much was actually set aside for employee health care, amounting to a form of fraud, the Chronicle reports.
Restaurateurs have said that the inconsistencies were not intentional, but that the rules didn't make it clear whether the surcharge money could be used to cover other costs.
The lesson: If you add a health care surcharge on your tabs, keep track of how much you're receiving in surcharges, how much of that money is being used for health care, and whether you can use surcharge money to shoulder other expenses.
Need More Help?
For more guidance on the legal ins and outs of adding "Obamacare fees" or other surcharges to your customers' bills, consider consulting an experienced business attorney. In addition, a tax attorney can answer questions about the taxability of surcharges.
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Related Resources:
- Florida Food Chain Imposes Obamacare Price Hike (Time)
- IRS to Tax 'Automatic Tips' as Regular Wages (FindLaw's Free Enterprise)
- Can You Refuse to Pay a Mandatory Tip? (FindLaw's Law and Daily Life)
- Is a 'Service Charge' a 'Tip'? Ask the IRS (FindLaw's Law and Daily Life)