Don’t forget that most of the crowd at that high end of a restaurant could probably easily afford to be walking around with a couple grand in cash.

Don’t forget, they are also used to tipping door men, bellhops, and others who don’t take credit cards.

I’m curious whether this is that much of a factor at a high-end place like one of Danny Meyer’s restaurants, where the majority of tips would be paid by credit card, and therefore tracked and reported accurately through the restaurant’s point of sale system. Do that many people tip in cash on expensive meals?

Yep, there’s the real issue. No payroll taxes or income tax withholding on tip income. And without an employer controlled tip pool, they can lie to the IRS about their tip income with very low risk of getting caught.

Stub article does not mention how the income change was assessed. Was the drop in income reflected on their 1040 forms? Would their real taxable income possibly have increased while at the same time their ‘take home pay’ decreased?