Pizza anyone?

[ILLMAS]

Hello, I have a question in regards to pizza delivery charge and tips. One of my client bought a pizza business from someone and kept the delivery personel, but I am not to sure they are addressing the delivery charge and tips properly, here is an example of how they are doing business:

Pizza + Tax $17.00

Delivery Chrg$ 2.00

Total $19.00

Once the pizza is delivery, the driver returns the $17 and keeps $2 + tip, on top of that my client give each driver around $30 for fuel a week, my client does not report delivery charge as revenue, but they do report the fuel charge as an expense. I told them that this didn't seem right, they should be giving the drivers a 1099 at the end of the year with the delivery charge + tip + fuel stipend, is this correct? FYI the drivers are not employees.

Thanks,

[Gail in Virginia]

Does he not pay the delivery drivers anything but the delivery charge and $30 for gas? I am glad I am not a delivery driver. I would have thought they would be employees, and I would have thought they got paid, so I am probably not the best one to answer this question.

Under the circumstances you outline, he pays them the delivery charge and the fuel stipend, so he should give them a 1099 for that, but he doesn't pay the tips and he probably doesn't have a clue what they get in tips. If they were employees, they should be reporting tips to him and he should be including them on the W2, but I don't think he would have an obligation to report tips if they are not employees.

[kcjenkins]

If he does not count the delivery charge as income, he can not deduct paying it to the driver as an expense. But he can deduct the $30 for fuel he pays out to these Independant Contractors who deliver for him.

[Daune/CA]

If he does not count the delivery charge as income, he can not deduct paying it to the driver as an expense. But he can deduct the $30 for fuel he pays out to these Independant Contractors who deliver for him.

It appears that the "delivery charge" is never received by them, but retained by the driver. As a cash based business, the delivery chg would not be income, nor expense--only the $30 fuel paid to driver would be an expense. And if that amount totaled more than $600 per driver, it would require a 1099 to be issued, and they should have the 1099 info on hand even before paying the fuel payment.

[michaelmars]

agree with Daune, I have food deliv clients too but you should be aware that both the irs and Workers Comp are going after these arrangements.

[joanmcq]

I delivered pizzas for awhile, and I was an employee (Round Table Pizza). Wages + tips.