Tips play a big role in compensating many of Las Vegas’ hospitality workers – from cocktail servers to bellhops to valet parkers – and how tips are taxed is at the center of an ongoing outcry from the Culinary Union.

In 2020, the IRS – the federal agency charged with collecting taxes – lowered what’s called the tip allocation rate to compensate for the lack of open hospitality business during the thick of the pandemic. The rate defines what workers would be reasonably expected to make from tips – and the IRS then taxes them accordingly.

Nearly two years later, the IRS has increased tip allocation rates by anywhere from 50 percent to 60 percent higher than pre-pandemic, which in turn increased taxes on income for hospitality workers, leading to hefty cuts in take-home pay and even some paychecks with a balance of zero, union workers say.