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Serving the students and the University community since 1893
Copyright The Daily Tar Heel 1983
it i 1
Volume 2, Issuefoj
Wednesday, April 13, 1983
Chapel Hill, North Carolina
NewsSportsArts 962-0245
BusinessAdvertising 962-1163
(( D i rTrn
Restai
want own
ers, employees unnappy wi
m
in
ip tax
By MIKE SHARSKY
Staff Writer
Because of a law that went into effect April 1,
working students who receive tips face tighter
scrutiny from their employers and the Internal
Revenue Service. Local restaurant and bar owners,
managers and employees have said they were
unhappy with the law.
On Sept. 3, 1982, President Reagan signed into
law the Tax Equity and Fiscal Responsibility Act. A
provision of that act known as the tip tax could
bring the government up to $1 billion a year in tax
revenues by tightening reporting, requirements for
tips.
A spokesman for the IRS, who declined to be
identified, said the tip tax was not a new tax, but a
benchmark for reporting, designed to increase com
pliance with existing tax laws. Few tipped employees
report more than a small fraction of their cash tips,
the spokesman said. According to The Associated
Press, the IRS said that "84 percent of taxable tips
are never reported as income."
The tip tax attempts to reduce tax fraud by re
quiring restaurants to report 8 percent of their gross
sales as employee tips. Employees are already re
quired to report all tips over $20 a month to their
employers. If total reported tips are less than 8 per
cent of gross sales, the employer must find a way to
bring reported tips up to his calculation.
IRS officials admit the law is complex. According
to the AP, Jeffrey Prince, senior director of the Na
tional Restaurant Association, said the tip tax is
"bad legislation because the average tip is much less
than 8 percent maybe as low as 3 percent.'
Prince added that waiters and waitresses usually lost
a percentage of their table tips when they tipped
busboys and other restaurant workers.
As a result, an employee may have to pay tax on
tips he never received, if the employer meets his re
quirement by allocating tips to employees who
report less than 8 percent tipped income. The
employee doesn't get the allocation; it's a paper
figure that goes onto the employee's W-2 form at
tax time.
Robert McDonald of the Foodservice and Lodg
ing Institute told the AP that "our greatest concern
is that a year from now, all hell is going to break
loose when these employees find they are going to
have to pay hundreds and perhaps thousands of
dollars in taxes on tips they didn't receive."
Local employees are unhappy with the tip tax
because of the pinch in increased state and Federal
Insurance Contributions Act taxes per paycheck, a
result of reporting more tips. Although many stu
dent workers are exempt from federal taxes because
of low yearly income, the effect of stringent report
ing is less daily income.
A waitress at Tijuana Fats' in Chapel Hill called
the new law "too arbitrary."
Other employees at Tijuana Fats' agree. One em
ployee passed a questionnaire asking for opinions
on the tip tax from Tijuana Fats' workers. The con
sensus response was that students working through
college should be exempt from the new require
ment. Will Stauber, manager of Tijuana Fats', said that
because the restaurant was liable for errors under
the law, the paperwork is much greater.
Bill Moss, bar manager for a local restaurant that
he declined to identify, said, "It's another report.
You almost have to go out and get an accountant."
He said that "it really makes it rough on bartenders
in a college town," where tips are smaller. Moss said
other local bartenders, some of whom are students,
shared his feelings.
Robert Wease, manager of Spanky's restaurant,
called the law "frustrating and a burden on the
bookkeepers." He complained that the law was
unclear, and unfair. "We're the only industry being
asked to police our employees," Wease said.
Mickey Ewell, owner of Spanky's and a member
of the N.C. Restaurant Association, said he disap
proved of a law that forced restaurants "to do the
" IRS's job in regulation and bookkeeping."
Wease agreed it was difficult to check up on
employees and said he thought the IRS would have
a hard time proving compliance by small
restaurants. The IRS is focusing its attention on big
cities and large establishments where a good waiter
- can make $25,000 a year, because that is where the
money is for the government, Wease said.
He said that some employees at Spanky's who
still did not report tips were shocked by very small
paychecks, a result of employer allocation, even
though daily income from tips was the same.
Sterling Jones, bartender and waiter at Spanky's
and a UNC student, said that by reporting more
tips, his per paycheck tax bite was less severe. But he
said he feared that although his daily take was
almost as much now as before TEFRA, come tax
time next year, all that newly reported income
would hit him hard.
The tip tax is considered experimental because of
reports of confusion and misapplication among
employers. An IRS spokesman said some employers
are incorrectly withholding an extra 8 percent from
employee paychecks. According to the AP, the law
"specifically prohibits withholding taxes from tips
except those reported by the waiter."
A spokesman for the Ways and Means Commit
tee Tax Staff in Washington said in a telephone in
terview that the new law would be up for review
after a study by the Department of the Treasury,
due Jan. 1, 1987.
The spokesman, who declined to be identified,
said many unforeseen complications arose that
necessitated the Treasury Department study. For
example, the law does not apply to shops with fewer
than 10 employees. Although he did not elaborate,
the spokesman said some shops at or near the
10-employee cutoff have already applied the tip tax
in a way that left employees with "negative or zero
paychecks" for some pay periods.
Buses to roll for
fund-cuts protest
By LIZ LUCAS
Assistant University Editor
Despite last-ditch efforts to stop buses from taking UNC
students to the Coalition for Education Rally in Raleigh Thurs
day, the buses still are scheduled to leave as planned.
Coalition for Education Coordinator Jon Reckford said Tues
day that efforts to place a restraining order on the buses would
not be successful.
Phil Painter, a former CGC representative, complained Mon
day that the $840 appropriated to the coalition for buses violated
a Student Government Constitution amendment prohibiting
funding of political or religious events.
But Painter's complaint came too late to be effective, CGC
Speaker James Exum said Tuesday. Painter requested Monday
that the Student Supreme Court place an injunction on the CGC
bill which appropriated the money, but the request for funds had
been signed and processed by the Student Activity Fees Office last
week before the complaint was filed, he said. i;2iiv:
'"Had theWnbt yet been processed, an mjuiicUuncuuid have
stopped the buses, Exum said. The funds would have been frozen
until the Student Supreme Court could rule on whether the issue
was political or religious in nature, he said.
"Painter has failed," Exum said. "The bill has been processed
and SAFO has written the check. The Coalition for Education
has made a legally binding contract with a bus company."
The Student Supreme Court can hear the case, but it cannot
stop the rally or the use of student fees for the buses, Exum said.
It is doubtful that the Student Supreme Court will hear the
complaint before the rally, said Robin Michaels, an associate
justice of the Student Supreme Court.
"No dates for a hearing have been set yet, and I'm not even
sure whether the petition has been presented to the court,"
Michaels said Tuesday. "I doubt a full hearing will be held before
the rally because it takes three or four days to prepare for a hear
ing the petition has to be filed and a counter-suit filed," she
said. .
But Painter said Tuesday that the buses could be stopped by the
Student Supreme Court placing a restraining order on them.
"Just because the service has been j)aid for, the services
don't have to be consummated," Painter said. "They can order
the contract broken even if the money can't be gotten back, but
that's, the extreme case."
See BUSES on page 3
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Up in the air
DTHJamie Francis
Bounce the Clown and Mademoiselle Oooh La La are two jugglers
from Florida who were on the UNC campus Tuesday practicing
their show 'Locomotion Vaudeville.' The two, who have traveled
around the nation performing for college students, have been jug
gling for nine years and are trying to get a job juggling at UNC.
Washington leadin
close race
The Associated Press
CHICAGO Rep. Harold Washington, bidding
to become the city's first black mayor, pushed into a
narrow lead over Republican Bernard Epton as of
midnight Tuesday after a record turnout in a racially
charged election.
Epton, a white millionaire lawyer, hoped to become
the city's first Republican chief executive in 52 years in
his battle against the Democratic congressman.
With 2,082 of 2,914 precincts reported, Washington
had 447,430 votes or 49.9 percent to Epton's 445,873
or 49.7 percent. Socialist candidate Ed Warren re
ceived 2,704 votes. It was not known which parts of
the city were reporting first, so it was unclear how well
the pattern would hoM uj3, v
The Chicago Board "o f ETcctioh Commissioners esti
mated 88 percent of the 1.6 million voters had cast
ballots, but it appeared the final figure would be some
what lower. A record 77 percent turned out in the Feb.
22 primary in which Washington narrowly captured
the Democratic nomination in a three-way race.
Washington benefitted Tuesday from an exceptional
black turnout, and bis campaign manager Al Raby
said he was running better than 50 percent among the
swing Hispanic voters.
. Massive numbers of whites who voted Democratic
in the primary switched to Epton. But Washington ran
better among whites than he had in the February
primary up from 6 percent to about 20 percent, ac
cording to an Associated Press WMAQ-TV sampling.
Epton was watching returns in a suite at the
downtown Palmer House. With him were his family
and Lt. Gov. George Ryan, and spokesman Rick
Murray described the mood as "excellent. Everybody
up there is smiling." ;
However, in an interview with WMAQ-TV, the
Republican lashed out at the local news media, saying
they had written things about him that were unfair.
Epton was particularly critical of the handling of his
income tax disclosures. ;!;' '
"I'm not bitter I think they're just slime," he
said.
"We feel good. It looks solid," Washington, 60,
said after a deli breakfast in his Hyde Park -neighborhood
where he voted. "We've been ahead
since day one."
Washington planned to campaign through the day,
while Epton who had been a quiet candidate in the
final days headed for the Chicago White Sox home
opener' against the Baltimore Orioles.
"Hopefully we'll start off with a victory there, and
if we're lucky and the Lord is willing we'll have a vic
tory when we end the day," Epton, 61, told reporters
at a Near North Side movie theater where he voted.
jAs jnl 4J.S,-; attorneys, and
others monitored for " possible vote fraud. By late
morning, the offices of the U.S. Attorney and the
Cook County's state's attorney reported more than
200 complaints. The elections board reported a quiet
election. 4
Despite the campaign's bitterness and their harsh
words for one another, Washington and Epton
former colleagues in the Illinois Legislature have
promised to meet for breakfast today, in a show of
unity. ,
The City Council will set an inauguration date to
day. Traditionally, the new mayor has been sworn in
to the powerful $60,000-a-year post within weeks of
the general election.
Washington, a two-term South Side congressman,
was ahead in final polls. But Epton was gaining, partly
on the strength of voter concern over his rival's income
tax conviction, suspension from the legal profession
and unpaid bills.
But Washington's race was the biggest issue, turning
what would have been a rubber-stamp general election
in traditionally Democratic Chicago into a horse race.
Epton ran unopposed in the GOP primary and got
1 1 ,397 votes, compared to nearly 1 .2 million votes cast
in the Democratic race.
Candidate
likes chances
for governor
By MARK STINNEFORD
Staff Writer
Expecting to face some of the state's
Democratic heavyweights, Lacy H.
Thornburg of Sylva said that being a new
face in the crowd could be an advantage in
his bid to gain the party's gubernatorial
nomination.
Despite the potentially crowded . slate,
Thornburg said he had a good chance.
"I'll be a new face in the group. I'm not
part of the Raleigh establishment," he said
in a recent telephone interview. "I think I
can project a true image of positive leader
ship, honesty and integrity."
Thornburg, who served as a superior
court judge from 1967 to March 1 of this
year, announced his candidacy for gover
nor on March 22, becoming the first to
enter the Democratic primary.
Charlotte Mayor H. Edward "Eddie"
Knox entered the race on April 7.
Other potential Democratic candidates
include Lt. Gov. Jimmy Green, Attorney
General Rufus Edmisten, Insurance Com
missioner , John Ingram, Commerce
Secretary D.M. "Lauch" Faircloth and
U.S. Rep. Charles L. Rose III.
Thornburg said his years in the court
room and traveling around the state had
given him greater insight into the problems
and concerns of citizens.
Thornburg's economic proposals call
for the creation of jobs through the re
cruitment of new industries to the state
and the expansion of existing industries.
New firms would be encouraged to locate
in the extreme eastern and western parts of
WBC program carries out students 'fantasies
Lacy H. Thornburg
the 'state which Thornburg called under
industrialized. "I want to promote a more aggressive
salesmanship of North Carolina as an ap
propriate place for industry to locate," he
said. .
The state's community college system
should be geared to training workers in
new, technologically-advanced industries,
Thornburg said.
Primary and secondary schools should
also keep pace with technology, instituting
training in computer use, science and
math, Thornburg said. But Thornburg
emphasized that other skills must not be
neglected.
" We're going to have to start a good
mix in our educational system, keeping in
mind that you have to have a well rounded
individual and not just somebody who is
trained like a monkey to punch buttons,"
he said.
Increased teacher pay is essential to the
quality of the educational system, Thorn
burg said.
"I doubt that we could come up with all
the money that teachers and other state
See THORNBURG on page 4
By CLINTON WEAVER
Staff Writer
Those who dream of fantastic places
and unreal situations which never seemed
possible, beware: Those wishes might
become reality, with the help of tele
vision. Fantasy a daytime show on NBC
which debuted in September 1982, is
soliciting the wishes of UNC students and
faculty and residents of Chapel Hill.
They- are restricted to requests which
would be suitable for daytime network
television, said Dennis Sullivan, a re
searcher for the show. "We cannot fulfill
fantasies of a sexual nature."
Sullivan also said that the show did not
give prizes just because someone asks for
them. "We are not simply interested in
doling out things but in fulfilling people's
fantasies."
The show "singles out the average
American and puts them in the limelight
for a few minutes," he said. "We are try
ing to do nice things for people, show
them that we care about them,"
Fantasy combines the surprises of Can
did Camera, the reunions of Truth or
Consequences, the earnest-man-elevated
strategy of Real People and the imagina
tion of Fantasy Island into a show de
signed to be different from other daily
television fare.
Chapel Hill residents and UNC stu
dents have a variety of fantasies. Gwen
Robinson, a sophomore from Goldsboro,
said, "(I would like to) send my mother
on a trip, a Carribean cruise, maybe. She
has sacrificed so much and she's always
saying she would like to do something
like that."
In fact, Sullivan said that dream vaca
tions were a frequently requested wish.
He also said people were often reunited
with old friends or family on the show.
Jean Larrabee, a senior anthropology
major, said she had a best Inend trom
childhood she would like to see. "It
would be interesting to see whether she
would still be my best friend," she said.
"She knows some secrets that no one else
knows."
Holly Benedict, a freshman from
Winston-Salem, said she would like to
learn to skydive. "It's adventurous and
I've always wanted to try it," she said.
"I've always wanted to be a stewardess
and high altitudes excite me."
Sullivan said the show was looking for
"students who want to do something in
teresting, such as hang gliding or piloting.
(If it is) something they have never done,
then we will do it."
The show also gives amateur musicians
a chance to perform on its "fantasy spot
light." "Usually it's singers with their
own music and we provide the accom
paniment," Sullivan said.
Ned Bixler, a Chapel Hill resident, has
a fantasy of being a rock n roll star, but
he said that would be hard to simulate in
a studio.
- "They'd have to ... set up the au
dience so they would clap and every
thing," he said.
Larrabee said, "I wouldn't mind sing
ing a song in front of a whole lot of peo
ple, one that I had thought I could sing
very well but no one had ever heard of."
The show's producers want interesting
and unusual requests. Mundane desires
for cars, stereos, televisions and trips to
Hawaii aren't usually fulfilled, Sullivan
said.
Myriam Adriaenssens, a junior physics
and business, major, had a fantasy to
meet those requirements. She would like
to travel by horse through Greece or
Yugoslavia. "It would be real slow
paced," she said. "It would be nice and
relaxed . . . and you wouldn't have to
wait in line."
Some fantasies would be hard to fulfill
and some would be impossible. Tom
Rose, a freshman from New York, said he
would like to be in a James Bond movie.
"I've always wanted to be the villain
with all those super-gadgets," he said.
Rose said he thought he could be the spy
who finally killed 007.
A man washing dishes at Ye Old Waf
fle Shop on Franklin Street, said his fan
tasy was as follows: "It's the end of the
world and I've got. a cabin up in the
mountains. There's nobody coming onto
me and I'm not coming onto nobody and
I've got the rest of the world around
me."
Fantasy is not shown by the local NBC
state, WPTF-TV (channel 28), but Sulli
"van said he hoped to bring the show to
the area soon. He acknowledges that its 3
p.m. time slot is competitive, opposite
ABCs General Hospital. But he said the
ratings had picked up a couple of percen
tage points since September.
"We want more students who are ad
dicted to soap operas," he said. "We
think university students will be inventive
and imaginative."