After putting in 37.5 years in public service (most in taxing agencies, I can say that Amoeba is, generally, correct.
If you intend to tip in cash, there's nothing wrong or illegal involved. In the case of independents, it's the responsibility of the individual to report/pay applicable taxes. Other methods are used where employers (restaurants, bars, etc.) to report/pay taxes. Nothing different than reporting/paying any personal income for tax purposes. If you choose not to comply, you take your chances on being audited and having the applicable taxes, penalties and interest assessed. A painful experience.
A word to the wise appears to be in order. If you fail to comply or encourage others not to comply with applicable tax laws, don't talk about it on a public forum (like a bulletin Board) and remember, ignorance is no excuse for failure to comply.
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