SINGLE HSC/TIPPING THREAD (Previously "Why are gratuities not included in Fares?")

[Fouremco]

Do you have any idea of the numbers who would criticize this idea? Personally, I don't have any issues with your concept and it does have several attractive features.

 

The point is, regardless of the issue, any change will produce as many who like the change as it will produce that do not.

A good number, I suspect! :)

 

You are quite right about changes. Even very positive ones leave some people grumbling...

[frugaltravel]

I don't know why the IRS would treat taxes on cruise line employees any different than servers in your favorite restaurant. Servers get taxed on tips collected by their employers via credit cards, and I think if it's an all cash business, the IRS has a formula to collect on tips regardless of how they're paid.

I do think advertising of low fares is a factor, but many cruisers who want to tip appreciate the convenience of the service charge. To keep the rest of their more Scrooge-like customers happy, HAL made it optional.

 

The majority of cruise ship employees are neither American citizens nor taxable in the USA. The IRS has no jurisdiction.

 

I think blizzardboy's comments were based on what Topsham incorrectly said about US tax laws for cruise ship crew. Also, in the USA, tips are subject to both payroll and income taxes.

Edited October 6, 2015 by frugaltravel

[sail7seas]

Many cruise ship crew are not American and do not file Income Tax Returns in U.S.

 

Certainly there are some from U.S. but a great many are from other countries.

 

[cbr663]

There are a number of lines that offer pre-paid gratuities a part of a promo. Celebrity frequently offers a choice between one or more of a beverage package, OBC or gratuities. Like the beverage package, once you've made your choice, you can't cash it in for it's face value, and I've personally never read about anyone dissatisfied with the service getting any type of rebate.

 

Celebrity also charges the gratuities at the time of your final payment if you choose anytime dining, but fixed seating customers are charged daily. I don't know how these variations are handled from an accounting perspective, but it does seem that there are alternatives that HAL could explore.

 

...

 

This was our experience on Celebrity also. The only thing that I would add is that we had fixed dining and three days prior to sailing were presented with an offer to pre-pay our gratuities in CAD$ instead of the US$ on the ship.

 

One thing that we learned is that compared to HAL, X takes much more positive actions to encourage passengers to pay gratuities, certainly a great way to show support for the crew.

[Topsham]

I think blizzardboy's comments were based on what Topsham incorrectly said about US tax laws for cruise ship crew. Also, in the USA, tips are subject to both payroll and income taxes.

 

 

 

Not true at all. The employees on cruise ships are not liable for US income taxes unless they are citizens of the US. End of story.

 

 

Does HAL pay the PAYROLL TAX? Yes. That is why they pay the minimal amount of the PAYROLL. The bulk is paid through the HSC system and so that amount is not included in the PAYROLL.

 

 

Foreign crew are not domicile in the US. They work on foreign flag vessels. They do not pay US taxes... they must pay taxes in their own countries.

[Vict0riann]

Not true at all. The employees on cruise ships are not liable for US income taxes unless they are citizens of the US. End of story.

 

 

Does HAL pay the PAYROLL TAX? Yes. That is why they pay the minimal amount of the PAYROLL. The bulk is paid through the HSC system and so that amount is not included in the PAYROLL.

 

 

Foreign crew are not domicile in the US. They work on foreign flag vessels. They do not pay US taxes... they must pay taxes in their own countries.

 

Glad to see you are posting. We have been worried about you - there is a thread addressed to you!:)

[Topsham]

Glad to see you are posting. We have been worried about you - there is a thread addressed to you!:)

 

Oh! Now what have I done?

 

Thank.

 

Stephen

[iancal]

I think that it is a customer benefit NOT to include tips (HSC) in the purchase price of a cruise. Why?

 

For anyone who has to cancel inside the cancellation window and walk away from their cruise fare they will not have to pay the HSC. Had it been included in the fare this amount also would have been lost.

 

Most travel insurance is based on value of travel. Many price it on increments of cost. Keeping the cost low by not including HSCs means that the cost of your insurance could be less. And so it should because if you do not sail, you do not pay HSC.

 

Just another view on this issue.

[catl331]

For anyone who has to cancel inside the cancellation window and walk away from their cruise fare they will not have to pay the HSC. Had it been included in the fare this amount also would have been lost.

I think they could be handled like pre-paid taxes and port fees, which are refunded.

[Randyk47]

I think that it is a customer benefit NOT to include tips (HSC) in the purchase price of a cruise. Why?

 

For anyone who has to cancel inside the cancellation window and walk away from their cruise fare they will not have to pay the HSC. Had it been included in the fare this amount also would have been lost.

 

Most travel insurance is based on value of travel. Many price it on increments of cost. Keeping the cost low by not including HSCs means that the cost of your insurance could be less. And so it should because if you do not sail, you do not pay HSC.

 

Just another view on this issue.

 

While that's true personally I figure anything that's going to cause me to cancel inside the cancellation window is so significant that the HSC being included in the basic fare is the least of my worries. If I self-insure, meaning I don't buy cruise/travel insurance, then I've taken a lot of expenses into consideration from potentially non-refundable airfare to pre and post cruise hotels to the cruise fare. If I get cruise/travel insurance the HSC is not significant enough that it's going to make the insurance that much more expensive if at all.

[Randyk47]

Not true at all. The employees on cruise ships are not liable for US income taxes unless they are citizens of the US. End of story.

 

 

Does HAL pay the PAYROLL TAX? Yes. That is why they pay the minimal amount of the PAYROLL. The bulk is paid through the HSC system and so that amount is not included in the PAYROLL.

 

 

Foreign crew are not domicile in the US. They work on foreign flag vessels. They do not pay US taxes... they must pay taxes in their own countries.

 

I actually wonder about this payroll tax business. If the crew member is not a US citizen or permitted resident subject to US tax laws then they have no benefits under any of the programs (i.e., Social Security, Unemployment Insurance) covered by payroll taxes and therefore the tax are not due or collected. Now if the crew member's country of residence has payroll taxes, and depending on the nature of those laws, then I suppose HAL is obligated to pay those taxes but then again they probably already are as no crew member is totally dependent on tips/HSC income. No doubt the accounting department at HAL is a big and probably complicated operation but other lines somehow manage so it can be done.

[Boytjie]

From CC news:

 

"Beginning January 2016, passengers staying in interior, oceanview and balcony cabins will pay $12.95 (up from $11.50). Those in mini-suites and suites will be charged $13.95 (up from $12). All charges are per person per day and include children. Passengers have until October 15 to pre-pay gratuities at the current rate."

[iancal]

I do not really care one way or the other. Though my preference is never to pay for anything until payment is due. So when it comes to HSC I prefer to be billed on board.

 

When we take Celebrity we always select anytime dining. Celebrity insists on charging HSC upfront for this, ie we the HSC's at time of final payment. Not our favourite option but we view it as a small price to pay for anytime dining. Not even certain why the do this for anytime dining. It is not as though we would consider dropping the HSC charges. The opposite is true. We usually end up tipping more on anytime dining.

[3rdGenCunarder]

I do not really care one way or the other. Though my preference is never to pay for anything until payment is due. So when it comes to HSC I prefer to be billed on board.

 

When we take Celebrity we always select anytime dining. Celebrity insists on charging HSC upfront for this, ie we the HSC's at time of final payment. Not our favourite option but we view it as a small price to pay for anytime dining. Not even certain why the do this for anytime dining. It is not as though we would consider dropping the HSC charges. The opposite is true. We usually end up tipping more on anytime dining.

 

Perhaps they've noticed a past pattern of more people on open dining removing the HSC?

[serendipity1499]

The majority of cruise ship employees are neither American citizens nor taxable in the USA. The IRS has no jurisdiction.

 

This statement is incorrect! Any person who works & is paid in the U.S.is subject to U.S. Income taxes.. They do not have to be citizens to pay income taxes![/SIZE]

 

Crew line employees are only subject to the US IRS if:

a) they are US citizens which the majority are not

b) are employed in the US, which they are not. These ships operate in international waters not in the US

 

In fact they are unlikely to be employed by a US company even though most passengers would regard Carnival or HAL as US operations. Why do you think most ships fly a foreign flag as oppose to a US flag. HAL ships are mainly registered in the Netherlands.

I bolded both of these statements because they are incorrect..

 

Even people who ARE NOT U.S. Citizens pay U.S. Income taxes if they work & get paid in the United States.. We had many NON U.S. Citizens working in our company who were paid here & lived here.. They all paid U. S. Income Taxes..

 

We deducted a percentage of their pay (payroll tax) & sent it to the Treasury Department, a branch of the U.S. Government on a quarterly basis.. At the end of the year each employee received a W2 form from our company...When they paid their U.S. Income taxes in April every year they sent this form with their tax return & paid any additional taxes which may be due depending on what their Income Bracket was..

 

Being a citizen does not make one bit of a difference..

 

For those said that HAL does not permit you to pre-pay your Gratuities that too is incorrect.. Anyone can purchase OBC in advance of your cruise & it will be put into your on board account.. Gratuities can be deducted from any OBC you purchase...

Edited October 6, 2015 by serendipity1499

[RocketMan275]

[/b]

I bolded both of these statements because they are incorrect..

 

Even people who ARE NOT U.S. Citizens pay U.S. Income taxes if they work & get paid in the United States.. We had many NON U.S. Citizens working in our company who were paid here & lived here.. They all paid U. S. Income Taxes..

 

We deducted a percentage of their pay (payroll tax) & sent it to the Treasury Department, a branch of the U.S. Government on a quarterly basis.. At the end of the year each employee received a W2 form from our company...When they paid their U.S. Income taxes in April every year they sent this form with their tax return & paid any additional taxes which may be due depending on what their Income Bracket was..

 

Being a citizen does not make one bit of a difference..

 

For those said that HAL does not permit you to pre-pay your Gratuities that too is incorrect.. Anyone can purchase OBC in advance of your cruise & it will be put into your on board account.. Gratuities can be deducted from any OBC you purchase...

 

Do you dispute that the crew is not "paid in the United States"?

[Fouremco]

[/b]

I bolded both of these statements because they are incorrect..

 

Even people who ARE NOT U.S. Citizens pay U.S. Income taxes if they work & get paid in the United States.. We had many NON U.S. Citizens working in our company who were paid here & lived here.. They all paid U. S. Income Taxes..

 

We deducted a percentage of their pay (payroll tax) & sent it to the Treasury Department, a branch of the U.S. Government on a quarterly basis.. At the end of the year each employee received a W2 form from our company...When they paid their U.S. Income taxes in April every year they sent this form with their tax return & paid any additional taxes which may be due depending on what their Income Bracket was..

 

Being a citizen does not make one bit of a difference..

 

For those said that HAL does not permit you to pre-pay your Gratuities that too is incorrect.. Anyone can purchase OBC in advance of your cruise & it will be put into your on board account.. Gratuities can be deducted from any OBC you purchase...

I think that if you research this issue on the internet, you'll find that my statement is accurate. The example you cite of foreign employees living and working in the USA is very different from that of employees aboard foreign-flagged ships working in international waters.

 

Purchasing OBC is a work around that achieves the same end, but you are simply establish a credit, not directing payment to any one area. Minor difference, but those who made the statement that you can't prepay gratuities were in fact correct.

[Stratheden]

[/b]

I bolded both of these statements because they are incorrect..

 

Even people who ARE NOT U.S. Citizens pay U.S. Income taxes if they work & get paid in the United States.. We had many NON U.S. Citizens working in our company who were paid here & lived here.. They all paid U. S. Income Taxes..

 

We deducted a percentage of their pay (payroll tax) & sent it to the Treasury Department, a branch of the U.S. Government on a quarterly basis.. At the end of the year each employee received a W2 form from our company...When they paid their U.S. Income taxes in April every year they sent this form with their tax return & paid any additional taxes which may be due depending on what their Income Bracket was..

 

Being a citizen does not make one bit of a difference..

 

For those said that HAL does not permit you to pre-pay your Gratuities that too is incorrect.. Anyone can purchase OBC in advance of your cruise & it will be put into your on board account.. Gratuities can be deducted from any OBC you purchase...

 

Deleted. Sorry.

Edited October 6, 2015 by Stratheden

[serendipity1499]

Do you dispute that the crew is not "paid in the United States"?

 

No not at all...I'm not disputing anything..

 

All I'm doing is correcting two people who stated they are "Not U.S. Citizens & are not subject to U.S. Tax laws".. If we pay the crew in the U.S. then they would have to pay tax on their earnings..

 

Being a citizen has nothing to do with it.. Anyone who lives, works & is paid in the U.S.pays taxes even if they are not a citizen..

 

The two posters said they do not have to pay taxes because they are NOT U.S. citizens...That has nothing to do with it..

 

Even my cleaning people who are NON-U.S. Citizens pay U.S. Income tax because they work & are paid here..

 

Philip 217 explained why the HSC can't be in the cruise fare..I'll look for his post afte I feed my dog..She is bugging me as it's time for her to eat....

[serendipity1499]

OK, The dogs has been fed & our dinner will be ready in a half hour..

 

I've found the thread entitled :

 

"Can someone explain the theory of Cruise Line tipping"

 

In Posts No. 11, Post No. 50 & Post No 55 Phillip 217 who also is a Cruise line Officer explains it & why the crew would not be happy..

 

 

http://boards.cruisecritic.com/showthread.php?t=781623&page=3

 

I can't repeat everything he said here but it makes sense for those who would question why it's done this way..

 

Hi post No. 55 actually explains it all..

Edited October 6, 2015 by serendipity1499

[Fouremco]

No not at all...I'm not disputing anything..

 

All I'm doing is correcting two people who stated they are "Not U.S. Citizens & are not subject to U.S. Tax laws".. If we pay the crew in the U.S. then they would have to pay tax on their earnings..

 

Being a citizen has nothing to do with it.. Anyone who lives, works & is paid in the U.S.pays taxes even if they are not a citizen..

 

The two posters said they do not have to pay taxes because they are NOT U.S. citizens...That has nothing to do with it..

 

Even my cleaning people who are NON-U.S. Citizens pay U.S. Income tax because they work & are paid here..

 

Philip 217 explained why the HSC can't be in the cruise fare..I'll look for his post afte I feed my dog..She is bugging me as it's time for her to eat....

Serendipity, as I am one of the posters who you are attempting to "correct", let's go back to my original post and I'll explain my logic.

 

The majority of cruise ship employees are neither American citizens nor taxable in the USA.

 

Taking this one part at a time, let's first deal with citizenship. If a crew member is an American citizen, he or she is subject to US tax laws wherever employed. The same applies to Canadians; it doesn't matter where they are employed, they are obligated to submit a tax return to the CRA. However, the majority of crew members are not US citizens, and therefore there is no citizenship-based requirement for the majority of crew members to pay taxes to the US.

 

The second part of the state, "nor taxable in the USA" is based on the fact that they are neither US residents nor are they employed in the US. If a Canadian citizen resided in Seattle and worked at HAL's Seattle HQ, there would be US tax liability. But place him instead as a crew member on a foreign-flagged ship in international waters and his taxes go to Canadian coffers, not those of the US.

[Topsham]

 

Being a citizen has nothing to do with it.. Anyone who lives, works & is paid in the U.S.pays taxes even if they are not a citizen..

 

 

 

 

 

Sorry, you are wrong.

 

 

 

2. The crew do NOT live in the USA. (Unless they are US Citizen)

 

3. The crew do NOT work in the USA.

[serendipity1499]

Sorry, you are wrong.

 

 

 

2. The crew do NOT live in the USA. (Unless they are US Citizen)

 

3. The crew do NOT work in the USA.

 

Stephen, Please re-read my posts.. I am well aware that the crew does not live or work in the U.S. & are not paid in the U.S..

 

All I'm doing is disputing two posts who state that ONLY persons who are U.S. citizens pay U.S. Income taxes & that is completely untrue!

 

There are plenty of people who work & live in the U.S. & are paid in the U.S. & those people are required by law to pay Income taxes to the U.S. Government..

 

Those are the only two statements I'm disputing!

[doublebzz]

OK, The dogs has been fed & our dinner will be ready in a half hour..

 

I've found the thread entitled :

 

"Can someone explain the theory of Cruise Line tipping"

 

In Posts No. 11, Post No. 50 & Post No 55 Phillip 217 who also is a Cruise line Officer explains it & why the crew would not be happy..

 

 

http://boards.cruisecritic.com/showthread.php?t=781623&page=3

 

I can't repeat everything he said here but it makes sense for those who would question why it's done this way..

 

Hi post No. 55 actually explains it all..

 

Maybe yes or maybe no. On some main line cruise line pre-paying gratuities are either mandatory or elective. So, to me, the more compelling argument is if some of the lines can do it, then all of them can. For whatever reason, HAL had chosen not to. I think its fair and more interesting for posters to state their preferences and their reasons for one over the other rather than discussions over international tax law by sea lawyers who may or may not know what they are talking about.

[Fouremco]

Stephen, Please re-read my posts.. I am well aware that the crew does not live or work in the U.S. & are not paid in the U.S..

 

All I'm doing is disputing two posts who state that ONLY persons who are U.S. citizens pay U.S. Income taxes & that is completely untrue!

 

There are plenty of people who work & live in the U.S. & are paid in the U.S. & those people are required by law to pay Income taxes to the U.S. Government..

 

Those are the only two statements I'm disputing!

Serendipity, please re-read MY posts. Nowhere did I say that only US citizens pay US income tax, yet you cited me.