DENVER, Colo. — You’ve probably noticed that companies are asking for more generous tips than they used to, and studies are showing that a lot of consumers are getting sick of it.

“Being asked to give more, it feels like a big ask right now,” said Kelly Goldsmith, professor of marketing at Vanderbilt University

At the beginning of the pandemic, the sentiment was different. Goldsmith said the quarantine and struggle small businesses endured created a sense of community and inspired people to donate extra tips. Now, those higher tipping rates look like they're becoming standard.

“Sometimes, the default tipping amount is quite high. We're talking 20%, 25%, and it forces people to take a step back and say, ‘What's going on?’” said Goldsmith.

Two years later, research shows shoppers are starting to feel less generous.

Software company Square found that tipping at sit-down restaurants has remained stable at around 20%, but when it comes to takeout, people are tipping less.

The average tip at places like cafes and coffee shops fell from 17.2% in March 2021 to 15.2% in February 2022.

“I think for some of us, it's pushing our boundaries, especially at a time when there's discussion of an economic recession, when there's discussion of inflation. This is a time when we need to protect our own financial well-being,” said Goldsmith.

Goldsmith says tipping fatigue is growing because technology makes tipping faster and we're being asked to tip more often and for things that don't usually require tips.

Now, many people are wondering, are these tipping practices here to stay?

“We'll see if they really push it too far—if consumers start complaining— because when that starts happening, you can imagine businesses are going to listen,” said Goldsmith.

Goldsmith said she hopes businesses will give customers more tipping options because it could cost them far more if they don't.

“What can happen over time is you're less likely to go back to that restaurant,” said Goldsmith. “Go back to those old methods, make it discretionary, have the tip jar. People gave tips in the past and we are pro-social. We do want to contribute to others. We just don't want to feel like we're being tricked into it by new technology.”

Goldsmith's biggest piece of advice to all of us tired tippers out there: don't feel pressured by technology. Maybe carry cash to control what you tip or remember that it's okay to skip the tip from time to time.

"You need to take care of your own financial bottom line. So, if you're going to a coffee shop and you can't afford to leave a 35% tip and that's the default, don't do it, and don't feel bad about it," she said.

The Internal Revenue Service announced it is proposing a new voluntary tip reporting program to improve tip reporting compliance by employers of service industry workers, such as servers.

The IRS requires employees who earn at least $20 a month in tips to keep a daily record of their tips to give to their employer. All of those tips are then required to be included on tax returns.

Employers are then required to withhold taxes on income earned from tips.

The IRS said voluntary tip compliance agreements have been established by the IRS for industries where tipping is customary. The IRS has three different voluntary compliance agreements in place:

• TRAC – Tip Reporting Alternative Commitment
• TRDA – Tip Rate Determination Agreement
• GITCA – Gaming Industry Tip Compliance Agreement

The IRS’ proposal would create one voluntary compliance agreement: The Service Industry Tip Compliance Agreement.

The IRS said the program would include several features:

• The monitoring of employer compliance based on actual annual tip revenue and charge tip data from an employer's point-of-sale system, and allowance for adjustments in tipping practices from year to year.
• Participating employers demonstrate compliance with the program requirements by submitting an annual report after the close of the calendar year, which reduces the need for compliance reviews by the IRS.
• Participating employers receive protection from liability under the rules that define tips as part of an employee's pay for calendar years in which they remain compliant with program requirements.
• Participating employers have flexibility to implement employee tip reporting policies that are best suited for their employees and their business model in accordance with the section of the tax law that requires employees to report tips to their employers.

The announcement comes amid speculation that the IRS is increasing tax enforcement on working-class taxpayers. The IRS said this program is voluntary.

It also comes as the IRS is working to hire 87,000 new employees after the agency struggled to answer customer service questions during the pandemic. The IRS said even with additional staff, they will not be conducting additional audits on Americans making less than $400,000 annually.