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To Insure Prompt Service, abbreviated to "TIPS", began as a way of insuring that one will receive prompt service. Also called a "Gratuity" or abbreviated to "Tip", these monies were once used to insure expedient service now works in a number of ways in the United States.

Historically, one would enter a restaurant and place an amount of money on the table, to ensure prompt service. If the service was slow, one would remove some of the money and the person serving the table would know to do better or eventually lose the "tip" completely. The server giving service above the expected might even find that the guest has added to the "tip". In this time, before the federal government instituted the minimum wage law, servers most often worked without salary and for tips alone.

Today, IRS code allows for businesses that employee tipped employees to offset their employee payroll by paying an hourly wage smaller than the federal or state minimum. States can and sometimes do increase the federal minimum wage in their respective State, also some states do not allow businesses to use a lower minimum wage for tipped employees.

Employers can also take a "tip credit" deduction on Social Security and Medicare payments they have made to the IRS (allowed when using an alternative minimum tax method).

"Tips" have moved well outside the boundaries of just insuring prompt service. Employees paid less than minimum wage must make their earnings in "tips" to meet the cost of living. Some say that tipped employees are one-third as likely to fall under the poverty level as others, and if they have any insurance coverage, it is usually not very good coverage.

A tipped employee actually need only "claim" to the employer that their tips were up to the minimum wage limit. However, the IRS assumes that at least most tipped employees earn a minimum of 15% of their yearly gross sales. A tipped employee is responsible to prove they did not make at least 15% of sales.

Some people believe the system is foul, that businesses should pay its employees a decent wage. The Restaurant Association, whose primary monetary support comes from the large restaurant chains, disagrees. As the large chains usually do quite well, the people who do not believe they should be paying "wages" as "tips" could be right.

However, without the tip credits, the smaller restaurants would probably go bankrupt. Moreover, in either case, the customer pays in the end. Restaurants would raise prices, cut quality and service to cover

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