I did dineLA at Grace, really enjoyed the food, except did not care for the donuts. There were 8 of us, and they added 18% (or was it 20% !) gratuity to the bill, which was all fine and well. However, the tax on the bill was based on the food plus tip, so they taxed on the tip. I questioned them about this, and was told that it was "the law." It was just a few dollars so I let it go.
I have not yet had the inclination to research "the law," but intuitively and logically, this does not sound right. Plus I don't recall ever paying tax for added tip before, unless I just never noticed. Does anyone know "the law" on this?