Yes, small businesses are generally exempt from filing Form 8027, which is the Employer’s Annual Information Return of Tip Income and Allocated Tips. This form is required only for certain businesses in specific circumstances related to tipped employees. Below are the criteria and details:
Who Must File Form 8027?
- Tipped Industries:
Form 8027 applies to employers in the food or beverage industry, such as restaurants, hotels, and bars, where tipping is customary. - Large Establishments:
Employers are required to file Form 8027 if they operate a “large food or beverage establishment”, which is defined as:- Employing more than 10 employees who work more than 80 hours collectively on a typical business day during the calendar year.
Small Business Exemption
- A small business that does not meet the above threshold (e.g., fewer than 11 employees or fewer than 80 collective hours worked daily) is not required to file Form 8027, even if tipping occurs.
- Businesses outside the food and beverage industry (e.g., retail stores) are also exempt, as the form specifically applies to tipped employees in food or beverage service operations.
Key Considerations for Small Businesses
- If you’re unsure whether your business qualifies as a “large food or beverage establishment,” calculate:
- The number of employees working on a typical business day.
- Their combined hours worked.
- If your business crosses the thresholds in certain months but not others, consult IRS guidance or seek professional advice.
Voluntary Filing
- Some small businesses may choose to voluntarily file Form 8027 to maintain accurate records or prepare for future growth that might push them into the “large establishment” category.
Penalties for Non-Compliance
- If a business meets the requirements to file Form 8027 but fails to do so, it may face penalties for late or non-filing unless reasonable cause is demonstrated.
If you think your business is close to the threshold or need help determining your filing obligations, let me know, and I can assist further!
