What is Form 8027 and Who Needs to Submit One?

Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, is a form used by certain employers in the food and beverage industry to report information about tip income and the allocation of tips to employees. Here’s a detailed overview:

Purpose of Form 8027

Form 8027 is used by the IRS to ensure proper reporting of:

1. Employee Tip Income: To confirm that tipped employees report their tips correctly for tax purposes.
2. Employer Allocation of Tips: To determine if employers need to allocate additional tips to employees based on IRS requirements.

Who Must File Form 8027?

Employers must file Form 8027 if they meet all of the following criteria:

1. Food or Beverage Establishments:
   • The business provides food or beverages for consumption on the premises.
   • Includes restaurants, bars, coffee shops, and similar establishments.
2. Employer-Employee Relationship:
   • The establishment employs workers who receive tips (e.g., servers, bartenders, bussers).
3. Tipping Environment:
   • Employees regularly receive tips from customers.
4. Large Establishments:
   • The employer operates in a location where there are normally 10 or more employees (including part-time and temporary staff) on a typical business day during the year.

What Information is Reported on Form 8027?

Employers must report:

1. Gross Receipts:
   • Total receipts from food and beverage sales, excluding non-allocable items like carryout sales.
2. Charge Tips:
   • Tips added to credit card charges or checks by customers.
3. Employee Reported Tips:
   • Total tips reported by employees to the employer during the year.
4. Allocated Tips:
   • Tips the employer must allocate to employees if the reported tips are less than 8% of gross receipts (or a lower IRS-approved rate).

How and When to File Form 8027

1. Filing Deadline:
   • Paper forms: Due by February 28 following the tax year.
   • Electronic filing: Due by March 31 following the tax year.
2. Electronic Filing Requirement:
   • If filing 10 or more forms, you must file electronically via the IRS FIRE System.
3. Paper Filing:
   • Mail Form 8027 to the IRS address specified in the form’s instructions.
4. Form 8027-T:
   • If you’re filing multiple Form 8027s, use Form 8027-T as a transmittal summary.

Exceptions

You don’t need to file Form 8027 if:

• The establishment operates with fewer than 10 employees on a typical business day.
• The business does not involve tipping (e.g., fast-food restaurants).