Instructions For Form 8027 (Page 3 of 4) in pdf

information shown on the Forms W-2 that you file with

amount of service charges of less than 10% that have

the Social Security Data Operations Center.

been added to customers’ bills and have been distributed

to your employees for the year. In general, service

Tip allocations have no effect on withholding income or

charges added to the bill are not tips since the customer

social security or Medicare taxes from employees’ wages.

does not have a choice. These service charges are

Allocated tips are not subject to withholding and are not

treated as wages and are includible on Form W-2. For

to be included in box 10, Wages, tips, and other

details, see Revenue Ruling 69-28, 1969-1 C.B. 270.

compensation, of Form W-2. See Pub. 937 for more

information.

Line 4a—Total tips reported by indirectly tipped

employees.—Enter the total amount of tips reported for

the year by indirectly tipped employees, such as cooks

Specific Instructions

and employees who bus tables.

File a separate Form 8027 for each large food or

Line 4b—Total tips reported by directly tipped

beverage establishment. Do not attach copies or any

employees.—Enter the total amount of tips reported for

unrelated correspondence.

the year by directly tipped employees, such as waiters

Name and address of establishment and employer

and waitresses.

identification number (EIN).—Please use the name and

Caution: Do not include tips received by employees in

address label provided. Cross out any errors and print the

December 1991 but not reported until January 1992.

correct information on the label. If you do not have one,

However, include tips received by employees in December

please type or print the name and address of the

1992 but not reported until January 1993.

establishment. They may be different from your name and

Line 5—Gross receipts from food or beverage

address, as in the case of employers who have more than

operations.—Enter the total gross receipts from the

one establishment. The employer identification number

provision of food or beverages for this establishment for

should be the same as the number on the Forms W-2

the year.

that you give to the employees and the Form 941,

If you do not charge separately for providing food or

Employer’s Quarterly Federal Tax Return, or Form 941E,

beverages along with other goods or services (such as a

Quarterly Return of Withheld Federal Income Tax and

package deal for food and lodging), make a good faith

Medicare Tax, you file reporting wages and taxes for

estimate of the gross receipts from the food or

employees working for the establishment.

beverages. This estimate must reflect the cost to the

Kind of establishment.—Check the box (check only one

employer for providing the food or beverage plus a

box) on the form that best describes the food or

reasonable profit factor.

beverage operation at this establishment:

Line 6—Enter the result of multiplying line 5 by 8% (.08)

1. an establishment that serves evening meals only

or a lower rate (if the establishment was granted one by

(with or without alcoholic beverages).

the IRS).

2. an establishment that serves evening and other

If a lower percentage rate was granted, write the rate in

meals (with or without alcoholic beverages).

the space provided and attach a copy of the IRS district

3. an establishment that serves only meals other than

director’s determination letter.

evening meals (with or without alcoholic beverages).

Note: If you have allocated tips using other than the

4. an establishment that serves food, if at all, only as

calendar year, put an X on line 6 and enter the amount of

an incidental part of the business of serving alcoholic

allocated tips (if any) from your records on line 7. This

beverages.

may occur if you allocated tips based on the time period

Employer’s name and address.—Enter your name and

for which wages were paid or allocated on a quarterly

address.

basis.

Establishment number.—Enter a five-digit number to

Line 7—Allocation of tips.—If 8% (or an approved lower

identify the individual establishments that you are

rate) of gross receipts (line 6) is more than the amount of

reporting under the same EIN. Give each establishment a

tips reported by your employees (line 4c), you must

separate number. For example, each establishment could

allocate the difference to those employees. Enter the

be numbered consecutively, starting with 00001.

difference on line 7. There are three methods by which

you may allocate tips. Check the box on line 7a, b, or c

to show the method used.

Line-by-Line Instructions

Line 7a—Hours-worked method.—Establishments that

Note: In these instructions, the term nonallocable receipts

employ fewer than the equivalent of 25 full-time

means receipts for carryout sales and receipts with a

employees during a payroll period may use the

service charge added of 10% or more.

hours-worked method to allocate tips. You will be

Line 1—Total charged tips for 1992.—Enter the total

considered to have employed fewer than the equivalent of

amount of tips that are shown on charge receipts for the

25 full-time employees during a payroll period if the

year.

average number of employee hours worked per business

day during a payroll period is less than 200 hours. To

Line 2—Total charge receipts with charged tips.—Enter

allocate tips by this method, follow the steps for the gross

the total sales (other than nonallocable receipts) from

receipts method on page 4. For the fraction in step (c) of

charge receipts that had a charged tip shown. Include

the gross receipts method, substitute one in which the

credit card charges and other credit arrangements and

numerator (top number) is the number of hours worked by

charges to a hotel room unless your normal accounting

each employee who is tipped directly, and the

practice consistently excludes charges to a hotel room.

denominator (bottom number) is the total number of hours

Do not include any state or local taxes in the amounts

worked by all employees who are directly tipped for the

reported.

payroll period. See Regulations sections 31.6053-3(j)(19)

Line 3—Total amount of service charges of less than

and 31.6053-3(f)(1)(iv) for details.

10% paid as wages to employees.—Enter the total

Page 3

Instructions For Form 8027 Page 3

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