Instructions For Form 8027 (Page 2 of 6) in pdf

When To File

For example, you would have to include in gross receipts

the retail value of the complimentary drinks served to

File Form 8027 (and Form 8027-T when filing more than one

customers in a gambling casino because tipping is

Form 8027) by February 29, 2012. However, if you file

customary, the gambling casino is an activity engaged in for

electronically, the due date is April 2, 2012.

profit, and the gambling receipts of the casino are not

Extension of time to file. Filers of Form 8027 submitted

included in the amount on line 5.

on paper or electronically may request an extension of time

However, you would not have to include the retail value

to file on Form 8809, Application for Extension of Time To

of complimentary hors d’oeuvres at your bar or a

File Information Returns. File Form 8809 as soon as you

complimentary dessert served to a regular patron of your

know an extension of time to file is necessary, but not later

restaurant in gross receipts because the receipts of the bar

than February 29, 2012 (April 2, 2012 if you file

or restaurant would be included in the amount on line 5. You

electronically).

would not have to include the value of a fruit basket placed

Note. When filing a paper Form 8027 attach a copy of your

in a hotel room in gross receipts since, generally, tipping for

extension approval. If an approval has not been received,

it is not customary.

attach a copy of your timely filed Form 8809.

Allocation of Tips

Where To File

You must allocate tips among employees who receive them

Mail Form 8027 to:

if the total tips reported to you during any payroll period are

less than 8% (or the approved lower rate) of this

Department of the Treasury

establishment’s gross receipts for that period.

Internal Revenue Service

Generally, the amount allocated is the difference between

Cincinnati, OH 45999

the total tips reported by employees and 8% (or the lower

Note. When filing a paper Form 8027, attach a copy of your

rate) of the gross receipts, other than nonallocable receipts.

extension approval, a copy of your “lower rate”

Lower rate. You (or a majority of the employees) may

determination letter from the IRS, your good-faith

request a lower rate (but not lower than 2%) by submitting a

agreement, and any other pertinent documents. See line 6

petition to:

of Form 8027.

Internal Revenue Service

Reporting and filing electronically. If you are the

National Tip Reporting Compliance

employer and you file 250 or more Forms 8027, you must

3251 North Evergreen Dr. NE

file the returns electronically. See Pub. 1239 for information

Grand Rapids, MI 49525

on filing Form 8027 electronically.

Do not mail Form 8027 to this address. See Where To

Penalties

File discussed earlier.

The law provides for a penalty if you do not file Form 8027

The burden of supplying sufficient information to allow

(and Form 8027-T) on time unless you can show reasonable

the IRS to estimate with reasonable accuracy the actual tip

cause for the delay. You may be charged penalties for each

rate of the establishment rests with the petitioner. Your

failure to:

petition for a lower rate must clearly demonstrate that a rate

•

Timely file a correct information return including failure to

less than 8% should apply. It must include the following

file electronically if required, and

information.

•

Timely provide a correct Form W-2 to the employee.

Employer’s name, address, and EIN.

•

Establishment’s name, address, and establishment

For more information on penalties for untimely or

number.

incorrect Forms W-2 or 8027, see Pub. 1239 and the

•

Detailed description of the establishment that would help

Instructions for Forms W-2 and W-3.

to determine the tip rate. The description should include the

Gross Receipts

type of restaurant, days and hours of operation, type of

service including any self-service, the person (waiter or

Gross receipts include all receipts (other than nonallocable

waitress, cashier, etc.) to whom the customer pays the

receipts, see definition below) from cash sales, charge

check, whether the check is paid before or after the meal,

receipts, charges to a hotel room (excluding tips charged to

and whether alcohol is available.

the hotel room if your accounting procedures allow these

•

Past year’s information shown on lines 1 through 6 of

tips to be separated), and the retail value of complimentary

Form 8027 as well as total carryout sales; total charge

food or beverages served to customers as explained below.

sales; percentage of sales for breakfast, lunch, and dinner;

Also include charged tips in gross receipts, but only to the

average dollar amount of a guest check; service charge, if

extent that you reduced your cash sales by the amount of

any, added to the check; and the percentage of sales with a

any cash you paid to tipped employees for any charged tips

service charge.

•

due them. However, if you did not reduce cash sales for

Type of clientele.

•

charged tips paid out to employees, do not include those

Copy of a representative menu for each meal.

charged tips in gross receipts. Do not include state or local

taxes in gross receipts.

The petition must contain the following statement and be

signed by a responsible person who is authorized to make

Remind all directly and indirectly tipped employees

and sign a return, statement, or other document.

to include all charged tips and all cash tips received

TIP

in the tip amount that they must report to you.

“Under penalties of perjury, I declare that I have

Nonallocable receipts. These are receipts for carryout

examined this petition, including accompanying

sales and receipts with a service charge added of 10% or

documents, and to the best of my knowledge and belief,

more. Nonallocable receipts generally include all sales on

the facts presented in support of this petition are true,

which tipping is not customary.

correct, and complete.”

Complimentary items. Food or beverages served to

customers without charge must be included in gross receipts

You must attach to the petition copies of Form 8027 (if

if (a) tipping for providing them is customary at the

any) filed for the 3 years before your petition. If you are

establishment, and (b) they are provided in connection with

petitioning for more than one establishment or you want to

an activity that is engaged in for profit and whose receipts

know your appeal rights, see Rev. Proc. 86-21, 1986 1 C.B.

would not be included in the amount on line 5 of Form 8027.

560 for additional information. Also include with your petition

-2-

Instructions For Form 8027 Page 2

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