Instructions For Form 8027 Page 2


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
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
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
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
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
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


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