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

Privacy Act and Paperwork Reduction Act Notice. We

Employer’s Optional Worksheet

ask for the information on this form to carry out the Internal

Revenue laws of the United States. You are required to give

for Tipped Employees

us the information. We need it to ensure that you are

Unreported tip income can lead to additional employer

complying with these laws and to allow us to figure and

liability for FICA taxes. As a means of determining if your

collect the right amount of tax.

employees are reporting all of their tips to you, please take a

Chapter 61, Information and Returns, of Subtitle F,

few minutes to voluntarily complete the following worksheet.

Procedure and Administration, requires certain employers to

Completing this worksheet is only for the employer’s

report gross receipts, tips reported to them, and any

information (it is not sent to the IRS).

allocated tips; and to furnish the amount of any allocated

tips to affected employees. Section 6053 and its related

regulations provide the definitions and methodology to be

1. Enter amount from Form 8027, line 1 . . . . . . . . . 1.

used in completing these forms. If you fail to provide this

2. Enter amount from Form 8027, line 2 . . . . . . . . . 2.

information in a timely manner, you may be liable for

3. Divide line 1 by line 2, enter as a decimal (at least 4

decimal places) . . . . . . . . . . . . . . . . . . . . . . . . 3.

penalties as provided by section 6721.

4. Enter amount from Form 8027, line 4c . . . . . . . . 4.

You are not required to provide the information requested

5. Enter amount from Form 8027, line 5 . . . . . . . . . 5.

on a form that is subject to the Paperwork Reduction Act

6. Divide line 4 by line 5, enter as a decimal (at least 4

unless the form displays a valid OMB control number. Books

decimal places) . . . . . . . . . . . . . . . . . . . . . . . . 6.

or records relating to a form or its instructions must be

7. Subtract line 6 from line 3; if zero or less, stop here 7.

retained as long as their contents may become material in

8. Potential unreported tips. Multiply line 7 by line 5

the administration of any Internal Revenue law.

Generally, tax returns and return information are

Once you have completed the worksheet:

confidential, as required by section 6103. However, section

•

If the entry on line 7 is zero or less, your employees are

6103 allows or requires the Internal Revenue Service to

probably accurately reporting their tips; however,

disclose or give the information shown on your tax return to

•

If the entry on line 8 is greater than zero, depending on

others as described in the Code. For example, we may

the type of operation you have and whether or not you have

disclose your tax information to the Department of Justice

allocated tips, it is possible that your employees are not

for civil and criminal litigation, and to cities, states, the

reporting all of their tip income to you.

District of Columbia, and U.S commonwealths and

Another quick method to determine if your

possessions to administer their tax laws. We may also

employees are properly reporting all of their tips to

TIP

disclose this information to other countries under a tax

you is to compare the rate of tips reported on credit

treaty, to federal and state agencies to enforce federal

sales to the rate of tips reported on cash sales. For

nontax criminal laws, or to federal law enforcement and

example, if line 3 in the worksheet above greatly exceeds

intelligence agencies to combat terrorism.

the rate determined from dividing reported cash tips by

The time needed to complete and file these forms will

reportable cash receipts (that is, total cash receipts less

vary depending on individual circumstances. The estimated

nonallocable cash receipts), some of your employees may

average times are:

not be reporting all of their tips to you and you generally

Forms

8027

8027-T

should be showing an amount on line 7 (“Allocation of tips”)

of Form 8027.

Recordkeeping . . . . . . . . . . . . . . . . . .

9 hr., 33 min.

43 min.

Learning about the law or the form . . . .

53 min.

Need Help?

Preparing and sending the form to the

If it appears that not all tips are being reported to you, the

IRS . . . . . . . . . . . . . . . . . . . . . . . . . .

1 hr., 5 min.

IRS offers a service called the Tip Rate Determination &

If you have comments concerning the accuracy of these

Education Program. This program can assist you, the

time estimates or suggestions for making these forms

employer, in implementing more effective methods of tip

simpler, we would be happy to hear from you. You can email

income reporting. The program also offers assistance in

us at taxforms@irs.gov. Enter “Form 8027” on the subject

educating tipped employees concerning their obligations

line. Or write to the Internal Revenue Service, Tax Products

relating to the reporting of any tip income they receive. To

Coordinating Committee, SE:W:CAR:MP:T:M:S, 1111

find out more about this program or to participate in a

Constitution Ave. NW, IR-6526, Washington, DC 20224. Do

voluntary tip compliance agreement, visit IRS.gov and type

not send the tax forms to this address. Instead, see Where

“restaurant” in the search box. You may also call

To File, earlier.

1-800-829-4933 or visit

for the

IRS Taxpayer Assistance Center in your area; or send an

email to

TIP.Program@irs.gov

and request information on

this program.

-6-

Instructions For Form 8027 Page 6

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