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

When To File

an activity that is engaged in for profit and whose receipts

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

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

For example, you would have to include in gross receipts

Form 8027) by February 28, 2011. However, if you file

the retail value of the complimentary drinks served to

electronically, the due date is March 31, 2011.

customers in a gambling casino because tipping is

Extension of time to file. Filers of Form 8027 submitted

customary, the gambling casino is an activity engaged in for

on paper or electronically may request an extension of time

profit, and the gambling receipts of the casino are not

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

included in the amount on line 5.

File Information Returns. File Form 8809 as soon as you

However, you would not have to include the retail value

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

of complimentary hors d’oeuvres at your bar or a

than February 28, 2011 (March 31 if you file electronically).

complimentary dessert served to a regular patron of your

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

restaurant in gross receipts because the receipts of the bar

extension approval. If an approval has not been received,

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

attach a copy of your timely filed Form 8809.

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

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

Where To File

it is not customary.

Mail Form 8027 to:

Allocation of Tips

Department of the Treasury

You must allocate tips among employees who receive them

Internal Revenue Service

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

Cincinnati, OH 45999

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

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

establishment’s gross receipts for that period.

extension approval, a copy of your “lower rate”

Generally, the amount allocated is the difference between

determination letter from the IRS, your good-faith

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

agreement, and any other pertinent documents. See line 6

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

of Form 8027.

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

Reporting and filing electronically. If you are the

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

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

petition to:

file the returns electronically. For details, see Regulations

section 301.6011-2.

Internal Revenue Service

National Tip Reporting Compliance

Specifications for filing. See Pub.1239 for information

3251 North Evergreen Dr., NE

on filing Form 8027 electronically. You can find Pub. 1239 at

Grand Rapids, MI 49525

IRS.gov.

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.

Employer’s name, address, and EIN;

•

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

Establishment’s name, address, and establishment

number;

For more information on penalties for untimely or

•

Detailed description of the establishment that would help

incorrect Forms W-2 or 8027, see Sec. 9 Penalties in Pub.

to determine the tip rate. The description should include the

1239, and the Instructions for Forms W-2 and W-3.

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

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

Gross Receipts

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

Gross receipts include all receipts (other than nonallocable

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

receipts, see definition below) from cash sales, charge

and whether alcohol is available;

•

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

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

the hotel room if your accounting procedures allow these

Form 8027 as well as total carryout sales; total charge

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

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

food or beverages served to customers as explained below.

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

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

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

service charge;

extent that you reduced your cash sales by the amount of

•

Type of clientele; and

any cash you paid to tipped employees for any charged tips

•

Copy of a representative menu for each meal.

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

charged tips paid out to employees, do not include those

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

The petition must contain the following statement and be

taxes in gross receipts.

signed by a responsible person who is authorized to make

and sign a return, statement, or other document.

Remind all directly and indirectly tipped employees

to include all charged tips and all cash tips received

TIP

“Under penalties of perjury, I declare that I have

in the tip amount that they must report to you.

examined this petition, including accompanying

Nonallocable receipts. These are receipts for carryout

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

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

the facts presented in support of this petition are true,

more. (Nonallocable receipts generally include all sales on

correct, and complete.”

which tipping is not customary.)

Complimentary items. Food or beverages served to

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

customers without charge must be included in gross receipts

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

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

petitioning for more than one establishment or you want to

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

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

-2-

Instructions For Form 8027 Page 2

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