Instructions For Form 8027

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Department of the Treasury
Internal Revenue Service
Instructions for Form 8027
Employer’s Annual Information Return of
Tip Income and Allocated Tips
Section references are to the Internal Revenue Code unless otherwise noted.
business day that determines whether or not you employed
General Instructions
more than 10 employees.
Items To Note
1. Enter one-half of the total employee hours worked
during the month in 2004 with the greatest aggregate
You must check one of the “Yes” or “No” boxes under
gross receipts from food and beverages . . . . . . . . . .
employer’s name and address to indicate whether or not the
establishment accepts credit cards, debit cards, or other
2. Enter the number of days opened for business during
charges. If the “Yes” box is checked, lines 1 and 2 of Form
the month shown in line 1 . . . . . . . . . . . . . . . . . . . .
8027 must be completed. Also see the instructions for lines 1
3. Enter one-half of the total employee hours worked
and 2 on page 3.
during the month in 2004 with the least aggregate
Complete the Worksheet for Determining Whether To File
gross receipts from food and beverages . . . . . . . . . .
Form 8027 (below) to determine if you are required to file Form
4. Enter the number of days opened for business during
8027.
the month shown in line 3. . . . . . . . . . . . . . . . . . . .
You may want to use the Employer’s Optional Worksheet for
Tipped Employees on page 5 as a means of determining if your
5. Divide line 1 by line 2. . . . . . . . . . . . . . . . . . . . . . .
employees are reporting all of their tip income to you.
6. Divide line 3 by line 4. . . . . . . . . . . . . . . . . . . . . . .
Purpose of Form
7. Add lines 5 and 6. If line 7 is greater than 80 (hours),
you are required to file Form 8027 for 2005. . . . . . . .
Form 8027 is used by large food or beverage establishments
when the employer is required to make annual reports to the
Note. The filing requirement (more than 10 employees) is
IRS on receipts from food or beverage operations and tips
based on the total of all employees who provided services in
reported by employees.
connection with the provision of food and beverages at the
All employees receiving $20 or more a month in tips
establishment, not just the number of directly tipped employees.
must report 100% of their tips to their employer.
TIP
Include employees such as waitstaff, bussers, bartenders, seat
persons, wine stewards, cooks, and kitchen help. See
Regulations section 31.6053-3(j)(10) for more information.
Who Must File
A person who owns 50% or more in value of the stock of a
corporation that runs the establishment is not considered an
If you are an employer who operates a large food or beverage
employee when determining whether the establishment
establishment, you must file Form 8027. If you own more than
normally employs more than 10 individuals.
one establishment, you must file Form 8027 for each one.
There may be more than one establishment (business activity
New large food or beverage establishment. File Form 8027
providing food or beverages) operating within a single building,
for a new large food or beverage establishment if, during any 2
and, if gross receipts are recorded separately, each activity is
consecutive calendar months, the average number of hours
required to file a Form 8027.
worked each business day by all employees is more than 80
A return is required only for establishments in the 50 states
hours. To figure the average number of employee hours worked
and the District of Columbia.
each business day during a month, divide the total hours all
employees worked during the month by the number of days the
If you are required to report for more than one
establishment was open for business. After the test is met for 2
!
establishment, you must complete and file Form 8027-T,
consecutive months, you must file a return covering the rest of
Transmittal of Employer’s Annual Information Return of
CAUTION
the year, beginning with the next payroll period.
Tip Income and Allocated Tips, with Forms 8027.
Exceptions To Filing
A large food or beverage establishment is one to which all of
the following apply:
A return is not required for:
Food or beverage is provided for consumption on the
Establishments operated for less than 1 month in calendar
premises.
year 2005.
Tipping is a customary practice.
Fast food restaurants and operations where tipping is not
More than 10 employees, who work more than 80 hours,
customary such as cafeterias or operations where 95% of the
were normally employed on a typical business day during the
total sales are carryout sales or sales with a service charge of
preceding calendar year.
10% or more.
Worksheet for Determining Whether
When To File
To File Form 8027
Complete the worksheet below to determine if you had more
File Form 8027 (and Form 8027-T when filing more than one
than 10 employees on a typical business day during 2004 and,
Form 8027) by February 28, 2006. However, if you file
therefore, are required to file Form 8027 for 2005. It is the
electronically (not by magnetic media), the due date is March
average number of employee hours worked on a typical
31, 2006.
Cat. No. 61013P

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