Instructions For Form 8027 (Page 3 of 6) in pdf

•

The IRS will notify you when and for how long the reduced

An establishment that serves only meals other than evening

rate is effective.

meals (with or without alcoholic beverages).

•

An establishment that serves food, if at all, only as an

Reporting Allocated Tips To Employees

incidental part of the business of serving alcoholic beverages.

Employer’s name and address. Enter the name and address

Give each employee who has been allocated tips a Form W-2

of the entity or individual whose EIN is shown above. Enter

that shows the allocated amount in box 8. The form must be

foreign addresses as follows: city, province or state, and

furnished to the employee by January 31 of the following year.

country. Do not abbreviate the name of the country.

If employment ends before the end of the year and the

employee asks for the Form W-2, a tip allocation is not required

Establishment number. Enter a five-digit number to identify

on the early Form W-2. However, you may include on the early

the individual establishments that you are reporting under the

Form W-2 the employee’s actual tip allocation or a good-faith

same EIN. Give each establishment a separate number. For

estimate of the allocation. Signify a good-faith estimate by

example, each establishment could be numbered

writing “estimate” next to the allocated amount in box 8 of the

consecutively, starting with 00001.

Form W-2.

Lines 1 Through 8

If no allocation was shown on the early Form W-2 or if the

estimated allocation on the early form differs from the actual

Credit card sales. If the credit or debit charge receipts reflect

amount by more than 5%, give the employee Form W-2c,

tips, then you must enter on lines 1 and 2 the appropriate

Corrected Wage and Tax Statement, during January of the next

amounts shown on the credit card or debit card charge

year.

statements. See instructions for line 1 below.

If you allocate tips among employees by the methods

Rounding off to whole dollars. You may round off cents to

described in the instructions for lines 7a through 7c, you are not

whole dollars on your return and schedules. If you do round to

liable to any employee if any amount is improperly allocated.

whole dollars, you must round all amounts. To round, drop

However, if the allocation shown on the employee’s Form W-2

amounts under 50 cents and increase amounts from 50 to 99

differs from the correct allocation by more than 5%, you must

cents to the next dollar. For example, $1.39 becomes $1 and

adjust that employee’s allocation and must review the allocable

$2.50 becomes $3.

amount of all other employees in the same establishment to

If you have to add two or more amounts to figure the amount

assure that the error did not distort any other employee’s share

to enter on a line, include cents when adding the amounts and

by more than 5%. Use Form W-2c to report the corrected

round off only the total.

allocation.

Line 1 — Total charged tips for calendar year 2005. Enter

You do not need to send to the IRS separate copies of

the total amount of tips that are shown on charge receipts for

Forms W-2 showing allocated tips. The IRS will use the

the year.

information shown on the Forms W-2 that you file with the

Line 2 — Total charge receipts showing charged tips.

Social Security Data Operations Center.

Enter the total sales (other than nonallocable receipts as

Tip allocations have no effect on withholding income or

defined on page 2) from charge receipts that had a charged tip

social security or Medicare taxes from employees’ wages.

shown. Include credit card charges and other credit

Allocated tips are not subject to withholding and are not to be

arrangements and charges to a hotel room unless your normal

included in boxes 1, 3, 5, and 7, of Form W-2.

accounting practice consistently excludes charges to a hotel

room. Do not include any state or local taxes in the amounts

reported.

Specific Instructions

Line 3 — Total amount of service charges of less than 10%

paid as wages to employees. Enter the total amount of

File a separate Form 8027 for each large food or beverage

service charges of less than 10% that have been added to

establishment. Use Form 8027-T, Transmittal of Employer’s

customers’ bills and have been distributed to your employees

Annual Information Return of Tip Income and Allocated Tips,

for the year. In general, service charges added to the bill are

when filing more than one Form 8027. Do not attach any

not tips since the customer does not have a choice. These

unrelated correspondence.

service charges are treated as wages and are includible on

Name and address of establishment and employer

Form W-2. For details, see Revenue Ruling 69-28, 1969-1 C.B.

identification number. If your preprinted name, EIN, or

270.

address information on Form 8027 and/or Form 8027-T is not

Line 4a — Total tips reported by indirectly tipped

correct, cross out any errors and print the correct information. If

employees. Enter the total amount of tips reported for the year

Form 8027 and/or Form 8027-T does not have your preprinted

by indirectly tipped employees, such as cooks, bussers, and

information, type or print the name and address of the

service bartenders.

establishment. They may be different from your mailing

address, as in the case of employers who have more than one

Line 4b — Total tips reported by directly tipped

establishment. If mail is not delivered to the street address of

employees. Enter the total amount of tips reported for the year

the establishment, enter the P.O. box number. The employer

by directly tipped employees, such as bartenders and waitstaff.

identification number (EIN) should be the same as the number

In figuring the tips you should report for 2005, do not

on the Forms W-2 that you give to the employees and the Form

include tips received by employees in December 2004,

941, Employer’s Quarterly Federal Tax Return that you file to

but not reported until January 2005. However, include

CAUTION

report wages and taxes for employees working for the

tips received by employees in December 2005, but not reported

establishment. Once you have filed a return, a preaddressed

until January 2006.

Form 8027 and/or Form 8027-T will be sent to you annually.

Line 5 — Gross receipts from food or beverage operations.

Type of establishment. Check the box (check only one box)

Enter the total gross receipts from the provision of food or

on the form that best describes the food or beverage operation

beverages for this establishment for the year.

at this establishment:

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An establishment that serves evening meals only (with or

If you do not charge separately for providing food or

without alcoholic beverages).

beverages along with other goods or services (such as a

•

An establishment that serves evening and other meals (with

package deal for food and lodging), make a good-faith estimate

or without alcoholic beverages).

of the gross receipts from the food or beverages. This estimate

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Instructions For Form 8027 Page 3

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