Instructions For Form 8027 (2015) Page 6
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8the tips the employee reported for the payroll period. The
(LLC) treated as a corporation). The president, vice
result is each directly tipped employee's shortfall (if any) for
president, or other principal officer duly authorized to sign.
the period.
• Partnership (including an LLC treated as a partner-
5. From the amount figured in step 1, subtract the total
ship) or unincorporated organization. A responsible and
tips reported by both directly and indirectly tipped
duly authorized member, partner, or officer having
employees. The result is the amount that has to be allocated
knowledge of its affairs.
among the directly tipped employees who had a shortfall for
• Single member limited liability company (LLC) treated
the payroll period as figured in step 4.
as a disregarded entity for federal income tax purpo-
6. For each directly tipped employee who had a shortfall
ses. The owner of the LLC or principal officer duly
for the period as figured in step 4, multiply the amount in step
authorized to sign.
5 by the following fraction: the numerator is the employee's
• Trust or estate. The fiduciary.
shortfall (figured in step 4), and the denominator is the total
shortfall of all directly tipped employees. The result is the
Form 8027 may also be signed by a duly authorized agent
amount of allocated tips for each directly tipped employee.
of the taxpayer if a valid power of attorney has been filed.
Alternative signature method. Corporate officers or duly
Line 7c. Good-Faith Agreement
authorized agents may sign Form 8027 by rubber stamp,
An allocation can be made under a good-faith agreement.
mechanical device, or computer software program. For
This is a written agreement between you and at least
details and required documentation, see Rev. Proc. 2005-39,
two-thirds of the employees of each occupational category of
2005-28 I.R.B. 82, available at
employees who receive tips (for example, waitstaff, bussers,
ar16.html.
and maitre d's) working in the establishment when the
agreement is adopted. The agreement must:
Example for Line 7b. Gross Receipts Method
1. Provide for an allocation of the difference between
A large food or beverage establishment has gross receipts
total tips reported and 8% (or the lower rate) of gross receipts
for a payroll period of $100,000 and has tips reported for the
among employees who receive tips that approximates the
payroll period of $6,200. Directly tipped employees reported
actual distribution of tip income among the employees;
$5,700, while indirectly tipped employees reported $500.
2. Be effective the first day of a payroll period that begins
after the date the agreement is adopted, but no later than
Directly
Gross receipts
January 1 of the next year;
tipped
for payroll
employees
period
Tips reported
3. Be adopted when there are employees in each
occupational category who would be affected by the
A
$18,000
$1,080
agreement; and
B
16,000
880
C
23,000
1,810
4. Allow for revocation by a written agreement adopted
D
17,000
800
by at least two-thirds of the employees in occupational
E
12,000
450
categories affected by the agreement when it is revoked. The
F
14,000
680
revocation is effective only at the beginning of a payroll
Totals
$100,000
$5,700
period.
1.
$100,000 (gross receipts) x .08 = $8,000
2.
$8,000 - $500 (tips reported by indirectly tipped employees) =
Keep a copy of the good-faith agreement for your records.
$7,500
Line 8. Total Number of Directly Tipped
3.
Directly tipped
Employees
Directly
employees'
(Times)
Employee's
tipped
share of 8% of
Gross receipts
share of 8%
Enter the total number of directly tipped employees who
employees
the gross
ratio
of gross
worked at the establishment during 2015. This is the
A
$7,500
18,000/100,000 =
$1,350
cumulative total of all directly tipped employees who worked
B
$7,500
16,000/100,000 =
1,200
at the establishment at any time during the year. If you have a
C
$7,500
23,000/100,000 =
1,725
large turnover of directly tipped employees, this number may
D
$7,500
17,000/100,000 =
1,275
be large. Don't use this number to determine if you must file
E
$7,500
12,000/100,000 =
900
Form 8027. Instead, see the Worksheet for Determining if
F
$7,500
14,000/100,000 =
1,050
You Must File Form 8027 for Calendar Year 2015, earlier.
Total
$7,500
4.
Directly
Employee's
Signature
tipped
share of 8% of
(Minus)
Employee
Sign your name and include your title. Then enter the date
employees
the gross
Tips reported
shortfall
signed and the best daytime telephone number where the
A
$1,350
$1,080 =
$270
IRS can reach you, including area code.
B
$1,200
880 =
320
C
$1,725
1,810 =
–
Who Must Sign
D
$1,275
800 =
475
E
$ 900
450 =
450
The following persons are authorized to sign the return for
F
$1,050
680 =
370
each type of business entity.
Total shortfall
$1,885
• Sole proprietorship. The individual who owns the
business.
• Corporation (including a limited liability company
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