IRS Form 8027 – IRS Forms, Instructions, Pubs 2026

IRS Form 8027 – IRS Forms, Instructions, Pubs 2026 – IRS Form 8027 is the Employer’s Annual Information Return of Tip Income and Allocated Tips. Employers use it to report annual gross receipts, charged tips, reported tips, and any allocated tips for large food or beverage establishments.

The form helps the IRS track tip income for tipped employees (such as servers, bartenders, and bussers) and ensures proper allocation when employees underreport tips below the 8% threshold of gross receipts. Accurate filing supports compliance with tip reporting rules and avoids penalties.

Download the official form here: IRS Form 8027 PDF. Always reference the latest IRS instructions for Form 8027 (2025).

Who Must File IRS Form 8027?

You must file Form 8027 if you operate a large food or beverage establishment in the 50 states or District of Columbia where:

  • Tipping of food or beverage employees is customary.
  • The employer normally employed more than 10 employees on a typical business day during the preceding calendar year (the “10-employee test”).

Key definitions:

  • Food or beverage operation: Provides food/beverages for consumption on premises (excludes fast-food where customers order/pay at a counter and take food elsewhere).
  • Tipping customary: Not usually in cafeteria-style or where ≥95% of sales (excluding carryout) include a ≥10% service charge.
  • Food/beverage employees: Includes waitstaff, bussers, bartenders, maitre d’s, wine stewards, cooks, and kitchen help (excludes coat check, bellhops, doormen).

Use the optional Worksheet for Determining if You Must File Form 8027 (in the instructions) based on 2024 data. If average employee hours per business day exceed 80 hours, you must file. File a separate Form 8027 for each qualifying establishment (even in the same building if receipts are tracked separately).

New businesses: File if, in any 2 consecutive calendar months, average hours worked per business day by all employees exceed 80 hours.

Note: For certified professional employer organizations (CPEOs), the customer (establishment operator) files Form 8027.

Form 8027 Filing Deadline and Requirements (2025)

For calendar year 2025:

  • Paper filing deadline: March 2, 2026.
  • Electronic filing deadline: March 31, 2026 (via the FIRE system).

Electronic filing is mandatory if you file 10 or more information returns during the year. Use the IRS Filing Information Returns Electronically (FIRE) system (see Pub. 1239 for specifications). Electronic filing is encouraged even if not required.

If you have multiple establishments and file on paper, use Form 8027-T (Transmittal) to send multiple Forms 8027 (in establishment number order).

Where to file (paper): Department of the Treasury, Internal Revenue Service, Ogden, UT 84201.

Extension: File Form 8809 by the original due date (March 2 or 31, 2026).

How to Complete IRS Form 8027: Step-by-Step

Round all amounts to the nearest whole dollar. Check boxes for amended or final return as needed.

  1. Establishment and Employer Info: Name/address of establishment, EIN, type of establishment (check one: evening meals only, evening/other meals, non-evening meals only, food incidental to alcohol).
  2. Does the establishment accept credit cards, debit cards, or other charges? Check Yes/No. If Yes, complete lines 1 and 2 (enter $0 if none).
  3. Line 1: Total charged tips for 2025.
  4. Line 2: Total charge receipts showing charged tips (food/beverage sales on charge slips with tips; exclude taxes, tips themselves, nonallocable receipts).
  5. Line 3: Total service charges <10% paid as wages to employees.
  6. Line 4a/4b/4c: Tips reported by indirectly/directly tipped employees (total in 4c).
  7. Line 5: Gross receipts from food and beverages (include cash/charge sales, compulsory tips; exclude taxes, carryout if nonallocable, service charges ≥10%).
  8. Line 6: Line 5 × 8% (0.08) or approved lower rate (attach determination letter if <8%).
  9. Line 7: Allocation of tips (Line 6 minus Line 4c, if positive; allocate only to directly tipped employees with shortfall).
  10. Line 8: Total number of directly tipped employees during 2025.

Signature: Under penalties of perjury; include title, date, and phone.

Allocating Tips on Form 8027

Allocate tips if total reported tips (Line 4c) are less than 8% (or approved lower rate) of gross receipts (Line 5). Allocate the shortfall only to directly tipped employees. Report allocated amounts in Box 8 of the employees’ Form W-2 (no withholding on allocated tips).

Allocation methods (choose one):

  • Hours-worked method: Allowed if <25 full-time equivalent employees (<200 average hours/day in the largest payroll period). Allocate based on hours worked by directly tipped employees.
  • Gross receipts method (default): Prorate based on each employee’s share of gross receipts attributable to directly tipped employees.
  • Good-faith agreement: Written agreement signed by ≥2/3 of tipped employees in each category that reasonably approximates actual tip distribution.

If using a lower rate than 8%, attach the IRS determination letter. No allocation if reported tips meet or exceed the threshold.

Penalties, Recordkeeping, and Compliance Tips

Penalties apply for failure to file on time, failure to file electronically when required, inaccurate/incomplete forms, or incorrect W-2 reporting (including allocated tips). Penalties also apply to Form 8027-T. Reasonable cause may waive penalties.

Recordkeeping: Retain all substantiating records (receipts, tip reports, allocation calculations, good-faith agreements) for 3 years after the due date.

Additional tips:

  • Employees must report $20+ monthly cash tips (including charged tips and shared tips) in writing.
  • Use the Employer’s Optional Worksheet for Tipped Employees to check for potential underreporting.
  • Consider the IRS Tip Rate Determination Program or Tip Reporting Alternative Commitment (TRAC) for agreements on tip rates.
  • Service charges ≥10% are wages (not tips); <10% may be treated as tips if voluntary.
  • For employer Social Security/Medicare tip credit, see Form 8846.

FAQs About IRS Form 8027

  • Is Form 8027 required for small restaurants? No, only if the 10-employee test is met.
  • What if no tips were reported? Still file if required; enter amounts (even zero where applicable).
  • Can I request a lower allocation rate than 8%? Yes, petition the IRS with historical data (minimum 2%).

For the most current details, always consult the official IRS Instructions for Form 8027 (2025) and Publication 531 (Reporting Tip Income).

Proper completion of Form 8027 ensures compliance, helps employees report tip income accurately, and supports smooth tax filing for your restaurant or food service business. Consult a tax professional for complex situations.