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What You Need to Know About IRS Tipping Rules & Form 8027

Below is an excerpt of an article by Bret Curtis, tax shareholder in our Overland Park office, which was published on the Kansas Restaurant & Hospitality Association website. Click here to read the full article on the KRHA website.

Imagine opening a notice from the IRS requesting you to file Form 8027 (Employer’s Annual Information Return of Tip Income and Allocated Tips) for the past few years. Surprise? Yes, and not a good surprise. Internal Revenue Service Form 8027 is an annual information return prepared by an employer who operates a large food or beverage establishment. The form requires the large employer to report gross receipts and tips. The form also calculates whether the employer is required to allocate tips to employees. Large discrepancies between employer- and employee-reported tips are a red flag to the IRS that employees are underreporting their tips. The form is due to the IRS by February 28th if filing in paper format or March 31st if you are filing electronically. If you are not familiar with Form 8027, here is what you need to know: