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About Form 8027

Large restaurants, bars, and other establishments serving food or drink must use Form 8027 to annually report employee tips and other receipts from operations. To qualify, such an establishment must on an average day employ over 10 employees who work more than 80 hours for two consecutive months; furthermore, tipping must be a norm among the establishment’s customers. An owner of multiple large food-and/or-drink-serving venues must file an 8027 form for each one.

To calculate whether your establishment must use a form 8027, undertake the following exercise: write down one-half of the total employee hours worked during the month in the past year with the greatest aggregate gross receipts from food and beverages (1). Then, write down the total days opened for business in that month (2). Then, write down one-half of the total employee hours worked during the month in 2009 with the least aggregate gross receipts from food and beverages (3). Add up the days opened for business in that month (4). Divide (1) by (2), and divide (3) by (4). Add those two quotients together, and if the sum is greater than 80, the form 8027 must be filled out.

All employees who receive over $20 in tips per month are responsible for reporting their tips to their employer. Non-tipped employees are counted along with tipped employees for determining the size of the establishment. However, the owner, or an individual possessing more than 50% of the business’s stock, does not count for this calculation.   New establishments, which have been open for a month or less in the current calendar year, are exempt from filing, as are fast food restaurants where tipping is not the norm.

Information reported on Form 8027 including the type of establishment, whether the establishment accepts credit cards or debit cards, the total charged tips, the total tips reported by employees (both directly and indirectly tipped), the total number of directly tipped employees, the allocation of tips, and the gross receipts from food and beverage operations. Gross receipts consists of the total tally from cash sales, charge receipts and hotel room charges for food and drink. In certain cases, the value of complimentary food and beverages provided to customers is also included in this figure.

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Erich J. Ruth

Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.

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