The IRS defines a large food or beverage establishment under Form 8027 based on employee count. Specifically, the business qualifies if it has 10 or more employees working on a typical business day during the preceding calendar year.
Definition of a Large Food or Beverage Establishment
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Size Criteria
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The establishment must employ 10 or more workers on a typical business day.
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This includes all employees — waitstaff, kitchen staff, bartenders, and other roles essential to daily operations.
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Typical Business Day
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Any day the establishment is open for business with regular staff.
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Both part-time and seasonal workers count toward the total if they are actively working that day.
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Examples of Large Food or Beverage Establishments
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Restaurant or Café: A restaurant with 10+ employees working on a typical business day must file Form 8027.
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Hotel with a Restaurant or Bar: If the hotel employs 10+ staff in its food and beverage section, it qualifies under the rule.
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Catering Services: Catering companies that meet the employee threshold are also considered large establishments.
👉 Related: Form 8027 Software
Why This Matters
Correct classification ensures accurate tip allocation reporting under Form 8027.
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Misclassification can result in IRS penalties or incorrect reporting of allocated tips.
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Establishments that meet the size requirement must report gross receipts and tip allocations properly.
👉 See also: IRS Instructions for Form 8027