![[Company Logo Image]](../images/cm_logo.gif){kind=logo}
|
|
|
|
Notice Regarding Tip Reporting Requirements Beginning in 1993, large food and beverage establishments were required to report certain information concerning employee tips. The required information must be reported on Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, on or before the last day of February of the following year. Internal Revenue Service Regulations Section 31.6053-3 provides authority for this reporting requirement. Form 8027 is used to calculate allocated tips to be included on each employee’s Form W-2. Allocated tips are the excess (if any) of 8% of allocable receipts (which for purposes of this notice, we could call “expected tips”) over the total tips reported by employees. “Large food and beverage establishment” is defined as one to which all of the following apply: · Food or beverage is provided for consumption on the premises. · Tipping is a customary practice. · More than 10 employees, who work more than 80 hours, were normally employed on a typical business day during the preceding calendar year. “More than 10 employees” includes all employees, not just tipped employees. That is, it includes wait staff, bussers, bartenders, seat persons, wine stewards, cooks, and kitchen help. The instruction to Form 8027 provide a worksheet for determining whether the establishment meets the last criterion above. The instructions to Form 8027 also provide a worksheet to aid in determining whether tipped employees are reporting all of their tips. Although the results of the worksheet may not be conclusive they would certainly be indicative (of underreporting or sufficient reporting). In an effort to promote tip reporting compliance by employees, the IRS created Tip Reporting Alternative Commitments (TRAC), Tip Rate Determination Agreements (TRDA) and Employer-designed Tip Reporting Alternative Commitments (EmTRAC). The main benefit of each of these types of agreements is that the IRS agrees not to initiate any tip examination of the employer, except in relation to a tip examination of one or more employees or former employees. The IRS may, however, conduct a compliance review to determine whether the employer is complying with the provisions of the agreement. Please contact us if you have additional questions.
|
Contact us.
|
