Line A: Accepts credit cards, debit cards or other chargesCheck Yes or No. If Yes, lines 1 and 2 must be completed, even with zero.Click to open the row in the table belowLine B: Voluntary tip reporting programNew for 2026: check Yes or No to show whether the establishment participated in TRDA, TRAC (including EmTRAC) or GITCA during the year. One box must be checked.Click to open the row in the table belowLine 1: Total charged tipsTips shown on charge receipts for 2026. Service charges are not tips and stay out.Click to open the row in the table belowLine 2: Total charge receipts showing charged tipsFood and beverage sales on charge receipts that had a tip, excluding nonallocable receipts, tips and sales taxes.Click to open the row in the table belowLine 3: Service charges of less than 10% paid as wagesService charges under 10% added to bills and distributed to employees. These are wages subject to withholding, not tips.Click to open the row in the table belowLine 4a: Tips reported by indirectly tipped employeesCooks, bussers, service bartenders and others who receive tips from other employees.Click to open the row in the table belowLine 4b: Tips reported by directly tipped employeesWaitstaff, bartenders, and employees such as a maitre d' who receive tips directly as well as through pooling.Click to open the row in the table belowLine 4c: Total tips reportedLine 4a plus 4b. Include December 2026 tips reported in January 2027, and exclude December 2025 tips reported in January 2026.Click to open the row in the table belowLine 5: Gross receipts from food and beveragesAll food and beverage receipts (other than nonallocable receipts), including the retail value of certain complimentary items. Not less than line 2.Click to open the row in the table belowLine 6: 8% of gross receiptsLine 5 times 8% or the IRS-approved lower rate, with the determination letter attached. Mark an X here if you allocated by a period shorter than the year.Click to open the row in the table belowLine 7: Allocation of tipsIf line 6 exceeds line 4c, the excess must be allocated to directly tipped employees and shown in box 8 of their Forms W-2.Click to open the row in the table belowLine 7a: Hours-worked methodOnly for establishments with fewer than the equivalent of 25 full-time employees (under 200 employee hours per business day); enter the average hours.Click to open the row in the table belowLine 7b: Gross receipts methodThe default when no good-faith agreement applies.Click to open the row in the table belowLine 7c: Good-faith agreementA written agreement with at least two-thirds of tipped employees in each occupational category.Click to open the row in the table belowLine 8: Number of directly tipped employeesCumulative count of directly tipped employees who worked there at any time in 2026. Not the number used for the 10-employee test.Click to open the row in the table belowHover over a line for what goes on it; click to open its row in the table below. On a touch screen, tap the line to jump to the row.
Who files Form 8027
“You must file Form 8027 if you’re an employer who operates a large food or beverage establishment.” That is a food or beverage operation located in the 50 states or the District of Columbia, where tipping of food or beverage employees is customary, and whose employer normally employed more than 10 employees on a typical business day during the preceding calendar year. The optional worksheet in the instructions applies the test by hours: if average employee hours on a typical business day (from the busiest and slowest months of 2025) exceed 80, you file for 2026.
Count every employee at all your food or beverage operations, not just servers, and exclude fast-food operations and 50% owners of a corporation. “Don’t apply the 10-employee test separately to each food or beverage operation.” Once the test is met, file a separate Form 8027 for each operation where tipping is customary, even one with fewer than 10 employees of its own; a hotel's restaurant, coffee shop and lounge with separately recorded receipts are three returns. Tipping is generally not customary in a cafeteria-style operation or where at least 95% of sales carry a service charge of 10% or more. A new business files once average hours exceed 80 per business day for 2 consecutive months.
Where a CPEO pays the workers, the customer that operates the establishment is the employer for Form 8027 and files it, with the CPEO supplying the data. Employers filing more than one paper Form 8027 also file Form 8027-T as the transmittal; it is not used with electronic filing.
Line by line
| Line | What it is | Notes |
|---|---|---|
| A | Accepts credit cards, debit cards or other charges | Check Yes or No. If Yes, lines 1 and 2 must be completed, even with zero. |
| B | Voluntary tip reporting program | New for 2026: check Yes or No to show whether the establishment participated in TRDA, TRAC (including EmTRAC) or GITCA during the year. One box must be checked. |
| 1 | Total charged tips | Tips shown on charge receipts for 2026. Service charges are not tips and stay out. |
| 2 | Total charge receipts showing charged tips | Food and beverage sales on charge receipts that had a tip, excluding nonallocable receipts, tips and sales taxes. |
| 3 | Service charges of less than 10% paid as wages | Service charges under 10% added to bills and distributed to employees. These are wages subject to withholding, not tips. |
| 4a | Tips reported by indirectly tipped employees | Cooks, bussers, service bartenders and others who receive tips from other employees. |
| 4b | Tips reported by directly tipped employees | Waitstaff, bartenders, and employees such as a maitre d' who receive tips directly as well as through pooling. |
| 4c | Total tips reported | Line 4a plus 4b. Include December 2026 tips reported in January 2027, and exclude December 2025 tips reported in January 2026. |
| 5 | Gross receipts from food and beverages | All food and beverage receipts (other than nonallocable receipts), including the retail value of certain complimentary items. Not less than line 2. |
| 6 | 8% of gross receipts | Line 5 times 8% or the IRS-approved lower rate, with the determination letter attached. Mark an X here if you allocated by a period shorter than the year. |
| 7 | Allocation of tips | If line 6 exceeds line 4c, the excess must be allocated to directly tipped employees and shown in box 8 of their Forms W-2. |
| 7a | Hours-worked method | Only for establishments with fewer than the equivalent of 25 full-time employees (under 200 employee hours per business day); enter the average hours. |
| 7b | Gross receipts method | The default when no good-faith agreement applies. |
| 7c | Good-faith agreement | A written agreement with at least two-thirds of tipped employees in each occupational category. |
| 8 | Number of directly tipped employees | Cumulative count of directly tipped employees who worked there at any time in 2026. Not the number used for the 10-employee test. |
Due dates
| What | Due | Notes |
|---|---|---|
| Paper Form 8027 (and 8027-T) for 2026 | March 1, 2027 | The regular February 28 date falls on a Sunday. |
| Electronic Form 8027 for 2026 (IRIS) | March 31, 2027 | Required if you file 10 or more information returns in total. |
| Form 8809 extension | By March 1, 2027 (March 31 if e-filing) | Not before January 1 of the filing year. |
| Forms W-2 with allocated tips (box 8) | January 31 (February 1, 2027 for 2026) | The allocation must be on the employee's W-2. |
Penalties
The instructions provide for a penalty for not filing Form 8027 (and Form 8027-T) on time without reasonable cause, and for each failure to timely file a correct information return (Forms 8027 and W-2), including failing to file electronically when required, and to furnish a correct W-2. They refer to the penalty sections of Pub 1099 and the W-2/W-3 instructions; for returns due in 2027 the information return amounts are $60 per return corrected within 30 days, $130 by August 1, $340 after that, and $690 for intentional disregard. An inaccurate Form 8027 also means the allocated tips on each directly tipped employee's W-2 are wrong.
Corrections
To correct a filed Form 8027, file a new one for the establishment with the Amended Return box checked. If an employee's W-2 allocation differs from the correct allocation by more than 5%, you must correct it and review the other employees' shares in the same establishment: use Form W-2c if the W-2 was filed with SSA, or a new W-2 marked “Corrected” on the employee copies if it was furnished but not yet filed. An early W-2 given to a departing employee may show a good-faith estimate marked “Estimate”.
Where it goes wrong
- Testing each restaurant on its own. The 10-employee test combines all employees, tipped and untipped, at all your food or beverage operations. Meeting it means a return for every qualifying operation.
- Service charges reported as tips. “Service charges aren’t reported as tips on Form 8027.” Distributed service charges are wages; only those under 10% go on line 3.
- Line A Yes with lines 1 and 2 blank. If the establishment accepts cards, both lines need an amount, even zero. Line 5 cannot be less than line 2.
- Reading 8% as a reporting floor. “The 8% rate (or lower rate) is used for tip allocation purposes only.” Employees must report all tips actually received.
- Allocated tips run through payroll. “Allocated tips aren’t subject to withholding and must not be included in boxes 1, 3, 5, and 7 of Form W-2.” “Don’t allocate tips to indirectly tipped employees.”
- EIN and establishment numbers. The EIN should match the one on the employees' W-2s and the Form 941. Each establishment keeps the same 5-digit number every year, and a closed establishment's number is not reused.
Inside the IRS: what happens to Form 8027
Paper Forms 8027, with Form 8027-T when there is more than one, “are filed and processed at the Ogden Submission Processing Campus (OSPC)” under IRM 3.11.180. The IRS uses Letter 1858C “to correspond for missing or inconsistent information” and allows 45 days for a reply. It checks the count on Form 8027-T against the forms actually received, and a single form listing several establishments is sent back: “Without a separate form, the submission is considered unfiled and a Failure to File (FTF) penalty may apply.” A return marked not liable is processed in short form: “Correspondence will not be initiated, and penalties will not apply.”
The IRM ties Form 8027 to the payroll returns: “The name and EIN of the employer listed on Form 8027 must be the same as those listed on Form W-2” and Form 941. Lower allocation rates need a determination letter, and “All determination letters are for a specific time period not to exceed three years.” Timing matters for late fixes: after October 31 the IRS stops corresponding on unprocessable returns, “Since the information is purged from the database in January”, and routes them to the National Tip Reporting Compliance Program.
Penalties are assessed under IRC 6721 on the civil penalty module. For an employer with several establishments the IRS will “assess the employer one penalty for the entire amount”, the per-return amount times the number of returns, and the employer receives CP 215. A reply with a reasonable cause explanation or a processable return goes to the campus collection function.
In examinations (IRM 4.23.7), Form 8027 “is analyzed and compared to Forms 941 filed by employers to determine the potential for under-reported tips in the food and beverage industry.” Warning signs include “Charged tips are greater than or equal to total tips reported” and differences between total tips on Form 8027 and tip wages on Form 941. What to do: reconcile line 4c to the tips reported on your Forms 941 and W-2, keep any lower-rate letter current, and answer Letter 1858C within the 45 days. See CP215.
Questions people ask about Form 8027
Is Form 8027 filed through IRIS for 2026?
Yes. The 2026 instructions say FIRE is retired and “The Information Returns Intake System (IRIS) is now the only system available to electronically file your 2026 Form 8027.” The e-file deadline is March 31, 2027.
What is the new line B?
A Yes or No question, new for 2026, on whether the establishment participated in a voluntary tip reporting program with the IRS during the year (TRDA, TRAC including EmTRAC, or GITCA). One box must be checked.
We have three restaurants with 6 employees each. Do we file?
The test is applied across all operations, so 18 employees on a typical business day exceeds 10. If tipping is customary at each, you file three Forms 8027.
Do we have to use 8%?
Yes, unless the IRS grants a lower rate (not below 2%) on a petition from you or a majority of directly tipped employees. Attach the determination letter to the return, or upload it in IRIS.
Can we file Form 8027-T electronically?
No. Form 8027-T is only the transmittal for multiple paper Forms 8027.
Other employer, withholding and ACA forms
Payroll and employment tax returns: W-4 · 941 · 941-X · 944 · 943 · 940 · W-2 · W-3 · W-2c
Withholding returns: 945 · 1042
Health coverage (ACA) returns: 1095-C · 1094-C · 1095-B · 1094-B
Paper transmittal: 1096
All of them on one table · Information returns (1099 series)
Sources: Form 8027 (2026) and Instructions for Form 8027 (2026, posted Oct. 2026); Pub 1099 (2026) part O; Rev. Proc. 2025-32.