The National Taxpayer Advocate reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business/Self Employed (SB/SE), Tax Exempt Government Entities (TEGE) Division, Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) that outline the procedures and responsibilities for processing Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

The SLAs are found at https://irsgov.sharepoint.com/sites/TAS/SitePages/SLA.aspx.

Edit an alpha "F" or "N" to the immediate left of the "Final Return" check box (as close to that area as possible), per the following:

Leave blank, if none of the above applies.

For processing year 2024, only tax year 2023Form 8027 and tax year 2022Form 8027 will be processed.

Route 2021 and prior Form 8027 to the following address; unless the form meets the criteria in IRM 3.11.180.2(14), General Information.
Internal Revenue Service
Attn. NTRCP
110 City Parkway
Las Vegas, NV 89106

Form 8027 is filed for a calendar year. If quarterly returns are received do not combine and create one calendar year return. Route quarterly returns to National Tip Reporting Compliance Program (NTRCP) for special handling.

There is no need to edit the current tax year, since it is computer-generated.

If Form 8027 is filed with an indication that the information is not for the year printed on the form, determine the tax year. If the information is for tax year 2022, circle the printed year and edit the two-digit year (21).

If Form 8027 is filed for tax year 2022 and the information is on the correct form, underline the tax year.

If Form 8027 is an early filed (future tax year) return, check the return and attachments for the correct tax period. Correct any coding or transcription errors.

The legal due date for paper Form 8027 is the last day of February of the year following the calendar year for which the return is filed. Electronically filed Form 8027 is due the last day of March of the year following the calendar year for which the return is filed.

A return is considered timely:

Determine timeliness as follows:

The date a document is received in the Campus or proper IRS Office is the date stamped as the "IRS Received Date" .

A received date is required on all delinquentForm 8027 returns.

Returns that do not meet the requirements for timely filing, as shown in (2) above, are considered delinquent. Edit the received date to agree with the postmark date if the IRS Received Date stamp is after ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the legal or extended due date and the postmark date or shipment date is on or before the legal due date

The IRS received date may or may not be stamped on the face of the return.

A valid IRS Received Date Stamp may consist of the following:

If the date stamp is not present or the date is illegible or invalid, edit the received date in MMDDYY format in the middle of the return.

Edit the received date in MMDDYY format according to the following priority:

Edit the received date as follows:

If a return was faxed to another area of the Service and then sent to Submission for processing, do not enter the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Enter a Received Date according to normal procedures.

Penalty Assessment Consideration - Failure to File. before assessing the penalty for Failure to File:

Establishment Name (or Name of Establishment) is found at the top of Form 8027 above the Employer's Name area. This is the common name the customers know for the business or the "Doing Business As" (DBA) name.

Edit to 40 characters. Alpha (A-Z) and numeric (0-9) characters are allowed.

If name is missing, research IDRS to perfect based on the EIN and address.

If this field is blank and the Employer's Name is complete, enter "SAME" . Also, edit arrows to show the reversal.

If Establishment and Employer names are reversed, arrow to correct position.

If Establishment and Employer names are both present on the "Name of Establishment" line, then circle out the Employer Name.

EIN may be present in the entity area or preprinted to the right of entity area in the EIN box.

If the EIN is blank, research attachments. If EIN is not present or "Applied For" , research IDRS for the EIN.

If the EIN is written in another area on the form, arrow/edit to the EIN area.

If research is unsuccessful, correspond using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing. See IRM 3.11.180.3.3, Correspondence Preparation.

If undeliverable or no response is received after 45 days then route to National Tip Reporting Compliance Program (NTRCP) for special handling.

One box should be checked to describe the type of service the establishment provides.

Use the following chart to determine the correct code:

Edit the code in the right margin next to the Type of Establishment box.

Determine the Establishment Address as follows:

The City must be all alphas and a maximum of 25 characters. Edit out hyphens as blanks (spaces). Spaces are allowed.

Enter the two-character State code. See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix, to determine valid state code and ZIP code range.

ZIP code must be either five or nine numeric. See Exhibit 3.11.180-9, State Codes and ZIP Codes Perfection Chart, to perfect incomplete or missing ZIP codes.

Employer's Name is found under the Name of Establishment area (which is found at the top of Form 8027). The Employer' Name should be what is shown on the Form 941, Employer's Quarterly Federal Tax Return.

Edit to 40 characters. Only alpha (A-Z) and numeric (0-9) characters are allowed.

Underline the first name line if more than one name line appears.

If the Employer's Name is blank, check for the Employer's Name on Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, if present. Write "SAME" in the Employer's Name line on Form 8027 if the Employer's Name on Form 8027-T is identical to the establishment name on Form 8027.

If Employer Name can’t be determined from Form 8027-T or IDRS research, write "SAME" in employer entity area.

If Employer and Establishment names are present on the "Employer’s Name" line, then circle out the Establishment Name.

If blank, check Form 8027-Torresearch IDRS using the Employer's EIN.

If this cannot be perfected through research, then use the establishment address.

The City must be all alphas and a maximum of 25 characters. Edit out hyphens as blanks (spaces). Spaces are allowed.

Enter the two-character State code. See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix, to determine valid state code and ZIP code range.

ZIP code must be either five or nine numeric. See Exhibit 3.11.180-9, State Codes and ZIP Codes Perfection Chart, to perfect incomplete or missing ZIP codes.

If blank, check Form 8027-T or research IDRS using the Employer's EIN. If unable to determine through research, this information may remain blank.

If the Establishment Number box is blank but found on Form 8027, then edit the Establishment Number.

If the Establishment Number is blank and not found, then sequentially number each Form 8027 for the employer beginning with "1" until each establishment is numbered. Do not code leading zeros.

If the sequence numbers are not consecutive, accept the employer's numbers. Numbers must be arranged from low to high order.

Sequentially renumber establishments that have the same number. If the Establishment Number is greater than five digits, circle all but the last five digits of the number.

A filer may check the "Yes" or "No" box in response to the question "Does this establishment accept credit cards or other charges?"

The questions and "Yes/No" boxes are found below the entity area. Do not edit.

Establishments report amounts on Line 1 through Line 5.

Line 1 and Line 2 must be completed if the Charge Receipts Indicator "Yes" box is checked.

If the Charge Receipts Indicator "No" box is checked, or if neither box is checked, Line 1 and Line 2 may be blank.

The amount on Line 2 must be greater than the amount on Line 1.

Line 3 may be zero or blank.

Lines 4a, 4b and 4c may be zero but cannot be negative. Use Letter 1858C to correspond with the employer if negative amounts are present on these lines. See IRM 3.11.180.3.3, Correspondence Preparation. If undeliverable or no response is received after 45 days, consider unprocessable and route to National Tip Reporting Compliance Program (NTRCP). See IRM 3.11.180.2, General Information paragraph (15) for routing instructions.

If amounts are present for Line 4a or Line 4b and Line 4c is blank, edit as follows:

If an amount is present on Line 4a only or Line 4b only and Line 4c is greater than (or less than) Line 4a or Line 4b (whichever is applicable), correct as follows:

If an amount is present on Line 4c only (Line 4a and Line 4b are blank), use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation

If an amount is present for Line 1 but no amounts are present (blank) on Lines 4a, 4b or 4c, correspond with the employer using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing. See IRM 3.11.180.3.3, Correspondence Preparation.

An amount is required for Line 5. Line 5 may not be less than Line 2, and Line 5 must be greater than each of Lines 1, 3, 4a, 4b and 4c.

If two amounts are shown on one line, "X" the amounts, combine for a total and enter the amount to the left of the "X'd" amounts.

Generally, the allocation rate is 8 percent. However, the establishment may be granted a lower allocation rate.

Be careful when checking for the determination letter in the employer's submission. The letter may be attached to one Form 8027 but apply to more than one of the employer's establishments. Verify the rate for each establishment if the determination letter is used for more than one Form 8027.

There may be multiple determination letters.

The percentage cannot be below 2 percent or greater than 8 percent. Circle out any rate that is lower than 2 percent or higher than 8 percent. The computer will use the standard rate of 8 percent.

If the determination letter is for a different percentage (2 percent or more, but less than 8 percent), edit the percentage as granted in the letter. If the establishment has two allocation rates approved, check for the most current date on the letter and use that rate for the entire year.

Convert a percentage to a four-digit field (e.g., "6.5" percent would be entered as "0650" or "7.75" percent would be "0775" ). Do not edit the decimal point. See Rate and Conversion table below.

If a lower rate is entered (2 percent or more, but less than 8 percent), but no determination letter (e.g., Letter 8027B) is attached:

If a lower rate is entered (2 percent or more, but less than 8 percent), but the determination letter (e.g., Letter 8027B shows an expired effective date:

The amount on Line 6 should equal Line 5 times 8 percent, or Line 5 times the lower rate granted by the IRS. This line may have an alpha "X" if the employer allocates tips using other than the calendar year.

If you change an amount on Line 6, make the necessary change to Line 7. Correspond using non suspense Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to notify the employer of any changes. See IRM 3.11.180.3.3, Correspondence Preparation.

Procedures for computing Line 7.

There are two codes that may be edited:

If Line 7 is more than zero (must be a positive amount), an entry must be made in either Line 7a, Line 7b or Line 7c. Enter one of the following codes to the left of the box checked:

If Line 7c is checked, a copy of the "Good-Faith Agreement" may be attached.

A number greater than zero should be present on Line 8.

If Line 8 is zero or blank, edit a "U" to the right of the line.

IRS has issued rules that allow corporate officers or duly authorized agents to sign employment tax forms by facsimile. This includes alternative signature methods such as computer software programs or mechanical devices.

A signature and jurat are required for all returns. A signature should be entered on each Form 8027 (under the jurat).

If signature is missing, correspond using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing.

Employers may send "Amended" Form 8027 to the Service to be processed.

There is no special numbering or blocking for amended Form 8027.

If the "Amended" return is delinquent, edit a received date. See IRM 3.11.180.3.1.3, Received Date, for more information.

When reviewing an amended return, make sure the information is not in response to an IRS letter before processing as "Amended" .

If the amended return is a response to Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, then determine if the reply is timely or late.

Filing of original returns via fax is permissible when contact with the employer was made and documented by IRS. In these circumstances, fax signatures are acceptable for the original returns.

Contact with the employer may be by telephone or correspondence. Follow local procedures to determine which method of contact will be used.

Tax examiners will indicate the fax paragraph on the Letter 1858C Correspondence Action Sheet, to advise employers/establishments of the option to fax their response. See IRM 3.11.180.2.5, Use of Fax for Taxpayer Submissions, for more information.

IRC 6721 provides for a penalty when an information return is not timely or correctly filed by the due date of the return. The penalty is assessed based on a time sensitive three-tiered rate structure and applies to:

IRC 6721 provides for a penalty when a person fails to follow certain specified information reporting requirements, including the requirement to furnish a taxpayer TIN. The penalty may apply where the employer does not respond to correspondence requesting the necessary information.

Intentional Disregard of Filing Requirements:

If an employer is required to file electronically but fails to do so and does not have an approved waiver (Form 8508, Request for Waiver from Filing Information Returns Electronically) on record, the employer may be subject to a penalty. See IRM 3.11.180.3.4.2, Penalty Information - Form 8508, Request for Waiver from Filing Information Returns Electronically, for more information.

No more than one penalty per return (under the same penalty code section) can be imposed even if there is more than one failure on the same information return. However, where a return is filed with multiple failures and the penalty amounts differ, the higher penalty should be imposed.

If an employer files multiple Form 8027 for different establishments and penalties are applicable, then assess the employer one penalty for the entire amount. Multiply the number of violations by the dollar amount associated with the penalty. See IRM 3.11.180.3.4.3, Assessing the Penalty,(10) "Caution" for more information.

If an electronic file was filed timely and is bad, the filer will have up to 60 days from the date the file was sent to transmit an acceptable file. If an acceptable file is not received within 60 days, then the taxpayer could be subject to late filing penalties. See the information below about electronic correction files and replacement files.

Form 8508 is a Application for a Waiver from Electronic Filing of Information Returns.

Per IRC 6011(e) and the Section 6011 regulations, information returns must be filed using electronic media when 10 or more of a particular type of return is required to be filed. The penalty applies to the returns that exceed this threshold.

If an employer is required to file electronically but fails to do so and does not have an approved waiver on record, the employer may be subject to a penalty.

If an employer is required to file original or corrected returns electronically, but the requirement creates an undue hardship, a waiver may be requested by filing Form 8508, Application for a Waiver from Electronic Filing of Information Returns, to the IRS.

Taxpayers should file Form 8508 with IRS at least 45 days before the due date of the returns, but no later than the due date of the returns for which the waiver is being requested. IRS does not process waiver requests until January 1st of the calendar year the returns are due.

Waivers are evaluated on a case-by-case basis and are approved or denied based on criteria set forth in Treasury Regulation Section 301.6011-2(c)(2). The taxpayer must allow a minimum of 30 days for the IRS to respond to a waiver request.

An approved waiver will provide exemption from electronic filing for the current tax year only and employers may not apply for a waiver for more than one tax year. A waiver does not provide exemption from filing. If a waiver is approved, the taxpayer must timely fileForm 8027 on acceptable paper forms with the Ogden Submission Processing Campus (OSPC).

Route waiver requests to:

For more information on filing Form 8027 electronically, see Publication 1239, Specifications for Electronic Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

Photocopy current processing year 2023Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, (if the employer files for more than one establishment), and any other pertinent supporting documentation (e.g., copy of Form 8809 Application for Extension of Time to File Information Returns, envelope) if a penalty is being assessed. Use the photocopy for penalty processing. Continue normal processing of the original.

Photocopy the envelope if the Form 8027 is delinquent. Attach envelope to the photocopy of the return.

File photocopies of delinquent returns in EIN order. Determine if an approved extension was received by researching extension listings.

Impose no more than one penalty per return even if there is more than one failure on the same information return. However, where a return is filed with multiple failures and the penalty amounts differ, impose the higher penalty.

Before assessing the penalty:

If assessing only the Failure to File penalty, then it cannot exceed the maximum annual amount, depending on when the return was received. Assess the penalty or the amount necessary to reach the annual limit, whichever is less. See Exhibit 3.11.180-10, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

If a Form 8027-T accompanies a paper Form 8027, use the Employer's EIN and data (if present on Form 8027-T) to assess the penalty for Failure to File. Compute the penalty by using the applicable penalty amount times the number entered in the Form 8027-T box labeled "Number of accompanying Forms 8027" (or per Form 8027) for that Employer’s EIN. See Exhibit 3.11.180-10, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

Use IAT to assess the Civil Penalty. See IRM 3.11.180.2.6, Integrated Automation Technologies (IAT), for more information.

If IAT is unavailable, use IDRS to assess the penalty manually on the Civil Penalty Module (MFT 13). Using the Employer’s EIN enter CC REQ54 to display the ADJ54 screen. See Figure 3.11.180-1, ADJ54 Screen Display for Penalty Example 1.On the ADJ54 screen, input the following fields:

Figure 3.11.180-1

This is an example of the Integrated Data Retrieval System (IDRS) Command Code ADJ54 screen display and fields for inputting a penalty on Master File Tax (MFT) 13, Tax Period 202312 for $840.00.ADJ54: 00-XXXXXXX - This is the EIN of the returnMFT: 13 - This is the Master File Tax PLAN: 000TX-PRD: 202312 - This is the Tax Period of Form 8027NM-CTRL: SEAL - This is the Name Control of the taxpayerSequence Number (SEQ-NUM): 01Blocking Series (BLK): 53Received Date (IRS-RCVD-DT): Enter the Received Date from the Form 8027 in MMDDYYYY format (e.g., 08162024)Case Control Category Code (CTRL-CAT) IRRQTC 290, with a zero (.00) amount (AMT) - This is the transaction code and amountHold Code (HOLD-CD): 0 (zero)Penalty Reference Number (CD): 638Amount (AMT): 840.00 - This is the amount of the penaltySOURCE-DOC-ATTACHED: Enter Y (Y = Yes)REMARKS: 8027 - 6721a - FTF

Please click here for the text description of the image.

Figure 3.11.180-2

This is an example of the Integrated Data Retrieval System (IDRS) Command Code ADJ54 screen display and fields for inputting a penalty on Master File Tax (MFT) 13, Tax Period 202312 for $1,400.00.ADJ54: 00-XXXXXXX - This is the EIN of the returnMFT: 13 - This is the Master File Tax PLAN: 000TX-PRD: 202312 - This is the Tax Period of Form 8027NM-CTRL: SEAL - This is the Name Control of the taxpayerSequence Number (SEQ-NUM): 02Blocking Series (BLK): 53Received Date (IRS-RCVD-DT): Enter the Received Date from the Form 8027 in MMDDYYYY format (e.g., 08162024) Case Control Category Code (CTRL-CAT) IRRQTC 290, with a zero (.00) amount (AMT) - This is the transaction code and amountHold Code (HOLD-CD): 0 (zero)Penalty Reference Number (CD): 638Amount (AMT): 1,400.00 - This is the amount of the penaltySOURCE-DOC-ATTACHED: Enter Y (Y = Yes)REMARKS: 8027- 6721a - FTF

Please click here for the text description of the image.

Refer to Exhibit 3.11.180-10, Penalty Tables, for penalty amounts.

Complete Form 9860, Adjustment Input Document/Case History Sheet, or print the IDRS ADJ54 "Request Completed" screen to create an IDRS source document.

Create an IDRS source document consisting of the photocopy of Form 8027-T or Form 8027, if no transmittal was filed.

If using the ADJ54 screen as the source document, staple the adjustment screen and the photocopy together. Keep batch in sequential order from 01-25.

Forward the IDRS source document to Files.

All penalty cases should be input by November 27, 2024.

An employer may respond to a Computer Paragraph (CP) 215, Civil Penalty Notice, or request that a penalty assessment be forgiven (e.g., penalty abatement request). A valid taxpayer identification number (TIN) may be furnished or an explanation for filing late may be provided.

If the penalty was charged because the employer did not respond to a request for necessary information and the employer resubmits the returns, check to see if the returns are processable.

The following action codes are valid:

Only one Action Code must be entered on the Error Register to the left of the error sequence number to correct an error record.

The above applies to both paper and electronic documents.

There are two codes that may be used:

The above applies to both paper and electronic documents.

An Error Reason Code (ERC) will display to the left of an element number on the Error Register when a consistency error exists.

If no Error Reason Code is present, the element found on the Error Register is invalid (e.g., alpha in a money field). Error Reason Codes:

Error Reason Codes may be combined.

See IRM 3.11.180.4.2, Error Correction - Specific Field Action, for specific field action.

The chart below provides element numbers displayed on Error Register, the description and location on Form 8027.

Element numbers display on Error Register to the right of the Error Reason Codes (ERC).

Form 8027 will be blocked in groups of 100. However, short blocks are acceptable since forms may be pulled for correspondence during Code and Edit.

A correction on the first document Document Locator Number (DLN) will cause the block DLN to dupe throughout the rest of the block.

The following is a description of each element of the DLN that will print out as Element 01 (11 positions).

Make necessary corrections to the DLN so it conforms to the description above. The Serial Number of the DLN is Element 02 on the Error Register. The Year Digit is computer-generated.

More corrections may be entered at the same time the DLN correction is made. If a DLN correction is made to the first document of the block, the correction, with Action Code 6, will be duped throughout the block. Only one Action Code per document may be entered.

Serial Numbers will not change when the DLN is duped. A separate correction is required to change the Serial Number (Element 02 - two positions). The Serial Number should be in sequence but does not have to be consecutive. For example, a sequence of "00" , "04" and "07" is acceptable.

The Amended Document Code (Element 03) has one position and must be blank or an alpha "G" .

Enter "G" if:

The Name of Establishment may have 40 characters and cannot be all blanks. Only alpha (A-Z) and numeric (0-9) characters are allowed.

The employer name should be entered if no establishment name is provided.

The employer’s name may be found on:

The Establishment City may have 25 alpha characters. Edit out hyphens as blanks.

Do not use major city codes.

Use the employer’s city if blank. Search attachments as instructed under "Name of Establishment" above.

Establishment State (Element 06) is two alpha characters.

Error Reason Code "SZ" will display on the Error Register if the Establishment State (Element 06) is inconsistent with the ZIP code.

A valid state is necessary for processing. Do not enter Action Code 7.

If the establishment's state is blank, use the employer's state. Search attachments as instructed under "Name of Establishment" above.

If the establishment has a foreign address, reject the document using Action Code 2. Route the Form 8027 to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2(14) and IRM 3.11.180.2(15), General Information. Reporting is required only for establishments found in the 50 states and the District of Columbia.

If necessary, See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix, and use the valid two alpha state code.

Error Reason Code "SZ" will display on the Error Register if the Establishment ZIP Code (Element 07) is inconsistent with the state.

The ZIP code must be five or nine numeric. The last four positions must be either all blanks or all numeric.

The first three digits must be in the valid range of ZIP codes for the state. See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix, and determine the valid ZIP code range for the state.

If the ZIP code is missing, see Exhibit 3.11.180-9, State Codes and ZIP Codes Perfection Chart.

If both the city and state are valid, but the ZIP code is missing and cannot be determined, enter Action Code 7.

The Name of Employer (Element 08) may have 40 characters and cannot be all blanks. Only alpha (A-Z) and numeric (0-9) characters are allowed.

The name must have at least one alpha or one numeric character.

If missing, search for the employer’s name on:

Employer Identification Number (Element 09) must be nine numerics, or it may have a valid EIN prefix in the first two positions followed by seven (7) periods.

Research attachments and IDRS to correct invalid EIN (having alphas, spaces, invalid EIN prefix, etc.).

If EIN cannot be determined, correspond with the employer using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing. If undeliverable or no response is received after 45 days then route to National Tip Reporting Compliance Program (NTRCP) for special handling.

One box should be checked to describe the type of service the establishment provides.

Use the following chart to determine correct code:

Establishment Number (Element 11) may have five numerics. Each establishment number must be unique for each establishment. Breaks in the sequence numbers are allowed.

If blank or a duplicate, sequentially number or renumber. Do not use leading zeros.

Elements 12 through 18 may have 10 numerics and are dollars only.

Error Reason Code "MA" will display on the Error Register if:

Establishments report amounts on Lines 1 through 5.

An amount is required for Line 5. Lines 1 through 4c may be blank.

Line 2 must be greater than the amount reported on Line 1.

Line 3 may be zero or blank.

Lines 4a, 4b and 4c may be zero but cannot be negative. Use Letter 1858C to correspond with the employer if negative amounts are present on these lines. See IRM 3.11.180.3.3, Correspondence Preparation. If undeliverable or no response is received after 45 days, consider unprocessable and route to National Tip Reporting Compliance Program (NTRCP). See IRM 3.11.180.2, General Information paragraph (15) for routing instructions.

If amounts are present for Lines 4a or 4b and Line 4c is blank, correct as follows:

If an amount is present on Line 4a only or Line 4b only and Line 4c is greater than (or less than) Line 4a or Line 4b (whichever is applicable), correct as follows:

If an amount is present on Line 4c only (Line 4a and Line 4b are blank), use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

If an amount is present for Line 1 but no amounts are present (blank) on Lines 4a, 4b or 4c, correspond. See IRM 3.11.180.3.3, Correspondence Preparation.

Check the amount for Line 5:

Error Reason Codes "AA and AT" - See IRM 3.11.180.4.2.12, ERCs AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21.

Elements 19 through 21 may have 10 numerics and are dollars only.

Error Reason Code "AA" will display on the Error Register if the IRS computed amount exceeds Line 6 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

When a discrepancy between the IRS and employer occurs, Elements 18, 19, and 20 will print along with Error Reason Code "AA" . Check for transcription and taxpayer errors. Correct accordingly.

If other than a calendar year, an "X" should be found on Line 6.

Generally, Line 6 will equal Line 5 times 8 percent or the percentage allowed in the IRS determination letter. The acceptable range is 2 percent to 8 percent.

The employer may use a lower percentage only when special permission is received from the IRS. The lower percentage will be entered in the center of Line 6 (Element 20).
Note: If the Form 8027 has any of the following notations (including 2020 and prior):

If a lower rate is entered (2 percent or more, but less than 8 percent), but the determination letter (e.g., Letter 8027B) shows an expired effective date or is an open ended tip rate reduction:

If the return shows a percentage rate that is higher than 8 percent, disregard it and use the standard 8 percent rate.

If the IRS computation exceeds Line 6, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and the percentage rate was verified, correct the employer's figure.

Error Reason Code "AT" will display on the Error Register if:

If there is a discrepancy between Line 4c, Line 6 and Line 7, the amounts will print along with Error Reason Code "AT" . If these fields display as errors on the Error Register, compare the Form 8027 with the Error Register to make sure all figures were transcribed accurately.

If other than a calendar year, an "X" should be found on Line 6.

If Line 6 is blank or "zero" and Line 7 has an amount, enter an "X" on Line 6 and the register.

If Line 6 is less than or equal to Line 4c, Line 7 must be zero.

If Line 6 is more than Line 4c and Line 7 is blank and the taxpayer is a casino, then search for a notation of a Gaming Industry Tip Compliance Agreement (GITCA) which is administered under Rev Proc. 2007-32 and, as modified by Rev. Proc. 2020-47. If a GITCA agreement or notation of either Rev. Proc. is found, forward return to National Tip Reporting Compliance Program (NTRCP) for special handling:
Internal Revenue Service
Attn. NTRCP
110 City Parkway
Las Vegas, NV 89106
If a GITCA agreement or notation of either Rev. Proc. is not found, remove return from processing and contact Headquarters Analyst (IRM 3.11.180 author).

If Line 6 is more than Line 4c, and the taxpayer entered zero"0" or "N/A" on Line 7, then the taxpayer may have a Gaming Industry Tip Compliance Agreement (GITCA) which is administered under Rev. Proc. 2007-32 and, as modified by Rev. Proc. 2020-47. If a GITCA agreement or notation of either Rev. Proc. is found, forward return to National Tip Reporting Compliance Program (NTRCP) for special handling:
Internal Revenue Service
Attn. NTRCP
110 City Parkway
Las Vegas, NV 89106
If a GITCA agreement or notation of either Rev. Proc. is not found, remove return from processing and contact Headquarters Analyst (IRM 3.11.180 author).

If Line 6 is more than Line 4c, the difference is entered on Line 7. Correct Line 7 or compute the difference if no entry is present.

Method of Allocation, Lines 7a through 7c (Element 22) has one numeric position.

Error Reason Code "AA" will display on the Error Register if Line 7 is significant but the allocation method (Line 7a, 7b or 7c) is not code 1, 2, 3, or 4.

If Line 7 is greater than zero, one of three methods of allocation must be checked. Enter:

If Line 7c is checked and a Good-Faith Agreement is not attached:

If the employer made multiple entries, enter a code in Element 22 according to the following priority:

If the employer made no entry in Line 7a through Line 7c, enter Condition Code "4" .

If Line 7 is blank, edit a zero. Circle out any entries in Line 7a, Line 7b or Line 7c.

Total Number of Directly Tipped Employees Line 8 (Element 23) may have four numeric positions.

A number greater than zero must be entered in Line 8.

If Line 8 is zero or blank, "U" code the register.

Tax Year (Element 24) has four numeric positions. The valid tax years are 2023 or 2022.

If the tax year is 2021 or prior, enter Action Code "2" to reject the document.

Route 2021 and prior Form 8027 to the following address; unless the forms meet the criteria in IRM 3.11.180.2(14), General Information.
Internal Revenue Service
Attn. NTRCP
110 City Parkway
Las Vegas, NV 89106

If a Form 8027 is an early filed (future tax year) return, check the return and attachments for the correct tax period. Correct any coding or transcription errors.

The Special Return Code (SRC) (Element 25) must be blank or one alpha character. The alpha character is edited to the left of the "Final Return" check box (as close to that area as possible).

The valid alpha codes are:

Leave blank, if none of the above applies.

The Received Date (Element 26) must be present if Form 8027 is delinquent.

When present, the received date must have eight numerics in MMDDYYYY format. See IRM 3.11.180.3.1.3, Received Date, for procedures.

If a received date is present on a timely filed return, Code and Edit is instructed to circle it out. If Code and Edit did not circle out the received date on a timely filed return and It was transcribed, then circle out the received date. Remove received date from Element 26 and continue processing the return.

Establishment Street (Element 27) must have more than one alpha character and a maximum of 35 characters.

If the establishment address is blank, use the employer's address.

Employer Street (Element 28) must have more than one alpha character and a maximum of 35 alpha and numeric characters.

If the street address is missing, search for the address on:

The Employer City (Element 29) must have alpha characters and a maximum of 25 characters.

Do not use major city codes.

If the city is missing, search for the address on:

Error Reason Code "SZ" will display if the Employer State (Element 30) is inconsistent with the ZIP Code.

A valid state (two-character code) is required for processing. Do not enter Action Code "7" .

If the state is missing, search for the address on:

Use the valid two alpha character state code. See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix.

Error Reason Code "SZ" will display if the Employer ZIP Code (Element 31) is inconsistent with the state.

The ZIP Code must be five or nine numerics. The last four positions must be all blanks or all numerics.

The first three digits must be in the valid range of ZIP codes for the state. See Exhibit 3.11.180-8, State Code - ZIP Code Range - EIN Prefix, to determine the valid ZIP Code range for the state.

If the ZIP Code is missing, see Exhibit 3.11.180-9, State Codes and ZIP Codes Perfection Chart.

If the Employer State Code could not be determined and the Establishment State Code was entered in Element 30, a error may display in Element 31 for an inconsistent Employer Zip Code. If this is the point of error, then enter Action Code "6" and correct the error register by entering the Establishment Zip Code in Element 31.

If both the city and state are valid, but the ZIP Code is missing and cannot be determined, enter Action Code 7.