3.11.180 Allocated Tips

Manual Transmittal

November 13, 2018

Purpose

(1) This transmits revised IRM 3.11.180, Returns and Documents Analysis, Allocated Tips.

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates, spelling, punctuation, unspan cells, links, etc.). Other significant changes to this IRM are shown below.

(2) For processing year 2019, Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, for tax year 2018 and tax year 2017 will be processed.

(3) IRM 3.11.180.1(1) - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(4) IRM 3.11.180.1.4(2) - Reworded for clarity per IRM feedback from Internal Management Document (IMD) reviewer.

(5) IRM 3.11.180.2(6) - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(6) IRM 3.11.180.2(10) - Updated tax year information.

(7) IRM 3.11.180.2(11) - Updated tax year information.

(8) IRM 3.11.180.2(13) - Updated tax year information.

(9) IRM 3.11.180.2.4(2) f. - Reworded for clarity per IRM feedback from Internal Management Document (IMD) reviewer.

(10) IRM 3.11.180.2.4(4) - Corrected IRM reference per latest IRM 11.3.1, Disclosure of Official Information, Introduction to Disclosure, revision.

(11) IRM 3.11.180.2.5(1) - Removed incorrect information.

(12) IRM 3.11.180.2.5(5) - Corrected IRM reference per latest IRM 11.3.1, Disclosure of Official Information, Introduction to Disclosure, revision.

(13) IRM 3.11.180.2.6(2) - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(14) IRM 3.11.180.2.6(2) a. - Updated tax year information.

(15) IRM 3.11.180.2.6(2) d. - Updated tax year information. Added Reminder to send the number of cases input.

(16) IRM 3.11.180.2.7(9) - Added Number/Numeric information. (IPU 18U0641 issued 04-16-2018)

(17) IRM 3.11.180.3.1.2(1) - Updated tax year information.

(18) IRM 3.11.180.3.1.2(2) - Updated tax year information.

(19) IRM 3.11.180.3.1.2(5) - Updated tax year information.

(20) IRM 3.11.180.3.1.2(6) - Updated tax year information.

(21) IRM 3.11.180.3.1.3(2) - Changed seven to 15 per IRM feedback from Office of Servicewide Penalties and to agree with IRM 20.1.7, Penalty Handbook - Information Return Penalties

(22) IRM 3.11.180.3.1.3(3) - Changed seven to 15 per IRM feedback from Office of Servicewide Penalties and to agree with IRM 20.1.7, Penalty Handbook - Information Return Penalties

(23) IRM 3.11.180.3.1.3(13) a. - Updated tax year information.

(24) IRM 3.11.180.3.1.3(13) a. Note - Changed June to September per Consolidation changes.

(25) IRM 3.11.180.3.1.3.1(1) - Added information about Form 8809Application for Extension of Time To File Information Returns, processed in Ogden. Renumbered remaining paragraphs accordingly.

(26) IRM 3.11.180.3.1.3.1(5) - Added Letter 5380, Extension Approved, per IRM feedback from Electronic Products and Services Support (EPSS).

(27) IRM 3.11.180.3.1.3.1(10) - Added new IRM 3.28.5, Information Returns Extension Request Processing reference.

(28) IRM 3.11.180.3.1.3.2(5) - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(29) IRM 3.11.180.3.1.3.2(6) - Added Letter 5382, Approved Waiver, per IRM feedback from Electronic Products and Services Support (EPSS).

(30) IRM 3.11.180.3.1.12(3) Example - Updated the example.

(31) IRM 3.11.180.3.1.20(1) - Added Caution about numeric fields and lines. (IPU 18U0641 issued 04-16-2018)

(32) IRM 3.11.180.3.3 (10) - Updated tax year information.

(33) IRM 3.11.180.3.4.1(5) - Reworded per IRM feedback from Chief Counsel. Updated amount per Revenue Procedure 2018-18.

(34) IRM 3.11.180.3.4.1(5) - Moved the Note information into alpha list.

(35) IRM 3.11.180.3.4.1(8) - Reworded for clarity per IRM feedback from Internal Management Document (IMD) reviewer.

(36) IRM 3.11.180.3.4.2(2) - Reworded per IRM feedback from Chief Counsel.

(37) IRM 3.11.180.3.4.2(7) - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(38) IRM 3.11.180.3.4.3(4) - Added "6721a - FTF" (if Failure to File) or "6721e - ID" (if Intentional Disregard) per IRM feedback from Office of Servicewide Penalties.

(39) IRM 3.11.180.3.4.3(8) - Added "6721a - FTF" (if Failure to File) or "6721e - ID" (if Intentional Disregard) per IRM feedback from Office of Servicewide Penalties.

(40) IRM 3.11.180.3.4.3(11) - Updated tax year information.

(41) IRM 3.11.180.3.4.4(2) b. - Reworded per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(42) IRM 3.11.180.4.2.12(6) Note - Updated tax year information.

(43) IRM 3.11.180.4.2.14(2) - Added Caution about numeric fields and lines. (IPU 18U0641 issued 04-16-2018)

(44) IRM 3.11.180.4.2.15(1) - Updated tax year information.

(45) IRM 3.11.180.4.2.15(2) - Updated tax year information.

(46) IRM 3.11.180.4.2.15(3) - Updated tax year information.

(47) Exhibit 3.11.180-4 - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(48) Exhibit 3.11.180-5 - Added Ogden Submission Processing Campus (OSPC) per Paper Returns Processing Changes for 2018 memo from the Director of Submission Processing dated June 20, 2017.

(49) Exhibit 3.11.180-5 - Form 8809 Original - Added new information per IRM feedback from Ogden.

(50) Exhibit 3.11.180-5 - Routing Guide for Attachments Table - Petitions to Reduce the Tip Rate - Then column - Updated tax year information.

(51) Exhibit 3.11.180-5 - Routing Guide for Attachments Table - Added Letter 5380, Extension Approved, per IRM feedback from Electronic Products and Services Support (EPSS).

(52) Exhibit 3.11.180-8 - Updated the tables information for current processing.

(53) IRM references updated throughout the IRM.

(54) Figures updated in the IRM.

(55) Exhibits updated in the IRM.

Effect on Other Documents

IRM 3.11.180, Returns and Documents Analysis, Allocated Tips, dated November 14, 2017 (effective January 01, 2018), is superseded. The following IRM Procedural Update (IPU), issued April 16, 2018, has been incorporated into this IRM: 18U0641 (issued 04-16-2018).

Audience

Wage and Investment (W&I) Submission Processing (SP) Code and Edit (C&E) and Error Resolution System (ERS) personnel are the intended audience for this IRM.

Effective Date

(01-01-2019)

Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This section contains instructions for Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Form 8027 processing is at the Ogden Submission Processing Campus (OSPC) and Cincinnati Submission Processing Campus (CSPC).

  2. Purpose: Document Perfection codes and edits (perfects) returns and other documents. Error Resolution resolves validity errors, field errors, and consistency errors on returns using paper Error Registers (Service Center Replacement System (SCRS)).

  3. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing (SP) Code and Edit (C&E) and Error Resolution System (ERS) personnel:

    • Code and Edit: Supervisory Tax Technician, Lead Tax Technician, Tax Examining Technician, Supervisory Clerk, Lead Clerk, and Clerk.

    • Error Resolution System (ERS): Supervisory Tax Examining Assistant, Lead Tax Examining Technician, and Tax Examining Technician.

  4. Policy Owner: Director, Submission Processing

  5. Program Owner: Paper Processing Branch, Business Master File (BMF) Section

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but not limited to):

    • Accounts Management (AM)

    • Chief Counsel

    • Information Technology (IT) Programmers

    • Small Business/Self-Employed (SB/SE)

    • Taxpayer Advocate Service (TAS)

    • National Tip Reporting Compliance Program (NTRCP)

    • Electronic Products and Services Support (EPSS)

    • Submission Processing (SP)

Background

  1. Document Perfection codes and edits (perfects) returns and other documents for input through the Integrated Submission and Remittance Processing System (ISRP). In addition, Code and Edit (C&E) forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them. It is not the purpose of C&E to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section.

  2. Error Resolution resolves validity errors, field errors, and consistency errors on returns and other documents using computer printed paper Error Registers. Employees use the paper Error Registers and the return to correct these conditions and when necessary use Integrated Data Retrieval System (IDRS) to research.

Authority

  1. Authority for these procedures is found in Internal Revenue Code Section 6721 and corresponding Treasury regulations.

Responsibilities

  1. The Campus Director is responsible for monitoring operational performance for the Submission Processing campus.

  2. The Operations Manager is responsible for monitoring operational performance for their operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible for following the instructions contained in this IRM and maintain updated IRM procedures.

Program Management and Review

  1. Program Goals: The Program Goals are outlined below for the following areas.

    • Code and Edit: Ensure documents are code and edit ready for transcription.

    • Error Resolution: Enter corrections on the paper Error Registers for any errors falling out through Service Center Replacement System (SCRS) in Error Resolution.

  2. Program Reports: The Batch Block Tracking System (BBTS) captures and stores a vast amount of data, which can be used in performance monitoring and production projections. System control reports are on the Control-D WebAccess (CTDWA) and a general listing of the reports is located in IRM 3.12.38, Error Resolution, BMF General Instructions.

  3. Program Effectiveness: The program goals are measured by using the following tools:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  4. Annual Review: The processes outlined in this IRM should be reviewed annually to ensure accuracy and promote consistent tax administration.

Program Controls

  1. Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

Terms/Definitions/Acronyms

  1. The table lists Interpretation Words and their definitions.

    Interpretation Words

    Word Definition Example of using a word that is open to interpretation

    Note:

    This column is for illustration purposes only.

    Fair Provide accurate and professional service to all persons without regard to personal bias. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely.
    Significant Entry Any entry other than zero or blank. Error Reason Code AA will appear on the Error Register if Line 7 is significant but the allocation method is not code 1,2, 3, or 4.
    Timely Provide the time frame to consider what is or is not timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels.

     

  2. See Exhibit 3.11.180-4, Acronyms and Abbreviations, for a list of commonly used acronyms and abbreviations.

Related Resources

  1. The following resources may assist in performing the work as outlined in this IRM.

    • Servicewide Electronic Research Program (SERP)

    • Integrated Data Retrieval System (IDRS)

    • Pub 1239, Specifications for Electronic Filing of Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips

General Information

  1. An employer who operates a large food or beverage establishment is required to file Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, to report information concerning receipts from food and beverages and tips reported by employees. See Exhibit 3.11.180-1, Form 8027, Transcription Lines, for an example of Form 8027. This is an annual return.

    Exception:

    Employers participating in a Gaming Industry Tip Compliance Agreement (GITCA) and who comply with the terms of this Agreement may provide the Form 8027 information in an alternate form deemed acceptable by the Service. The GITCA program is administered under Revenue Procedure 2007-32, published in Internal Revenue Bulletin 2007-22.

  2. Paper Form 8027 returns must be filed by the last day of February of the year following the calendar year for which the return is filed. If the due date of the return falls on a Saturday, Sunday or legal holiday, the return is considered timely if filed by the next business day.

  3. Electronically filed Form 8027 is due by March 31 of the year following the calendar year for which the return is filed. If the due date of the return falls on a Saturday, Sunday or legal holiday, the return is considered timely if filed by the next business day.

  4. Employers must file Form 8027 for each of their large food or beverage establishments. A large food or beverage establishment is a food or beverage operation:

    • That is located in the 50 states or the District of Columbia,

    • Where tipping of food or beverage employees by customers is customary and,

    • Whose employer normally employed more than 10 employees on a typical business day during the preceding calendar year.

  5. An employer may complete and file paper Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, if it is required to file a Form 8027 for more than one establishment when filing paper Form 8027. See Exhibit 3.11.180-2 for an example of Form 8027-T.

  6. All paper Forms 8027 (along with transmittal Forms 8027-T if more than one Form 8027 is filed) are filed and processed at the Ogden Submission Processing Campus (OSPC) and Cincinnati Submission Processing Campus (CSPC).

  7. Form 8027 secured by Stakeholder Liaison is submitted via Form 3210, Document Transmittal.

  8. IRS/Technical Services Operation is responsible for processing electronic submissions.

    Note:

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

  9. The Program Code 80310 is used by Business Master File (BMF) Code and Edit (C&E) and Error Resolution System (ERS) for processing Form 8027.

  10. For processing year 2019, only tax year 2018Form 8027 and tax year 2017Form 8027 will be processed.

  11. All 2016 and prior Forms 8027 should be sent to the Small Business/Self Employed (SB/SE), National Tip Reporting Compliance Program (NTRCP) address; unless the form meets the criteria in IRM 3.11.180.2 (13), General Information.
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

  12. Use Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to correspond for missing or inconsistent information. The current version of this letter is available on Servicewide Electronic Research Program (SERP).

  13. If the Form 8027 has any of the following notations(including 2016 and prior):

    • Under Tip Rate Determination Agreement (TRDA)

    • Under Gaming Industry Tip Compliance Agreement (GITCA)

    • Under Tip Reporting Alternative Commitment (TRAC)

    • Under Revenue Procedure (Rev. Proc.) 2007-32

    • Under Revenue Procedure (Rev. Proc.) 2003-35
      Mail to:
      Internal Revenue Service
      Attn. NTRCP/TW
      110 City Parkway
      Las Vegas, NV 89106

    Exception:

    Following receipt of Forms 8027, the National Tip Reporting Compliance Analyst will separate out all Forms 8027 that were submitted by Indian tribal government entities and mail them to the Indian Tribal Government (ITG) Tip Coordinator at the following address:
    Internal Revenue Service
    Attn: ITG Tip Coordinator
    55 North Robinson
    Oklahoma City, OK 73102

  14. Route documents that can’t be perfected and processed to the National Tip Reporting Compliance Program (NTRCP) for special handling:
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

  15. Form 8027 does not post to Master File, so Form 8027 will not be on the Cycle Proof List (CPL) or Automated Cycle Proof List (ACPL).

  16. IRM 3.11.180 is exempt from the Business Master File (BMF) Consistency Guidelines (for example (e.g.), indicating diamonds) as shown in other sections of IRM 3.11, Returns and Documents Analysis.

  17. This IRM can’t address every possibility that may arise while coding and editing returns or documents. Taxpayer intent must be taken into consideration. In some cases, it may be necessary to refer the issue to your Subject Matter Expert (SME), lead or manager to determine the proper action.

IRM Deviation Procedures

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

Taxpayer Advocate Service (TAS)

  1. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely.

  2. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. For additional information on the Taxpayer Bill of Rights, visit http://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.

  3. Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day.

  4. "Same day" includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, Same Day Resolution by Operations.)

  5. When making a TAS referral, use Form 911, and forward to TAS in accordance with your local procedures.

Taxpayer Advocate Service (TAS) - Service Level Agreements (SLAs)
  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business Self-Employed (SBSE) Division, Tax Exempt and Government Entities (TEGE) Division, Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) Division, that outline the procedures and responsibilities for the processing of 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).

  2. The SLAs are located at http://tas.web.irs.gov/policy/sla/default.aspx.

BMF Identification (ID) Theft

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing Code and Edit (C&E) or Error Resolution System (ERS) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must indicate that they are a victim of "ID Theft" ; do not send cases that are subject to "Criminal Investigation (CI)" , "Examination (Exam)" , or "Fraud" review.

IRS Employee Contacts - RRA98, Section 3705(a)

  1. The Restructuring and Reform Act of 1998 (RRA98), Section 3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face-to-face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

  2. All IRS employees who communicate by telephone, correspondence or face-to-face, with taxpayers or their personal representatives, on tax-related matters are required to provide (at minimum) the following information:

    1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name, and badge identification (ID Card) number.

    2. Face-to-Face Contact - Their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence - All correspondence must include a telephone number that taxpayers can call for answers to any questions they may have. In addition, manually generated and handwritten correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, and IDRS (Integrated Data Retrieval System) number, letter system number, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax-related matters are considered manually-generated correspondence and must include the required information.

      Caution:

      Email can’t be used to transmit taxpayer account information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

    6. When taxpayer requests to speak with a specific employee who previously handled their inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue can’t be resolved, the employee should refer the inquiry using established procedures to his or her manager.

    7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is asking the taxpayer for additional case-related information.

    8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

    9. Secretaries, receptionists, or other people who answer the telephone in functional offices need to identify themselves and should provide their badge identification (ID Card) number only if they are answering telephones which are routinely used to provide tax or account information.

    10. It is not necessary to repeat the badge identification (ID Card) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer, and the employee has given the taxpayer (either telephone or in-person) his or her badge identification (ID Card) number on the first contact.

    Note:

    The Taxpayer Bill of Rights (TBOR) was adopted by IRS in June 2014 and provides that taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak to a supervisor whenever quality service is not received.

  3. When contacting taxpayers by telephone, you must be sure you are speaking with the taxpayer or authorized representative before disclosing tax information. See IRM 21.1.3.2.3, Required Taxpayer Authentication, and IRM 21.1.3.2.4, Additional Taxpayer Authentication. Also, before leaving a message on a taxpayer's answering machine, see IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail. See IRM 3.11.180.2.5, Use of Fax for Taxpayer Submissions, for additional information.

  4. Prior to faxing confidential information to the taxpayer, review fax procedures contained in IRM 11.3.1.14, Facsimile Transmission of Tax Information. See IRM 3.11.180.2.5, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information, for additional information.

  5. During taxpayer contact, if the taxpayer asks to be referred to the Taxpayer Advocate Service (TAS) or you believe a referral to TAS may be appropriate, see IRM 3.11.180.2.2, Taxpayer Advocate Service (TAS).

Use of Fax for Taxpayer Submissions

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, faxed signatures are acceptable.

    Caution:

    If the employee does not have the delegated authority to accept a tax return, the employee cannot accept a return by fax.

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

  3. Code and Edit and ERS tax examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, (or other approved correspondence action sheet) to advise taxpayers of the option to fax their response.

  4. Use the following resources to make sure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4Additional Taxpayer Authentication

  5. Before leaving any messages on a taxpayer's answering machine, review:

    • IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail

    • IRM 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information

Start-Up and End-of-Year Processing Information

  1. Start-Up Processing (for both paper and electronically filed returns) should begin the last week of January, unless there are unforeseen issues (e.g., programming changes). If you experience a problem, please report the problem to the appropriate personnel (e.g., IRM Analyst, programmer, Help Desk, Planning and Analysis (P&A) Analyst).

  2. End-of-Year Processing should begin in December. Ogden Submission Processing Campus (OSPC) and Cincinnati Submission Processing Campus (CSPC) will implement their End-of-Year procedures and prepare for the upcoming filing season.

    1. In Code and Edit, if you receive a Form 8027 (tax year 2018 and prior) after December 1st of the year Form 8027 is due, route the form (and attachments) to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

      Note:

      In order for NTRCP to receive all returns submitted in current processing year, route Form 8027 to NTRCP.

    2. Information Technology (IT) will input a ticket to request start-up year processing and end of year processing to cancel Employee Master File (EMF) runs: EMF01W, EMF03, and EMF02W. See table below for additional information on EMF runs.

      Employee Master File (EMF) Runs

      Employee Master File (EMF) Description
      EMF01 Runs weekly and validates paper and electronic Allocated Tips MagTape (ATM) data.
      EMF02 Runs weekly and stores valid data on the database.
      EMF03 Runs weekly and sends invalid data to error resolutions where it is fed back into the system after correction.
      EMF82 Runs once a year and generates the penalty report used by the mini system.
      EMF91 Runs once a year and is the purge program that converts the current year to the prior year.
      EMF02A Runs once a year immediately after EMF91.
      EMF02S Runs once a year after EMF 82 and prints out the penalty report.

       

    3. If you receive an early filed (future tax year) Form 8027, hold the return until the next processing year.

      Note:

      See IRM 3.11.180.3.1.2, Tax Year, for additional information on tax year.

    4. All penalty cases should be input on Integrated Data Retrieval System (IDRS) by November 29, 2019.

      Reminder:

      After all penalty cases have been input on IDRS, Planning & Analysis (P&A) Analyst should send the number of penalty cases to Headquarters Analyst (IRM 3.11.180 author).

Definitions

  1. Allocated Tips - Amounts employers that operate large food or beverage establishments must assign to employees if the employees at the establishment do not report a minimum amount of tips. The minimum amount is 8% (or the lower rate granted by the IRS) of the establishment’s gross receipts. The amount allocated to an individual employee generally depends on the amount of tips reported to the employer.

  2. Determination Letter - A letter from the IRS granting a request for an allocation rate of less than 8 percent (%) but not lower than 2%. A copy of this letter must be attached to the paper Form 8027 if the allocation rate is less than 8%. If Form 8027 is filed electronically, a copy of the determination letter must be submitted separately. See Publication 1239, Specifications for Electronic Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

    1. National Tip Reporting Compliance Program (NTRCP) is requesting a copy of any Determination Letter (DL) received in Submission Processing. Make a copy of the DL, notate the EIN (if not already indicated) and send it to the following address:
      Internal Revenue Service
      Attn. NTRCP/TW
      110 City Parkway
      Las Vegas, NV 89106

    2. As of January 1996, on tip rate reduction requests where the IRS has approved a lower rate, Letter 8027-B, Determination Letter Approving Specified Lower Rate, is used. This letter provides the taxpayer with the lower rate to be entered on Line 6 of the Form 8027. After December 1995, the IRS changed procedures as allowed under IRC Regulations 31.6053-3(h)(3), to determine the term for which the reduced percentage is to be effective.

  3. Employer - The name and EIN of the employer listed on Form 8027 must be the same as those listed on Form W-2 (Wage and Tax Statement) and Form 941 (Employer's QUARTERLY Federal Tax Return) reporting wages and taxes for employees. Each employer should have a unique Employer Identification Number (EIN) as assigned by IRS and established on the Business Master File (BMF).

  4. Establishment - A food or beverage operation that meets the requirements for filing Form 8027.

  5. Establishment Number (EN) - A unique five-digit number for each establishment. The employer should assign a unique number for each establishment or we should assign a sequential number during processing, beginning with "1" (e.g., 00001).

  6. Type of Establishment - Establishments are categorized as:

    • An establishment that serves evening meals only (with or without alcoholic beverages).

    • An establishment that serves evening meals and other meals (with or without alcoholic beverages).

    • An establishment that serves only meals other than evening meals (with or without alcoholic beverages).

    • An establishment that serves food, if at all, only as an incidental part of the business of serving alcoholic beverages.

  7. Good-Faith Agreement (GFA) - A written agreement between the employer and at least two-thirds of the employees of each occupational category of employees who receive tips (e.g., waiters and waitresses, busboys, maitre d's) working in the establishment when the agreement is adopted which provides for a tip allocation among tipped employees in a manner that, in combination with the tips reported by such employees, will reflect a good faith approximation of the actual distribution of tip income among such tipped employees. A copy of the Good-Faith Agreement (GFA) is no longer required to be attached to the Form 8027.

  8. Employee Master File (EMF) Runs - Information Technology (IT) programming runs that impact the processing of the Form 8027.

  9. Number/Numeric - When the line or field should be numeric and the entry is written out in alpha characters (e.g., thirty-one), edit/enter the numeric equivalent (e.g., 31), as needed.

Document Review

  1. Form 8027 may be received as a single submission for an establishment, or an employer may use Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to submit multiple Form 8027 (when filing paper Form 8027).

  2. Keep multiple Form 8027 submissions in Establishment Number order (if present). Arrange from the lowest to highest number if the employer has not already done so. Breaks in the sequence numbers are allowed. Attach the Form 8027-T to the first Form 8027 in the set of multiples.

  3. If a multiple Form 8027 submission must be split during batching, photocopy the Form 8027-T and any attachments that are used for more than one establishment. Attach the copies to the next Form 8027 for that employer.

    Note:

    After photocopying and attaching the Form 8027-T to Form 8027, never detach.

  4. If two or more Form 8027 appear to show the same employer, and no Form 8027-T is present, treat these as single submissions. Do not correspond.

  5. Returns secured by Stakeholder Liaison may include an explanation for late filing. See IRM 3.11.180.3.1.3 (13)(c), Penalty Assessment Consideration - Failure to File, for instructions on determining reasonable cause.

  6. Verify the count shown in the Form 8027-T"Number of accompanying Forms 8027" box.

    1. If there are fewer Form 8027 than the number shown on Form 8027–T, correspond with the employer using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing. Include the paragraph that mentions the "Number of accompanying Forms 8027" . See IRM 3.11.180.3.3, Correspondence Preparation, for additional instructions.

    2. Make sure there are no duplicate Form 8027. Any duplicates (exact copies) should be destroyed using the guidelines for classified waste.

    3. Correct the count based on the number of original Form 8027 received and continue processing the forms.

  7. Original and amended returns may be in the same batch.

  8. See Exhibit 3.11.180-5, Routing Guide for Attachments, for guidelines on attachments.

  9. If a Form 8027 has a list of establishments attached, or if more than one establishment's data is present on one Form 8027, correspond with the employer to request a proper submission.

    1. Correspond using Letter 1858C and include the paragraph that requests a separate Form 8027 for each establishment. Without a separate form, the submission is considered to be unfiled and a Failure to File (FTF) penalty may apply. See IRM 3.11.180.3.3, Correspondence Preparation, for additional instructions.

    2. Place the Form 8027 in a suspense file and allow 45 days for a response.

    3. If undeliverable or no response is received after 45 days, write "No Response - Separate Form 8027 Needed" in the upper left margin/side of the return. Penalty Assessment consideration - Incomplete Filing. The penalty for Failure to File must be assessed. See IRM 3.11.180.3.4, Background of Penalty Assessments. Continue processing.

  10. If a Form 8027 contains a foreign address for the establishment address, route to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14). Reporting is required only for establishments located in the 50 states and the District of Columbia.

    Caution:

    If a foreign address is shown only for the employer address, the Form 8027 is processable.

  11. Requests for forms. If the taxpayer states on the return or an attachment to the return that tax forms and schedules are requested, prepare Form 4190, Order Form for Tax Forms and Publications, for current year tax forms or Form 6112, Prior Year Tax Products Order Form, for prior year tax forms. Forward the request to the Forms Distribution Center.

    Note:

    Form 4190 and Form 6112 are generally used in the Code and Edit function for IMF requests. Therefore, all BMF requests for forms and schedules should be entered in the "write-ins" portion of the forms. This will shorten the time frame when the taxpayer's requests for forms/schedules are identified.

  12. Petitions to Reduce the Tip Rate and User Fee. If a petition to lower the tip rate is received:

    1. Immediately hand carry any remittance to your manager.

    2. Send the petition package and copies of Form 8027 (if included) to:
      Internal Revenue Service
      National Tip Reporting Compliance
      3251 North Evergreen Drive NE
      Grand Rapids, MI 49525

      Note:

      Include a statement that indicates the payment amount, method of payment (check or money order), and the date submitted to your manager.

Code and Edit Instructions

  1. Complete Code and Edit procedures on the entire return to identify all items needing correspondence. The exception is "Not Liable" returns. See IRM 3.11.180.3.1.1, Special Return Code.

    1. A Form 8027 that is annotated as being not liable to file will be processed in abbreviated format. Lines 1 through 7 (money fields) and Line 8 (number of directly tipped employees) will not be edited. Correspondence will not be initiated, and penalties will not apply.

    2. A Form 8027 that appears to be both "Final" and "Not Liable" , should be treated as "Not Liable" . See IRM 3.11.180.3.1.1, Special Return Code.

Coding and Editing - Specific Field Action

  1. The required coding and editing actions for each field and line item are described in the following sections.

Special Return Code
  1. 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:

    1. "F" - Final return (e.g., "Final Return" check box checked) with money amounts.

    2. "N" - Final return with no money amounts or "Not Liable" return with no money amounts.

      Note:

      A Form 8027 that appears to be both "Final" and "Not Liable" , should be treated as "Not Liable" .

    3. If more than one condition above is reported, enter one code using this priority: F (1st), N (2nd). The "Note" above is the exception to this priority.

  2. Leave blank, if none of the above applies.

Tax Year
  1. For processing year 2019, only tax year 2018Form 8027 and tax year 2017Form 8027 will be processed.

  2. All 2016 and prior Form 8027 should be sent to the following address; unless the form meets the criteria in IRM 3.11.180.2 (13).
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

  3. Form 8027 is for a calendar year.

    Note:

    If there is clear indication that the establishment operated for less than a month in a calendar year, route the form to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

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

  5. If a 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 2017, circle the printed year and edit the two-digit year (17).

    Note:

    A tax year may be edited in a four-digit format (YYYY) which defines the year in which the period ends. The Integrated Submission and Remittance Processing (ISRP) input screen is programmed to establish "20" as the century in the tax period field. Therefore, only the last two digits are required in the Code and Edit function.

  6. If a Form 8027 is filed for tax year 2017 and the information is on the correct form, underline the tax year.

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

    1. For non-final returns, if the tax period is more than three months but less than one year from the current date, correspond for confirmation of the tax year.

    2. If the return is a "Final" , hold the return until the next processing year.

Received Date
  1. 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.

  2. A return is considered timely:

    Received Date Criteria

    If Then
    The return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The return is considered timely.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    If the IRS Received Date stamp is after ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the legal or extended due date, the postmark date or shipment date is on or before the legal due date, Edit the received date to agree with the postmark date or shipment date.

    Note:

    The postmark date or shipment date includes returns delivered by:

    • U.S. Postal Service (USPS),

    • Private Delivery Services, e.g., Federal Express Corporation (FedEx) or United Parcel Service (UPS), "designated" by the IRS. See IRM 3.10.72, Receiving, Extracting and Sorting, for a list of designated private delivery services, or

    • Returns with a Foreign Postmark.

     

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    An extension of time to file has been granted,

    Note:

    As of January 2015, filers of paper Form 8027 are no longer instructed to attach a copy of their approved extension to the Form 8027 when filed. The Service will no longer send an approval letter (e.g., Letter 2519 (CG) for the automatic 30-day extension. Requests for an additional extension of time to file information returns are not automatically granted. Generally, requests for additional time are granted only where it is shown that extenuating circumstances prevented filing by the date granted by the first request. An approval letter (e.g., Letter 5380) will be issued for an additional extension request.

    The return is considered timely.
    The return is received with an explanation that the return is late due to a failed attempt to file electronically, The return is considered timely.

     

  3. Determine timeliness as follows:

    Received Date Criteria

    If Then
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Do not edit the received date.

    2. Do not make a copy of the return.

    3. Do not assess the penalty for Failure to File (FTF) timely.

    An extension of time to file has been granted and the return is received by the extended due date.

    Note:

    See IRM 3.11.180.3.1.3.1, Form 8809, Application for Extension of Time To File Information Returns.

    1. Do not edit the received date.

    2. Do not make a copy of the return.

    3. Do not assess the penalty for Failure to File timely.

    The filer explains that the return is late due to a failed attempt to file electronically and the paper return is received within 10 days of the denial of the electronic filing.
    1. Do not edit the received date.

    2. Do not make a copy of the return.

    3. Do not assess the penalty for Failure to File timely.

     

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

  5. A received date is required on all delinquentForm 8027 returns.

  6. Returns that do not meet the requirements for timely filing, as indicated 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

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

    Reminder:

    If a received date is present on a timely filed return, circle out the received date.

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

    • The word "Received"

    • Month (alpha or numeric)

    • Day (e.g., "1" or "01" )

    • Year (four digits)

    • "Area Office" , Campus, "Field Office" , "Taxpayer Assistance Center (TAC)" plus the city, location, or functional area within one of these sites (e.g., Compliance Services Collection Operations (CSCO), Examination (Exam), Image Control Team (ICT), Correspondence Imaging System (CIS), Accounts Management (AM), etc.).

      Exception:

      Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return contains a received date stamp from other than a Taxpayer Assistance Center (TAC), Lockbox, or IRS campus (Compliance, Accounts Management, or Submission Processing (SP)),circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date" .

  9. 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.

    Note:

    Per the programming for the received date format, Integrated Submission and Remittance Processing (ISRP) transcribers enter six (6) numeric (MMDDYY) at initial input. When the ISRP transcriber hits the field release, it displays as eight (8) numeric (MMDDYYYY). For ERS, the tax examiner must enter eight numeric. If a received date issue continues to loop, ERS should delete the register and re-input the return.

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

    1. The earliest legible postmark date (U.S. Postal Service (USPS) or Private Delivery Service on the envelope. Rules for using the USPS postmark date or Private Delivery Service date are as follows:

      Received Date Criteria

      If Then
      An envelope is not attached, Use the postmark date stamped on the face of the return.

      Note:

      When there are multiple returns in one envelope, the envelope is attached to one return and the postmark date is stamped on the other returns.

      A document was returned for insufficient postage, Use the postmark date that coincides with the correct delivery of the return.
      An envelope has both a USPS and private metered postmark, Use the USPS postmark.
      An envelope has two private metered postmarks, Use the latest private postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

       

    2. Service Center Automated Mail Processing System (SCAMPS) Digital Date.

    3. Revenue Officer's or other IRS official's signature date.

    4. Signature date, if within current year (unless other information indicates signature date is invalid).

    5. Julian Date of the Document Locator Number (DLN) minus 10 days.

    6. Current date minus 10 days.

  11. Edit the received date as follows:

    Received Date Criteria

    If And Then
    A timely received date is the only received date stamped on the return,   Circle out the received date.
    Two or more dates stamped on the return,  
    1. Use the earliest IRS stamped received date.

    2. Circle out all other dates.

    A Federal return is addressed to the IRS Delivered to a State agency, Use the postmark date as the received date.
    Federal return is addressed to a State agency,   Use the IRS date stamp as the received date.
    The only received date on the return is a Taxpayer Advocate Service (TAS) or Chief Counsel received date,   Circle out the TAS or Chief Counsel received date and edit the received date according to instructions.

     

    Reminder:

    If an envelope is attached to the return, check envelope for remittance. If remittance is found, hand carry to the manager.

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

    Caution:

    The EEFax Date cannot legally be used as an IRS Received Date.

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

    1. Check for an approved extension of time to file. See IRM 3.11.180.3.1.3.1, Form 8809, Application for Extension of Time To File Information Returns. If applicable, write "Filing Extension Granted" in the upper left margin/side of the return (if not already present). Continue processing the return and do notmake a copy of the return.

      Note:

      By September 2019, Technical Services Operation (TSO) personnel will send OSPC and CSPC an approved Extension Listing for paper filers and electronic filers. Check the listing for an approved extension before assessing a penalty for Failure to File (FTF).

    2. Check for a statement that explains the delinquent filing, and

    3. If the taxpayer gives reasonable cause, write "Reasonable Cause Accepted" in the upper left margin/side of the return. Continue processing the return and do not make a copy of the return.

      Note:

      See IRM 20.1.7, Penalty Handbook - Information Return Penalties, for information regarding penalties and reasonable cause.

    4. If a return is delinquent and (a) or (c) above does not apply, assess the penalty for Failure to File. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    5. Write "Late" in the upper left margin/side of the return when assessing the penalty for Failure to File. Make a copy of the return (and the envelope, if attached) and place the copy in the appropriate area for penalty assessment. Continue processing the original return.

Form 8809, Application for Extension of Time To File Information Returns
  1. In 2019, Form 8809Application for Extension of Time To File Information Returns, will be processed in Ogden. When Form 8027 is received, there may be writing in the upper left margin/side of the return (e.g., "Filing Extension Granted" .

  2. Form 8809, Application for Extension of Time To File Information Returns, may be submitted on paper or electronically to request an initial or additional extension of time to file Form 8027 for the current tax year.

  3. Form 8809 must be submitted on paper or electronically by the due date of the return in order for the automatic 30-day extension to be granted.

  4. The automatic extension is 30 days from the original due date. Taxpayer may request one additional extension of not more than 30 days by submitting a second Form 8809 before the end of the first extension period.

  5. As of January 2015, filers of paper Form 8027 are no longer instructed to attach a copy of their approved extension to the Form 8027 when filed. The Service will no longer send an approval letter (e.g., Letter 2519 (CG)) for the automatic 30-day extension. But, Letter 5380 , Extension Approved, will be issued for an additional extension request.

  6. Requests for an additional extension of time to file information returns are not automatically granted. Generally, requests for additional time are granted only where it is shown that extenuating circumstances prevented filing by the date granted by the first request. An approval letter (e.g., Letter 5380, Extension Approved) will be issued for an additional extension request.

  7. The filer is instructed to send a copy of the timely filed Form 8809 when filing Form 8027 on paper only.

  8. Approved requests for extension of time to file:

    Extension of Time To File

    If And Then
    The taxpayer (EIN, Employer Name, etc.) is indicated on the approved Extension Listing The return is filed by the extended due date Write "Filing Extension Granted" in the upper left margin/side of the return.

    Note:

    Do not assess a penalty for Failure to File.

    A copy of Form 8809 is attached There's an indication the extension request was submitted timely Write "Filing Extension Granted" in the upper left margin/side of the return.

    Note:

    Do not assess a penalty for Failure to File.

     

  9. All requests for an extension of time filed on the paper Form 8809 must be sent using the following address:
    Department of the Treasury
    Internal Revenue Service Center
    Ogden, UT 84201-0209

  10. For additional information, see IRM 3.28.5, Information Returns Extension Request Processing.

Form 8508, Request for Waiver From Filing Information Returns Electronically
  1. Form 8508 is a Request for Waiver From Filing Information Returns Electronically.

  2. 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, Request for Waiver From Filing Information Returns Electronically, to the IRS.

  3. Filers are encouraged to file Form 8508 with the 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. The IRS does not process waiver requests until January 1st of the calendar year the returns are due.

  4. 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 transmitter must allow a minimum of 30 days for the IRS to respond to a waiver request.

  5. 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 filer/payer must timely fileForm 8027 on acceptable paper forms with the Ogden Submission Processing Campus (OSPC) and Cincinnati Submission Processing Campus (CSPC).

  6. Letter 5382, Approved Waiver, advises the taxpayer to keep the approval letter in their files and attach a copy to their paper filed Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

Establishment Name
  1. Establishment Name (or Name of Establishment) is located at the top of the Form 8027 (above the Employer's Name area).

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

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

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

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

Employer Identification Number (EIN)
  1. EIN may be present in the entity area or preprinted to the right of entity area in the EIN box.

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

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

    Caution:

    If the EIN is missing from the EIN area and is in the Establishment Number box, arrow the EIN to the EIN area. See IRM 3.11.180.3.1.12, Establishment Number (EN), for additional instructions.

  4. If research is unsuccessful, correspond using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to secure an EIN from the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

  5. If undeliverable or no response is received after 45 days:

    1. Write "Failure to Provide TIN" in the upper left margin/side of the return.

    2. The penalty for Failure to Provide a Taxpayer Identification Number (TIN) must be assessed. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    3. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, to determine the first 2 digits of the EIN (EIN prefix). Edit the two-digit EIN prefix plus seven (7) periods in the EIN area. Continue processing.

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

  2. Use the following chart to determine the correct code:

    Type of Establishment

    Box(es) checked Code
    1 1
    2 2
    3 3
    4 4
    None 2
    1 and 4 1
    3 and 4 3
    1, 2, and 3 2
    1 and 2 2
    1 and 3 2
    2 and 3 2
    2 and 4 2

     

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

Establishment's Address
  1. Determine the Establishment Address as follows:

    Establishment's Address

    If Then
    Establishment Address field is blank, Enter employer's address in Establishment Address field.
    No address is present,
    1. Research IDRS using Employer EIN.

    2. Enter Employer's address in Establishment Address field.

    A valid address is not found but there are entries on Lines 1 through 8, Complete edit procedures and process the return.
    A valid address is not found and there are no entries on Lines 1 through 8,
    1. Route to National Tip Reporting Compliance Program (NTRCP) for special handling.

    2. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

Establishment's City, State, and ZIP Code
  1. The City must be all alphas and a maximum of 25 characters. Edit out hyphens as blanks (spaces). Spaces are allowed.

  2. Enter the two-character code for the State. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, to determine valid state code and ZIP code range.

  3. ZIP code must be either five or nine numeric. See Exhibit 3.11.180-7, State Codes and ZIP Codes Perfection Chart, to perfect any incomplete or missing ZIP codes.

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

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

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

  4. 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.

    Reminder:

    Research Integrated Data Retrieval System (IDRS) to obtain the Employer's Name.

  5. If no Employer Name can be determined from the Form 8027-T or IDRS research, write "SAME" in employer entity area.

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

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

Employer's City, State and ZIP Code
  1. The City must be all alphas and a maximum of 25 characters. Edit out hyphens as blanks (spaces). Spaces are allowed.

  2. Enter the two-character code for the State. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, to determine valid state code and ZIP code range.

  3. ZIP code must be either five or nine numeric. See Exhibit 3.11.180-7, State Codes and ZIP Codes Perfection Chart, to perfect any incomplete or missing ZIP codes.

  4. 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.

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

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

  3. 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.

    Example:

    Establishment Number 2019-13579, Code and Edit should circle out 2019. There is no need to circle out the dash/hyphen (-) since this is a numeric only field and ISRP should enter 13579.

    Caution:

    If the Establishment Number (EN) matches the Employer Identification Number (EIN), circle it out. The EIN should not be in the Establishment Number box. If the EIN is missing from the EIN area and is in the Establishment Number box, arrow the EIN to the EIN area. Continue processing. See procedures above for additional Establishment Number instructions. See IRM 3.11.180.3.1.5, Employer Identification Number (EIN), for additional instructions.

Charge Receipts Indicator Box
  1. A filer may check the "Yes" or "No" box in response to the question "Does this establishment accept credit cards or other charges?"

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

    Charge Receipts Indicator Box Criteria

    If Then
    The filer checks the "Yes" box. Lines 1 and 2 must be completed.
    The filer checks the "Yes" box but does not complete Lines 1 and 2. Correspond using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to request the missing information from the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    The filer checks the "No" box or neither box is checked. Lines 1 and 2 may be blank. Do not correspond.

     

Money Amounts Lines 1 through 5
  1. Establishments report amounts on Lines 1 through 5.

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

    1. If Lines 1 and 2 are zero (or show a dash "None" , "Not Applicable (N/A)" , "Not Available" , or "Unknown" ), accept and continue processing.

    2. If Lines 1 and 2 are not completed (blank), correspond using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to request the missing information from the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

    3. If undeliverable or no response is received after 45 days, leave blank, and continue processing. Penalty Assessment consideration - Incomplete Return. Write "No Response - Incomplete Return" in the upper left margin/side of the return. Assess the penalty for Failure to File. See IRM 3.11.180.3.4, Background of Penalty Assessments.

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

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

    1. If this condition does not exist, 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.

    2. If undeliverable or no response is received after 45 days, edit a "1" on Line 2 if there is no amount present. Do not edit if there is an amount present on Line 2. Continue processing. Penalty Assessment consideration - Inconsistent Return. Write "No Response - Inconsistent Return" in the upper left margin/side of the return. Assess the Failure to File penalty. See IRM 3.11.180.3.4, Background of Penalty Assessments.

  5. Line 3 may be zero or blank.

  6. Lines 4a, 4b, and 4c may all be zero.

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

    1. Add Line 4a and Line 4b.

    2. Correspond using Letter 1858C to inform the employer of any change that is made to Line 4c. See IRM 3.11.180.3.3, Correspondence Preparation.

  8. 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:

    Line 4a, Line 4b, and Line 4c Criteria

    If there is an amount on And Then
    Line 4a only A greater amount on Line 4c, Enter the difference between the two lines on Line 4b.
    Line 4b only A greater amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    Line 4a only A lesser amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    Line 4b only A lesser amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

     

  9. 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

    Exception:

    If Line 4c contains a zero (0), do not correspond. Line 4a + Line 4b = Line 4c (0 + 0 = 0).

    1. If undeliverable or no response is received after 45 days, continue processing.

  10. 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.

    Note:

    Zero (0) is an amount.

    1. If undeliverable or no response is received after 45 days, continue processing. Lines 4a, 4b and 4c may all be zero.

  11. 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.

    1. If the amount for Line 5 is missing or is inconsistent with an amount on Lines 1 through 4c, use Letter 1858C to correspond to request the information from the employer.

    2. If undeliverable or no response is received after 45 days, continue processing. Penalty Assessment consideration - Inconsistent Return. Write "No Response - Inconsistent Return" in the upper left margin/side of the return. Assess the Failure to File penalty. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    Note:

    If all receipts including tips are charged, and Lines 2 and 5 are equal, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and do not correspond.

  12. 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.

Allocation Rate - Center of Line 6
  1. Generally, the allocation rate is 8 percent (%). However, the establishment may be granted a lower allocation rate.

    1. The center of Line 6 may be blank. Do not correspond.

    2. If the establishment has been granted a lower allocation rate, the lower rate may be entered on the form. An IRS determination letter granting the lower rate must be attached.

      Reminder:

      National Tip Reporting Compliance Program (NTRCP) is requesting a copy of any Determination Letter (DL) received in Submission Processing. Make a copy of the DL, notate the EIN (if not already indicated) and send it to following address:
      Internal Revenue Service
      Attn. NTRCP/TW
      110 City Parkway
      Las Vegas, NV 89106

    Note:

    Determination letters (e.g., Letter 8027-B) issued after December 1995, have an effective date for the tax period the lower rate is allowed.

  2. 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.

    Caution:

    Enter the rate based on the determination letter.

  3. There may also be multiple determination letters.

  4. If the letter shows percentages higher than 8 percent (%), the employer should not have attached the letter to Form 8027. Disregard the higher rate. The letter was issued by Examination to advise the employer that the percentages in the "Tip Rate Determination Agreement" were recalculated. These percentages are used to determine the minimum amount of tips that should appear on Form 941. Do not math verify. Continue processing the return.

    Note:

    A determination letter is different from a Tip Rate Determination Agreement (TRDA). An employer under a TRDA does not get a determination letter but rather gets a separate document listing tip rates for the various worker categories. If a taxpayer has attached a copy of either a TRDA Attachment B or Gaming Industry Tip Compliance Agreement (GITCA) Appendix A showing tip rates for various worker categories, this is not a determination letter. A determination letter issued under the provisions of IRC 6053(c)(3)(A), petition for a lower tip allocation rate, will merely state one tip rate to use for when a large food and beverage employer must make tip allocations.

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

  6. If the determination letter is for a different percentage (2% or more, but less than 8%), 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.

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

    Conversion Rate Table

    Rate (Percent (%)) Conversion
    2.00% 0200
    2.25% 0225
    2.50% 0250
    2.75% 0275
    3.00% 0300
    3.25% 0325
    3.50% 0350
    3.75% 0375
    4.00% 0400
    4.25% 0425
    4.50% 0450
    4.75% 0475
    5.00% 0500
    5.25% 0525
    5.50% 0550
    5.75% 0575
    6.00% 0600
    6.25% 0625
    6.50% 0650
    6.75% 0675
    7.00% 0700
    7.25% 0725
    7.50% 0750
    7.75% 0775
    8.00% 0800

     

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

    1. Use Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

    2. If undeliverable, no response is received after 45 days, or correspondence is unsuccessful, edit the percentage in the center of Line 6 (or in that area) as "0800" and initiate a non-suspense Letter 1858C to the employer to inform them of the allocation rate change.

  9. If a lower rate is entered (2% or more, but less than 8%), but the determination letter (e.g., Letter 8027-B) shows anexpiredeffective date,

    1. Edit the percentage in the center of Line 6 (or in that area) as "0800" .

    2. Use Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, and initiate a non-suspense letter to the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

Allocation Amount Line 6
  1. 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 contain an alpha "X" if the employer allocates tips using other than the calendar year.

    Allocation Amount Line 6

    If And Then
    Line 6 is blank, Line 7 is blank, Complete Line 6 using 8% or the *lower rate, whichever applies.

    Note:

    If the establishment has a determination letter approving two allocation rates, apply the lower rate for the entire year. *If the determination letter is for a different percentage (2% or more, but less than 8%), 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.

    Line 6 is blank, Line 7 has a positive entry, Enter an alpha X on Line 6.

     

  2. If you change an amount on Line 6, make the necessary change to Line 7. Correspond using Letter 1858C to notify the employer of any changes. See IRM 3.11.180.3.3, Correspondence Preparation.

Allocation of Tips Amount Line 7
  1. Procedures for computing Line 7.

    Allocation of Tips Amount Line 7

    If And Then
    Line 6 is more than Line 4c Line 7 is blank, Enter the difference on Line 7.
    Line 4c equals or is more than Line 6 Line 7 has a negative amount, Circle the amount and enter zero to the right of the amount.
    Line 4c equals or is more than Line 6 Line 7 is blank, Enter a zero on Line 7.

     

    Note:

    If you change an amount on Line 7, correspond using Letter 1858C to notify the employer. See IRM 3.11.180.3.3, Correspondence Preparation. In addition, if you change a hyphen (-) to a zero (0), correspondence is not needed for this situation.

Condition Codes 4 and U
  1. There are two codes that may be edited:

    1. Code "4" is edited to the right of Line 7a, Line 7b or Line 7c, as instructed in IRM 3.11.180.3.1.19, Method of Allocation Boxes Lines 7a through 7c.

    2. Code "U" is edited to the right of Line 8, as instructed in IRM 3.11.180.3.1.20, Number of Directly Tipped Employees Line 8.

Method of Allocation Boxes Lines 7a through 7c
  1. 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:

    1. Line 7a - enter "1" ,

    2. Line 7b - enter "2" , or

    3. Line 7c - enter "3" , if a Good-Faith Agreement (GFA) is attached. See (2) below for additional information.

    Method of Allocation Boxes Criteria

    If Then
    No boxes are checked and Line 7 is greater than zero, Edit a Condition Code 4 to the right of Line 7a, 7b or 7c.
    No allocation was made (Line 7 is zero or no money),
    1. The method of allocation should be blank.

    2. Circle out any entry.

      Caution:

      Make sure to circle out any check mark and "X" by Line 7a, Line 7b, or Line 7c.

    More than one box is checked,
    1. Use the following priority to determine code:

      1. Line 7c, with a Good-Faith Agreement (Code 3),

      2. Line 7a (Code 1),

      3. Line 7b (Code 2).

    2. Circle out the remaining boxes.

     

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

    Note:

    The Good-Faith Agreement may be applicable for more than one return. Write "GFA" for "Good-Faith Agreement" in the upper left margin/side of each applicable return.

    1. If the Good-Faith Agreement cannot be found, edit a Condition Code "4" to the right of Line 7a, 7b or 7c to force the document to good tape.

Number of Directly Tipped Employees Line 8
  1. A number greater than zero should be present on Line 8.

    Caution:

    If the entry on Line 8 is written out in alpha characters (e.g., thirty-one), edit the numeric equivalent (e.g., 31), as needed.

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

Signature
  1. The 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.

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

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

    1. When the reply is received, attach the taxpayer's response to the return and continue processing.

    2. If no reply is received, contact National Tip Reporting Compliance Program (NTRCP) for follow-up action and special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

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

    Amended Documents Criteria

    If Then
    The "Amended Return" box is marked Continue processing.
    If the "Amended Return" box is not marked, and
    • The word "Amended" , "Supplemental" , "Corrected" , or "Additional" is written on the return or an attachment, or

    • Any indication from the taxpayer that a previous return was filed.

    Note:

    Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

    Mark the "Amended Return" check box.

     

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

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

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

Disposition

  1. After Coding and Editing of Form 8027, forward to final batching and numbering.

Correspondence Preparation

  1. In compliance with a Chief Counsel opinion issued September 2, 2008, tax examiners will no longer send returns back to the taxpayer when corresponding for missing signature, missing information and supporting schedules and documentation on refund or zero balance returns (Chief Counsel Opinion PMTA-2008-01947, effective October 5, 2009).

  2. Written communication to the employer is used to request additional or missing information to perfect the Form 8027. Correspondence is generally used after research and the needed information cannot be obtained.

  3. In most cases, correspondence will be sent to the employer's address. If the employer information is not present, or the address is incomplete or illegible, send correspondence to the establishment's address.

  4. Utilize the Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, via a Form 3696, Correspondence Action Sheet, (or other approved Correspondence Action Sheet).

  5. Letter 1858C should address all correspondence issues identified during review and should contain:

    • The current date

    • The name and address of the employer or establishment

    • The return number or title and tax year

    • All "select" paragraphs that pertain to the missing information or the information in question

    • The period of time the taxpayer must respond (for example (e.g.), 30 days from the date of the letter), when applicable

    • Instructions for faxing information, when applicable

    • The name, phone number and duty hours of either the IRS tax examiner or supervisor the taxpayer may call if there are additional questions. See IRM 3.11.180.2.4, IRS Employee Contacts - RRA98, Section 3705(a).

    • Appropriate select paragraphs, based on the following Correspondence Guide:

      Correspondence Guide

      Condition Letter 1858C Paragraph Suspend IRM Reference
      Number of Form 8027 fewer than the count indicated on Form 8027-T. Paragraph V No IRM 3.11.180.2.8(6), Document Review
      Separate Form 8027 submissions are needed. Paragraph W Yes IRM 3.11.180.2.8(9), Document Review
      EIN is incomplete or missing. Paragraph H Yes IRM 3.11.180.3.1.5(4) and IRM 3.11.180.4.2.8(3)
      Charge Receipts Indicator "Yes" box is checked. Lines 1 and 2 are blank. Paragraph I Yes IRM 3.11.180.3.1.13(2) and IRM 3.11.180.3.1.14(2)
      The amount on Line 2 is not greater than the amount on Line 1. Paragraph J Yes IRM 3.11.180.3.1.14(4) and IRM 3.11.180.4.2.11(5)
      Line 4c is incorrect or blank and an amount is reported on Line 4a or Line 4b. Paragraph L No IRM 3.11.180.3.1.14(7) and IRM 3.11.180.4.2.11(7)
      An amount is reported 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). Paragraph K Yes IRM 3.11.180.3.1.14(8) and IRM 3.11.180.4.2.11(8)
      An amount is present on Line 4c only (Line 4a and Line 4b are blank). Paragraph K Yes IRM 3.11.180.3.1.14(9) and IRM 3.11.180.4.2.11(9)
      An amount is reported on Line 1 but no amounts are present on Lines 4a, 4b or 4c. Paragraph K Yes IRM 3.11.180.3.1.14(10) and IRM 3.11.180.4.2.11(10)
      No amount or an incorrect amount is shown on Line 5. Paragraph. M and Paragraph O or Paragraph N and Paragraph O Yes IRM 3.11.180.3.1.14(11) and IRM 3.11.180.4.2.11(11)
      Lower tip rate (center of Line 6) not supported by an IRS determination letter (e.g., Letter 8027-B). Paragraph P Yes IRM 3.11.180.3.1.15(8) and IRM 3.11.180.4.2.12(6)
      Lower tip rate replaced with standard 8 percent (%) tip rate. Paragraph Q No IRM 3.11.180.3.1.15(8) and IRM 3.11.180.4.2.12(6)
      Lower tip rate (center of Line 6) and the IRS determination letter (e.g., Letter 8027-B) has an expired effective date. Paragraph R No IRM 3.11.180.3.1.15(9) and IRM 3.11.180.4.2.12(7)
      No amount or an incorrect amount is reported on Line 6. Paragraph S No IRM 3.11.180.3.1.16(2) and IRM 3.11.180.4.2.12(13)
      The amount on Line 7 is changed due to a change to Line 6. Paragraph T No IRM 3.11.180.3.1.17(1) and IRM 3.11.180.4.2.12(15)
      No amount or an incorrect amount is shown on Line 7. Paragraph U No IRM 3.11.180.3.1.17(1) and IRM 3.11.180.4.2.12(15)
      Information appears to be split between establishments. Paragraph 0 (zero) Yes IRM 3.11.180.4.4(3)
      Signature is required on return(s) Paragraph G and Paragraph Z Yes IRM 3.11.180.3.1.21(3)

       

  6. See below for additional appropriate select paragraphs from the Letter 1858C information:

    1. Use Sel. A to identify a specific establishment if multiple forms were included in the employer's submission.

    2. Use Sel. B, C or D as the opening paragraph.

    3. Use Sel. E and F as appropriate.

    4. Refer to the "Notes" at the end of Letter 1858C for additional information.

  7. Suspense a copy of the correspondence with the associated return for 45 days. Keep this file by date/EIN order or date/alpha order if the EIN is missing.

  8. Purge the suspense file 15 days after the 30 day response period has expired.

  9. If undeliverable or no response is received after 45 days, refer to the No Reply Chart below.

  10. If working return that is not processable, and current date is after October 31, 2019:

    1. Do not correspond. Since the information is purged from the database in January, any correspondence sent after October 31 would not provide time for the return to post prior to the purge.

    2. Route the return to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

  11. The following No Reply Chart provides a road map to the specific field instructions in this IRM:

    No Reply Chart

    If no reply or undeliverable and Then
    Separate Form 8027 submissions are needed.
    1. Assess the penalty per IRM 3.11.180.2.8(9), Document Review.

    2. Keep the establishment list attached.

    3. Process the Form(s) 8027 received.

    EIN is incomplete or missing.
    1. Determine the EIN prefix. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix.

    2. Edit EIN prefix and seven (7) periods.

    3. Continue processing.

    Charge Receipts Indicator "Yes" box is checked. Lines 1 and 2 are blank.
    1. Assess the penalty per IRM 3.11.180.3.1.14(2).

    2. Continue processing.

    The amount on Line 2 is not greater than the amount on Line 1.
    1. See IRM 3.11.180.3.1.14(4) and IRM 3.11.180.4.2.11(4).

    2. Edit the form and assess the penalty per instructions.

    3. Continue processing.

    No amount or an incorrect amount is shown on Line 5.
    1. See IRM 3.11.180.3.1.14(11) and IRM 3.11.180.4.2.11(10).

    2. Assess the penalty and edit Line 5 as instructed.

    3. Continue processing.

    Lower tip rate (center of Line 6) is not supported by an IRS determination letter.
    1. See IRM 3.11.180.3.1.15(8) and IRM 3.11.180.4.2.12(6).

    2. Use standard 8 percent (0800) rate and correspond using Letter 1858C to inform the employer.

    3. Continue processing.

    Line 7c is checked, but the "Good-Faith Agreement" is not attached.
    1. Edit Condition Code "4" . See IRM 3.11.180.3.1.19(2)(b) and IRM 3.11.180.4.2.13(3).

    2. Continue processing.

    Information appears to be split between establishments.
    1. Assess the penalty per IRM 3.11.180.4.4(3).

    2. Process document as instructed.

     

Faxing Information
  1. Filing of original returns via fax is permissible as part of the return perfection process where contact with the employer has been made and documented by the Service. In these circumstances, fax signatures are acceptable for the original returns.

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

  3. Tax examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, (or other approved 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 additional information.

Background of Penalty Assessments

  1. The Revenue Reconciliation Act of 1989 changed the penalty provisions (Internal Revenue Code (IRC) 6721-6724) for any documents, including corrections, which are filed after the original filing date for the return. The penalty for failure to file correct information returns is "time sensitive", in that prompt correction of failures to file, or furnish, or prompt correction of errors on returns that were filed, can lead to reduced penalties.

  2. Treasury Regulations affecting all persons who may be subject to penalties for failure to comply with the information reporting requirements under the Internal Revenue Code (IRC) are:

    • 301.6721-1, Failure to file correct information returns (IRC 6721 penalty)

    • 301.6723-1, Failure to comply with other information reporting requirements (IRC 6723 penalty)

    • 301.6724-1, Reasonable Cause (applies to IRC 6721 and 6723 penalties)

  3. Penalties can be waived if failures were due to reasonable cause and not to willful neglect. The abatement criteria for all information returns is reasonable cause (IRC 6724(a)).

  4. Refer to IRM 20.1.7, Penalty Handbook - Information Return Penalties, for information regarding penalties and reasonable cause criteria.

  5. See Publication 1239, Specifications for Electronic Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, for additional information on penalties and electronic filing.

  6. See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for additional information on reasonable cause.

Applicable Penalties
  1. IRC 6721 provides for a penalty when an information return is not timely or correctly filed by the due date of the return. Penalties assessed under IRC 6721 are based on a time sensitive penalty rate. IRC 6723 provides for a penalty when a person fails to comply with certain specified information reporting requirements, including the requirement to furnish the person’s Taxpayer Identification Number (TIN).

  2. The Failure to File penalty under IRC 6721 applies not only to delinquent returns but also to returns that are filed in unprocessable condition. The penalty for Failure to Provide a Taxpayer Identification Number (TIN) under IRC 6723 may apply where the employer does not respond to correspondence requesting the necessary information.

  3. The Trade Preferences Extension Act (TPEA) of 2015, Section 806, increased the tiered penalty amounts for IRC 6721. See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

  4. The following penalty amounts are effective for returns required to be filed on or after January 1, 2011, and before January 1, 2016.

    1. $30 per failure, not to exceed an annual maximum of $250,000, for returns filed or furnished correctly within 30 days of the due date, or

    2. $60 per failure, not to exceed an annual maximum of $500,000, for returns filed or furnished correctly after 30 days, but on or before August 1, or

    3. $100 per failure, not to exceed an annual maximum of $1,500,000, for returns filed or furnished after August 1.

    Note:

    These penalty amounts were established by the Creating Small Business Jobs Act of 2010 (Public Law (P.L.) 111-240). See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

  5. Intentional Disregard of Filing Requirements:

    1. Intentional disregard occurs when a filer who knows, or should know of a rule or regulation, chooses to ignore its requirements.

    2. If any failure to file a correct information return is due to intentional disregard of the filing and correct information reporting requirements, the penalty is at least $540 ($250 for returns due between 01-01-2011 through 12-31-2015), subject to annual inflationary adjustment, per information return with no maximum penalty.

    3. See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

  6. 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 additional information.

  7. No more than one penalty per return 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.

    1. For example, only one penalty may be imposed on a return which is filed both late and incomplete.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. If an electronic file was submitted 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.

    1. A Correction is an information return submitted by the transmitter to correct an information return that was previously submitted to and successfully processed by IRS/Technical Services Operation (TSO), but contained erroneous information.

      Note:

      Corrections should only be made to forms that have been submitted incorrectly, not the entire file.

    2. A Replacement is an information return file sent by the filer because the CHECK FILE STATUS option on the Filing Information Returns Electronically (FIRE) System indicated the original/correction file was bad. After the necessary changes have been made, the file must be transmitted through the FIRE System.

      Note:

      Filers should never transmit anything to IRS/Technical Services Operation as a Replacement file unless the CHECK FILE STATUS option on the FIRE System indicates the file is bad.

Penalty Information - Form 8508, Request for Waiver From Filing Information Returns Electronically
  1. Form 8508 is a Request for Waiver From Filing Information Returns Electronically.

  2. Per IRC 6011(e) and the Section 6011 regulations, information returns must be filed using electronic media when 250 or more of any document types are submitted. The penalty applies to the returns that exceed this threshold.

  3. 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.

  4. 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, Request for Waiver From Filing Information Returns Electronically, to the IRS.

  5. Filers are encouraged to file Form 8508 with the 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. The IRS does not process waiver requests until January 1st of the calendar year the returns are due.

  6. 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 transmitter must allow a minimum of 30 days for the IRS to respond to a waiver request.

  7. 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 filer/payer must timely fileForm 8027 on acceptable paper forms with the Ogden Submission Processing Campus (OSPC) and Cincinnati Submission Processing Campus (CSPC).

  8. All requests for a waiver should be sent to the following address:
    Internal Revenue Service
    Attn. Extension of Time Coordinator
    240 Murall Drive, Mail Stop 4360
    Kearneysville, WV 25430.

  9. 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.

Assessing the Penalty
  1. A photocopy of Form 8027, Form 8027-T (if the employer files for more than one establishment), and any other pertinent supporting documentation (e.g., copy of Form 8809, envelope, etc.) should be made if a penalty is being assessed. The photocopy will be used for penalty processing. The original will be used to continue normal processing.

  2. A photocopy of the envelope should also be made if the Form 8027 is delinquent.

  3. No more than one penalty per return 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.

    1. For example, only one penalty may be imposed on a return which is filed both late and incomplete.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. The penalty is assessed on the Civil Penalty Module on Integrated Data Retrieval System (IDRS) using the employer's EIN on Master File Tax (MFT) 13. Enter Command Code REQ54 to bring up the ADJ54 screen. See Figure 3.11.180-1, ADJ54 Screen Display for Penalty Example 1 On the ADJ54 screen, input the following fields:

    1. Sequence Number (SEQ-NUM)

    2. Blocking Series (BLK) 53

    3. IRS Received Date (IRS-RCVD-DT): Enter the Received Date from the Form 8027 in MMDDYYYY format

    4. Transaction Code: TC 290, with a zero (.00) amount (AMT)

    5. Hold Code (HOLD-CD) zero (0)

    6. Penalty Reference Number (CD): Enter 638

    7. Amount (AMT): Enter the amount of the penalty (e.g., 1,350.00)

      Note:

      Enter money amount in dollars and cents and decimal/period (.) between the dollars and cents. Enter the comma (when needed, as shown in 1,350.00). Do not enter a dollar sign. See Figure 3.11.180-2, ADJ54 Screen Display for Penalty Example 2.

    8. SOURCE-DOC-ATTACHED: Enter "Y" (Y = Yes)

    9. REMARKS: Enter 8027

    10. REMARKS: Also enter "6721a - FTF" (if Failure to File) or"6721e - ID" (if Intentional Disregard), e.g., REMARKS: 8027 - 6721a - FTF

    Figure 3.11.180-1

    This is an Image: 33583201.gif
     

    Please click here for the text description of the image.

    Figure 3.11.180-2

    This is an Image: 33583205.gif
     

    Please click here for the text description of the image.

  5. The penalty for Failure to File is shown in Exhibit 3.11.180-8, Penalty Tables.

  6. 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. The penalty is computed as: applicable penalty amount times the number entered in the Form 8027-T box that is labeled "Number of accompanying Forms 8027" (or per Form 8027) for that employer’s EIN. See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

  7. Before assessing the penalty:

    1. Check for Employment Code "F" (Federal) using Command Code (CC) ENMOD, CC BMFOLE or CC INOLES. If present, do not assess the penalty.

    2. Check the Civil Penalty Module (MFT 13) for previous assessments of the Failure to File penalty. Since this penalty cannot exceed the maximum amount, depending on when the return is received) annually, make the assessment for the amount of the penalty or the amount necessary to reach the annual limit, whichever is less. See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

      Note:

      See IRM 3.11.180.3.4, Background of Penalty Assessments, for additional information.

  8. Complete Form 9860, Adjustment Input Document/Case History Sheet.

    If Then
    Using Form 9860, Adjustment Input Document/Case History Sheet,
    1. Attach Form 9860 to the photocopy Form 8027 (below the entity area)

    2. Complete the applicable fields on the Form 9860:

      • Tax Examiner Number

      • Function: 210

      • Program: 80310

      • IRS Received Date (MMDDYYYY format)

      • MFT/Form Number: 13

      • Tax Period (TX/PRD)

      • Sequence Number (SEQ-NUM)

      • Blocking Series (BLK): 53

      • Transaction Code (T/C): 290

      • Amount (AMT) .00 (.zero zero)

      • Hold Code (HOLD-CD): 0

      • Credit Reference (Cr/ref no.): 638

      • Amount: Amount of the penalty

        Note:

        Enter money amount in dollars and cents and decimal/period (.) between the dollars and cents. Enter the comma (when needed, as shown in 1,350.00). Do not enter/edit a dollar sign.

      • Remarks: "SD: 8027" (Source Document: 8027), and "6721a - FTF" (if Failure to File) or"6721e - ID" (if Intentional Disregard). For example, REMARKS: SD: 8027 - 6721a - FTF.

    3. Management approval is needed below the Remarks area or somewhere in white space

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

    Caution:

    If assessing penalties on multiple Form 8027 for the same EIN (same employer, different establishments), you MUST attach the Form 8027 together and use one Form 9860 for the penalty assessment.

  10. Forward the IDRS source document to Files.

    Note:

    Refer to IRM 20.1.7, Penalty Handbook - Information Return Penalties, for specific procedures in regard to assessing penalties on Information Returns. Always use Reference Number 638, instead of numbers assigned to Information Return Processing (IRP).

  11. All penalty cases should be input on Integrated Data Retrieval System (IDRS) by November 29, 2019.

Replies to Penalty Assessment Notices
  1. 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.

  2. 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.

    1. If the returns are processable, follow processing procedures.

    2. Route CP 215, Civil Penalty Notice, response, correspondence related to a penalty assessment, or a penalty abatement request to Campus Compliance Collection Operation (CCCO). Indicate whether the return is "processable" or "not processable" based on the information received.

Late Replies

  1. Late replies may be received in response to Letter 1858Cafter the 45-day response period has expired. Therefore, the late reply must be worked without the original document.

  2. After the 45-day suspense period, the original return is pulled from the suspense file and, if processable, it is processed without complete information. See IRM 3.11.180.3.3 (9), Correspondence Preparation.

  3. Check the late reply for a completed Form 8027.

    1. If a complete Form 8027 is attached, follow processing procedures.

    2. If the original Form 8027 contained sufficient information and was processed when purged from the suspense file, mark the "Amended Return" check box on the corrected Form 8027.

    3. If no Form 8027 is attached but the letter contains the requested information, prepare a dummy Form 8027 and process.

    4. If there is insufficient information to prepare a dummy Form 8027, route to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

  4. See IRM 3.11.180.3.4, Background of Penalty Assessments, for penalty information.

Unprocessable Documents

  1. Perfect all documents, if possible. Examine attachments and Form 8027-T, if present, for the information necessary to make a return processable.

  2. If unprocessable, initiate correspondence action when the document cannot be perfected from attachments or Form 8027-T.

    Exception:

    Employer and establishment name and address are missing or are illegible that correspondence is impossible, or correspondence was sent on the same issue, but the document is still unprocessable.

  3. If correspondence is impossible, follow guidelines for undeliverable or no response after 45 days. See IRM 3.11.180.3.3 (9).

  4. Route documents that cannot be perfected and processed to National Tip Reporting Compliance Program (NTRCP) for special handling:
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

Error Resolution

  1. The Service Center Replacement System (SCRS) is a term used to refer to the processing of paper register documents. While Error Resolution System (ERS) is worked on the computer with Integrated Data Retrieval System (IDRS), SCRS documents are corrected on a paper print, by hand, with a pen. The errors appear on computer printed paper Error Registers. SCRS programs are few in number as programs continue to be moved to ERS each year; the few that remain are generally received in such small numbers that it is considered too expensive to move them to ERS. Despite the low amounts of receipts, these forms are just as important to process correctly as those on ERS.

  2. See IRM 3.11.180.2, General Information, and IRM 3.11.180.3, Code and Edit Instructions, to become familiar with the Form 8027 and the procedures required to ensure the form is processable.

  3. You are not expected to review or redo the work of a Code and Edit (C&E) tax examiner, except in the resolution of an error of omission or commission which forced the return to the Error Register.

Error Register

  1. Only errors will be printed on the paper register. More than one field will be printed when one field of data is inconsistent with another field.

  2. Each correction must use either Action Code 2, 6 or 7. Corrections are subject to validity checks. If a correction does not pass these checks, the record will reappear on the Error Register. See IRM 3.11.180.4.1.1, Action Codes.

  3. Electronic source documents will be identified by the presence of a Transmitter Control Code (TCC) literal and a five-digit printed number. The source document for electronic returns is a computer generated transcript, which generates with the Error Register.

    Note:

    The computer generated transcript may not help resolve errors that are present. Correspondence may be needed. See IRM 3.11.180.4.3, Reject Register.

  4. Paper source documents will be identified by the presence of a Document Locator Number (DLN) literal and the 14-digit number. The source document is the actual Form 8027.

  5. See Exhibit 3.11.180-3, Form 8027 Error Register, for an example of an Error Register.

Action Codes
  1. The following action codes are valid:

    Action Codes

    Action Code Description
    2 Delete the record from the Error Register and send the record to the Reject Register.
    6 Programming allows up to three (3) corrections on the register. Change one or more data fields. It is not necessary to change every field on the register when one or more fields are inconsistent, (e.g., an error in gross receipts may cause several other items to be inconsistent). A correction to gross receipts will cause the other inconsistencies to be dropped. An error in the state/ZIP code fields may cause both fields to be inconsistent. A change to the incorrect field will cause the inconsistency check to be corrected.

    Note:

    You can make up to three (3) corrections on the register, so do not make just one (1) correction and wait for it to loop to make the additional corrections.

    7 Indicate the data on the Error Register is to be accepted as is. Action Code 7 cannot be used to force an invalid character within a specific field (e.g., you cannot force bad data).

    Note:

    You can force a "0" for Line 5 with Action Code 7 if the form shows "0" .

     

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

  3. The above applies to both paper and electronic documents.

Condition Codes
  1. There are two codes that may be used:

    1. Condition Code "4" is entered when Lines 7a through 7c are blank and Line 7 is greater than zero. See IRM 3.11.180.3.1.19, Method of Allocation Boxes Lines 7a through 7c.

    2. Condition Code "U" is entered when Line 8 is blank or zero. See IRM 3.11.180.3.1.20, Number of Directly Tipped Employees Line 8.

  2. The above applies to both paper and electronic documents.

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

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

  3. Error Reason Codes:

    Error Reason Codes

    Error Reason Code (ERC) Generates when:
    SZ - Address inconsistency
    • See IRM 3.11.180.4.2.5, ERC SZ - Establishment State, and IRM 3.11.180.4.2.6, ERC SZ - Establishment ZIP Code, for establishment.

    • See IRM 3.11.180.4.2.21, ERC SZ - Employer State, and IRM 3.11.180.4.2.22, ERC SZ - Employer ZIP Code, for employer.

    Establishment (or employer) state and ZIP code are inconsistent.
    MA - Money amounts in Lines 1 through 5 are inconsistent
    • See IRM 3.11.180.4.2.11 for additional information.

    Line 2 is not greater than Line 1.
    MA - Money amounts in Lines 1 through 5 are inconsistent
    • See IRM 3.11.180.4.2.11 for additional information.

    Line 4c does not equal the sum of Line 4a and Line 4b≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    MA - Money amounts in Lines 1 through 5 are inconsistent
    • See IRM 3.11.180.4.2.11 for additional information.

    Line 5 is not greater than each of Lines 1, 3, 4a, 4b and 4c.
    MA - Money amounts in Lines 1 through 5 are inconsistent
    • See IRM 3.11.180.4.2.11 for additional information.

    Line 5 is less than Line 2.
    AA - Allocation amounts are inconsistent Line 6 does not equal Line 5timesTip Rate≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 3.11.180.4.2.12(1) through (9) for additional information.
    AA - Allocation amounts are inconsistent Line 7 is significant but the allocation method (Line 7a, Line 7b or Line 7c) is not code 1, 2, 3, or 4. See IRM 3.11.180.4.2.13 for additional information.
    AT - Lines 4c, 6 and 7 are inconsistent
    • See IRM 3.11.180.4.2.12 for additional information.

    Line 6 is equal to or less than Line 4c, and Line 7 is not equal to zero.
    AT - Lines 4c, 6 and 7 are inconsistent
    • See IRM 3.11.180.4.2.12 for additional information.

    Line 6 is greater than Line 4c, and Line 7 is not equal to the difference between Line 6 and Line 4c, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    13 - Invalid correction An invalid correction is attempted or a correction did not take.
  4. Error Reason Codes may be combined.

    Example:

    Error Reason Codes MA and AA may be combined if both are true of the same elements.

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

Element Numbers
  1. The chart below provides the element numbers as they appear on the Error Register, their description and where it is located on the Form 8027.

    Element Numbers, Description, and Location on the Error Register

    Element Number Item Description Location on the Form 8027
    01 BLOCK DLN Center top area
    02 SERIAL NUMBER Center top area
    03 AMENDED DOC CODE Dotted area of Line 1
    04 NAME OF ESTABLISHMENT Establishment area
    05 CITY - ESTABLISHMENT Establishment area
    06 STATE - ESTABLISHMENT Establishment area
    07 ZIP CODE - ESTABLISHMENT Establishment area
    08 NAME OF EMPLOYER Employer area
    09 EIN Right upper area
    10 ESTABLISHMENT TYPE CODE Right upper area
    11 ESTABLISHMENT NUMBER Right of Employer area
    12 CHARGED TIPS Line 1
    13 CHARGE RECEIPTS Line 2
    14 SERVICE CHARGES Line 3
    15 INDIRECT TIPS Line 4a
    16 DIRECT TIPS Line 4b
    17 TOTAL TIPS Line 4c
    18 GROSS RECEIPTS Line 5
    19 GROSS RECEIPTS TIMES TIP RATE PERCENTAGE (Calculation line) Line 6
    20 TIP RATE PERCENTAGE Line 6 (Center)
    21 ALLOCATED TIPS Line 7
    22 ALLOCATION METHOD Line 7a, Line 7b, or Line 7c
    23 NUMBER OF EMPLOYEES Line 8
    24 TAX YEAR Right upper area
    25 SPECIAL RETURN CODE Left of the check boxes for Amended Return and Final Return (as close to that area as possible)
    26 RECEIVED DATE Center area
    27 STREET - ESTABLISHMENT Establishment area
    28 STREET - EMPLOYER Employer area
    29 CITY - EMPLOYER Employer area
    30 STATE - EMPLOYER Employer area
    31 ZIP CODE - EMPLOYER Employer area

     

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

Error Correction - Specific Field Action

  1. Enter the field correction immediately to the right of the field on the Error Register.

  2. Enter the appropriate Action Code to the left of the error sequence number on the Error Register.

  3. All money amount fields (Lines 1 through 7) are numeric or blank except for Line 6, which may contain an alpha "X" .

    1. No negative amounts will be allowed.

    2. No commas or decimals should be entered.

    3. All money amounts are in dollars only.

    4. Do not code any leading zeros.

Block Document Locator Number (Element 01) and Serial Number (Element 02)
  1. 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.

  2. A correction on the first document DLN will cause the block DLN to dupe throughout the rest of the block.

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

    1. Positions 1-2, Service Center Code "17" .

    2. Positions 3, Tax Class "5" .

    3. Positions 4-5, Document Code "57" .

    4. Positions 6-8, Julian Date, valid range is "001" to "366" .

    5. Positions 9-11, Block Number "000-499" .

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

  5. Additional 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 for a given pass.

  6. 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.

Amended Document Code - Element 03
  1. The Amended Document Code (Element 03) may contain one position, must be blank or an alpha "G" .

  2. Enter "G" if:

    1. The "Amended Return" check box is marked, or

    2. The word, "supplemental" , "duplicate" or "additional" is written on the return or an attachment, or

    3. There is positive indication that the employer/establishment filed previously.

Name of Establishment - Element 04
  1. The establishment name may contain 40 characters and cannot be all blanks. Only alpha (A-Z) and numeric (0-9) characters are allowed.

  2. The employer name should be entered if no establishment name is given.

  3. The employer’s name may be found on:

    1. Form 8027-T (if present) or on other Form 8027 included in the employer's submission,

    2. The return envelope, if attached to the submission, or

    3. Through IDRS research.

Establishment City - Element 05
  1. The City may contain 25 characters and must be all alphas. Edit out hyphens as blanks.

  2. Do not use major city codes.

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

ERC SZ - Establishment State - Element 06
  1. Establishment State (Element 06) is two-characters.

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

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

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

  5. 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 (13) and IRM 3.11.180.2 (14). Reporting is required only for establishments located in the 50 states and the District of Columbia.

  6. If necessary, See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, and use the valid two alpha state code.

ERC SZ - Establishment ZIP Code - Element 07
  1. Error Reason Code SZ will appear on the Error Register if the Establishment ZIP Code (Element 07) is inconsistent with the state.

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

  3. The first three digits must be in the valid range of ZIP codes for the state. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, and determine the valid ZIP code range for the state.

  4. If the ZIP code is missing, see Exhibit 3.11.180-7, State Codes and ZIP Codes Perfection Chart.

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

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

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

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

    1. Form 8027-T (if present) or on other Form 8027 included in the employer's submission,

    2. The return envelope, if attached to the submission, or

    3. If not found, research IDRS using EIN.

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

    Note:

    Valid EIN prefixes are 01-06, 10-16, 20-27, 30-48, 50-68, 71-77, 80-88, 90-95, 98-99.

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

  3. If EIN cannot be determined, correspond with the employer using Letter 1858C. If undeliverable or no response is received after 45 days:

    1. Write "Failure to Provide TIN" in the upper left margin/side of the return.

    2. Penalty Assessment - Failure to Provide a TIN. The penalty for Failure to Provide a Taxpayer Identification Number (TIN) must be assessed. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    3. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix. Determine the correct EIN prefix.

    4. Enter the two-digit code followed by seven (7) periods and continue processing.

Establishment Type Code - Element 10
  1. One box should be checked to describe the type of service the establishment provides.

  2. Use the following chart to determine correct code:

    Establishment Type Codes

    Box(es) checked Code
    1 1
    2 2
    3 3
    4 4
    None 2
    1 and 4 1
    3 and 4 3
    1, 2, and 3 2
    1 and 2 2
    1 and 3 2
    2 and 3 2
    2 and 4 2

     

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

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

ERCs AA/AT/MA -
Money Amounts
Lines 1 through 5 -
Elements 12 - 18
  1. Elements 12 through 18 may contain 10 numeric and are dollars only.

  2. Error Reason Code MA will appear on the Error Register if:

    1. Line 2 is not greater than Line 1.

    2. Line 4c does not equal the total of Line 4a and Line 4b ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Line 5 is not greater than each of Lines 1, 3, 4a, 4b and 4c.

    4. Line 5 is less than Line 2.

    Note:

    See IRM 3.11.180.3.1.14, Money Amounts Lines 1 through 5, for additional information.

  3. Establishments report amounts on Lines 1 through 5.

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

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

    Line 2 Criteria

    If Then
    Line 2 is not greater than Line 1 Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    No reply or undeliverable
    1. Penalty Assessment - Inconsistent Return. Write "No Response - Inconsistent Return" in the upper left margin/side of the return. Assess the Failure to File penalty. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    2. Enter a "1" in Element 13 (Line 2) if there is no amount present.

    3. Use Action Code 7 to clear the register.

     

  6. Line 3 may be zero or blank.

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

    1. Add Line 4a and Line 4b. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Correspond using Letter 1858C to inform the employer of any change that is made to Line 4c. See IRM 3.11.180.3.3, Correspondence Preparation

  8. 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:

    Line 4a, Line 4b, and Line 4c Criteria

    If there is an amount on And Then
    Line 4a only A greater amount on Line 4c, Enter the difference between the two lines on Line 4b.
    Line 4b only A greater amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    Line 4a only A lesser amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.
    Line 4b only A lesser amount on Line 4c, Use Letter 1858C to correspond with the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

     

    1. If undeliverable or no response is received after 45 days, enter Action Code 7.

  9. 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.

    Exception:

    If Line 4c contains a zero (0), do not correspond. Line 4a + Line 4b = Line 4c (0 + 0 = 0).

    1. If undeliverable or no response is received after 45 days, enter Action Code 7.

  10. 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.

    1. If undeliverable or no response is received after 45 days, enter Action Code 7. Lines 4a, 4b and 4c may all be zero or blank.

  11. Check the amount for Line 5.

    Line 5 Criteria

    If Then
    The amount for Line 5 is missing, or Line 5 is not greater than each amount on Lines 1, 3, 4a, 4b, and 4c, or Line 5 is less than Line 2. Correspond using Letter 1858C to request the correct information from the employer.
    No reply or undeliverable
    1. Penalty Assessment - Inconsistent Return. Write "No Response - Inconsistent Return" in the upper left margin/side of the return. Assess the Failure to File penalty. See IRM 3.11.180.3.4, Background of Penalty Assessments.

    2. If all receipts including tips are charged, and Lines 2 and 5 are equal, add ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Otherwise, use Action Code 7 to clear register.

     

  12. 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.

ERCs AA/AT -
Money Amounts
Lines 6 and 7 -
Elements 19 - 21
  1. Elements 19 through 21 may contain 10 numeric and are dollars only.

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

  3. When there is a discrepancy between the IRS figure and that of the employer, Elements 18, 19, and 20 will print along with Error Reason Code AA. Check for transcription and taxpayer errors. Correct accordingly.

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

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

  6. 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 2016 and prior):

    • Under TRDA/Tip Rate Determination Agreement

    • Under GITCA/Gaming Industry Tip Compliance Agreement

    • Under TRAC/Tip Reporting Alternative Commitment

    • Under Revenue Procedure (Rev. Proc.) 2007-32

    • Under Revenue Procedure (Rev. Proc.) 2003–35
      Mail to:
      Internal Revenue Service
      Attn. NTRCP/TW
      110 City Parkway
      Las Vegas, NV 89106

    Note:

    Following receipt of Form 8027, the National Tip Reporting Compliance Analyst will separate out all Form 8027 returns that were submitted by Indian tribal government entities and mail them to the Indian Tribal Government (ITG) Tip Coordinator at the following address:
    Internal Revenue Service
    Attn: ITG Tip Coordinator
    55 North Robinson
    Oklahoma City, OK 73102.

    1. When a rate lower than the 8% allocation rate is used, be sure that an IRS determination letter, allowing the lower percentage rate, is attached.

      Reminder:

      National Tip Reporting Compliance Program (NTRCP) is requesting a copy of any Determination Letter (DL) received in Submission Processing. Make a copy of the DL, notate the EIN (if not already indicated) and send it to following address:
      Internal Revenue Service
      Attn. NTRCP/TW
      110 City Parkway
      Las Vegas, NV 89106

      Note:

      Determination letters (e.g., Letter 8027-B) issued after December 1995, have an effective date for the tax period the lower rate is allowed.

    2. Failure to have a determination letter attached requires correspondence using Letter 1858C. See IRM 3.11.180.3.3, Correspondence Preparation.

    3. If undeliverable, no response, or correspondence is unsuccessful, recalculate the allocation amount using the 8% rate. Correspond using Letter 1858C to inform the employer that the standard 8% rate has been used. See IRM 3.11.180.3.3, Correspondence Preparation.

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

    1. Disregard the lower rate and use the standard 8% rate.

    2. Correspond using Letter 1858C and initiate a non-suspense letter to the employer. See IRM 3.11.180.3.3, Correspondence Preparation.

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

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

  10. Error Reason Code AT will appear on the Error Register if:

    1. Line 6 is equal to or less than Line 4c, and Line 7 is not equal to zero.

    2. Line 6 is greater than Line 4c, and Line 7 is not equal to the difference between Lines 6 and 4c, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

  13. If Line 6 has no amount or "zero" and Line 7 has an amount, enter an "X" on Line 6 and the register.

    Note:

    If you make a correction to Line 4c, Line 5, or Line 6, also make any necessary correction to Line 7. Correspond using Letter 1858C to notify the employer of any adjustment. See IRM 3.11.180.3.3, Correspondence Preparation.

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

  15. 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.

    Note:

    If you make a correction to Line 4c, Line 5, or Line 6, also make any necessary correction to Line 7. Correspond using Letter 1858C to notify the employer of any adjustment. See IRM 3.11.180.3.3, Correspondence Preparation.

ERC AA - Method of Allocation, Lines 7a through 7c - Element 22
  1. Method of Allocation, Lines 7a through 7c (Element 22) may contain one position.

  2. Error Reason Code AA will appear 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.

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

    1. "1" if Line 7a is checked.

    2. "2" if Line 7b is checked.

    3. "3" if Line 7c is checked and a Good-Faith Agreement is attached.

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

    1. Enter Condition Code "4" .

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

    1. "3" for Line 7c, if a Good-Faith Agreement is attached.

    2. "1" for Line 7a, if checked with another box.

    3. "2" for Line 7b, if checked with other than Line 7a or Line 7c with a Good-Faith Agreement attached.

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

  7. 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
  1. Total Number of Directly Tipped Employees Line 8 (Element 23) may contain four positions.

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

    Caution:

    If the entry on Line 8 is written out in alpha characters (e.g., thirty-one), enter the numeric equivalent (e.g., 31), as needed.

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

Tax Year - Element 24 (4 Positions)
  1. Valid tax year is 2018 or 2017.

  2. If the tax year is 2016 or prior, use Action Code 2 to reject the document.

  3. All 2016 and prior Form 8027 should be sent to the following address; unless the form meets the criteria in IRM 3.11.180.2 (13).
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

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

    1. For non-final returns, if the tax period is more than three months but less than one year from the current date, correspond for confirmation of the tax year.

    2. If the return is a "Final" , use Action Code 2 to reject the document and hold the return until the next processing year.

Special Return Code - Element 25
  1. The Special Return Code (SRC) 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).

  2. The valid alpha codes are:

    1. "F" - Final return (e.g., "Final Return" check box checked) with money amounts.

    2. "N" - Final return with no money amounts or "Not Liable" return with no money amounts.

  3. Leave blank, if none of the above applies.

Received Date - Element 26
  1. The received date must be present if Form 8027 is delinquent.

  2. When present, the received date must contain eight numeric in MMDDYYYY format. See IRM 3.11.180.3.1.3, Received Date, for procedures.

    Note:

    Per the programming for the received date format, Integrated Submission and Remittance Processing (ISRP) transcribers enter six (6) numeric (MMDDYY) at initial input. When the ISRP transcriber hits the field release, it displays as eight (8) numeric (MMDDYYYY).

  3. 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, delete the register and re-input the return to correct it.

  4. If a received date issue continues to loop, delete the register and re-input the return. If you still have problems, contact the appropriate people (e.g., Planning and Analysis (P&A) Analyst, Headquarters Analyst, Headquarters Programmer, etc.) for assistance.

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

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

Employer Street - Element 28
  1. Employer Street (Element 28) must contain more than one alpha character and a maximum of 35 characters.

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

    1. Form 8027-T (if present) or on other Form 8027 included in the employer's submission,

    2. The return envelope, if attached to the submission, or

    3. If not found, research IDRS using EIN.

Employer City - Element 29
  1. The City must be all alphas and a maximum of 25 characters.

  2. Do not use major city codes.

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

    1. Form 8027-T (if present) or on other Form 8027 included in the employer's submission,

    2. The return envelope, if attached to the submission, or

    3. If not found, research IDRS using EIN.

ERC SZ - Employer State - Element 30
  1. Error Reason Code SZ will generate if the state is inconsistent with the ZIP code.

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

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

    1. Form 8027-T (if present) or on other Form 8027 included in the employer's submission,

    2. The return envelope, if attached to the submission, or

    3. If not found, research IDRS using EIN.

  4. Use the valid two alpha character state code. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix.

ERC SZ - Employer ZIP Code - Element 31
  1. Error Reason Code SZ will generate if the ZIP code is inconsistent with the state.

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

  3. The first three digits must be in the valid range of ZIP codes for the state. See Exhibit 3.11.180-6, State Code / ZIP Code Range / EIN Prefix, to determine the valid ZIP code range for the state.

  4. If the ZIP code is missing, see Exhibit 3.11.180-7, State Codes and ZIP Codes Perfection Chart.

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

Reject Register

  1. Records will be rejected from the Error Register when errors cannot be resolved from the Form 8027 submission. In some cases, correspondence will be needed. In other cases, the record will be considered unprocessable.

  2. If correspondence is needed, prepare a Correspondence Action Sheet (CAS) to issue Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing.

  3. Prepare the Correspondence Action Sheet, enter Action Code 2 on the register and route the return and the CAS to the Correspondence Team.

  4. After the letter has been issued, the return will be filed in the Correspondence Team to await reply.

  5. Allow 45 days for a reply.

  6. When the reply is received, the Correspondence Team will associate the reply with the return.

  7. Line out the DLN on the return, and prepare for re-input and renumbering.

    1. Electronic source documents will be numbered with a Transmitter Control Code(TCC).

    2. Prepare a "dummy" Form 8027. Use the Form 8027 transcripts for re-input of electronic documents.

    3. Any correspondence from the employer providing additional information should also be incorporated.

  8. If undeliverable or no response is received after 45 days, examine the return to determine if it is possible to force post the document. See IRM 3.11.180.3.3 (9) and IRM 3.11.180.3.3 (10).

  9. If a document is unprocessable and cannot be perfected based on the information provided in the No Reply Chart, route it to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13), IRM 3.11.180.2 (14), and IRM 3.11.180.4.5

Generated "Unpostable" Listing

  1. The "Unpostable" listing is generated in the same format as the Reject Register, except there is no error sequence number. The "Unpostable" listing is titled, Tip Income Form 8027 Unpostable Register.

  2. An unpostable listing will generate when a return tries to post but it matches a return on either the input file or posted file in the following fields:

    • EIN

    • Type of Establishment

    • Money amounts on Lines 4c and 5

  3. A transcript will be printed for the posted record to compare data with the unpostable return.

    1. If the transcript and the return have the same establishment name and tax year indicating the establishment filed twice, check the data on both returns. If the data is the same on both returns, annotate the listing as "Duplicate Processing" . Do not re-input return.

    2. If there are different establishment names shown on the transcript and the return, check data on both returns. If it appears that the filer simply split the money amounts between establishments, use Letter 1858C to correspond with the employer. Explain that this is not acceptable. If no reply, or the employer does not comply,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See Exhibit 3.11.180-8, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments. See IRM 3.11.180.3.4, Background of Penalty Assessments. re-input the document after ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. If there are duplicates of Form 8027 on the unpostable listing and no transcript is printed, re-input one of the duplicates.

    4. If there are multiple unpostables for the same EIN and no transcripts are generated, check to see if the returns are being filed as "not liable" for different establishments. Since these will match on EIN, Type of Establishment, and money amounts on Lines 4c and 5 (none), they will unpost even though they are not true duplicates. Re-input one of these returns and route the others to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14). Notate that duplicate forms were submitted with the same EIN. These documents will not post because they will be duplicates of the re-input return.

  4. There is no difference between the paper and electronic "Unpostable" format. However, an electronic unpostable will generate two transcripts - one for the previously posted record and one for the record attempting to post, in lieu of a paper Form 8027.

  5. For electronic source documents, if an "Unpostable" listing is generated, it is possible that the electronic document was processed twice. Contact the Planning and Analysis (PA) Staff to research if this situation occurs.

Uncorrectable Unprocessable Documents

  1. Examine the document to ensure there is no procedure that will force the document through processing without the required field data. See IRM 3.11.180.3.3 (11) for guidelines on "No Replies" .

  2. Route any uncorrectable unprocessable document to National Tip Reporting Compliance Program (NTRCP) for special handling if:

    1. The document is deemed uncorrectable because the return cannot be perfected from attachments or Form 8027-T,

    2. No response has been received from the employer or establishment, or corresponding is not possible due to incomplete address information, and

    3. Guidelines provided in the No Reply Chart were followed.

      Note:

      For special handling address procedures, see IRM 3.11.180.2 (13) and IRM 3.11.180.2 (14).

Form 8027, Transcription Lines

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Element Numbers, Description, and Location on the Form 8027

Element Number Item Description Location on the Form 8027
01 BLOCK DLN Center top area
02 SERIAL NUMBER Center top area
03 AMENDED DOC CODE Dotted area of Line 1
04 NAME OF ESTABLISHMENT Establishment area
05 CITY - ESTABLISHMENT Establishment area
06 STATE - ESTABLISHMENT Establishment area
07 ZIP CODE - ESTABLISHMENT Establishment area
08 NAME OF EMPLOYER Employer area
09 EIN Right upper area
10 ESTABLISHMENT TYPE CODE Right upper area
11 ESTABLISHMENT NUMBER Right of Employer area
12 CHARGED TIPS Line 1
13 CHARGE RECEIPTS Line 2
14 SERVICE CHARGES Line 3
15 INDIRECT TIPS Line 4a
16 DIRECT TIPS Line 4b
17 TOTAL TIPS Line 4c
18 GROSS RECEIPTS Line 5
19 GROSS RECEIPTS TIMES TIP RATE PERCENTAGE (Calculation line) Line 6
20 TIP RATE PERCENTAGE Line 6 (Center)
21 ALLOCATED TIPS Line 7
22 ALLOCATION METHOD Line 7a, Line 7b, or Line 7c
23 NUMBER OF EMPLOYEES Line 8
24 TAX YEAR Right upper area
25 SPECIAL RETURN CODE Left of the check boxes for Amended Return and Final Return (as close to that area as possible)
26 RECEIVED DATE Center area
27 STREET - ESTABLISHMENT Establishment area
28 STREET - EMPLOYER Employer area
29 CITY - EMPLOYER Employer area
30 STATE - EMPLOYER Employer area
31 ZIP CODE - EMPLOYER Employer area

Form 8027-T

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Form 8027 Error Register

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Acronyms and Abbreviations

The table lists commonly used acronyms, abbreviations and their definitions.

Acronyms and Abbreviations

Acronyms and Abbreviations Definition
ACPL Automated Cycle Proof List
AM Accounts Management
AMT Amount
ATM Allocated Tips MagTape
BBTS Batch Block Tracking System
BMF Business Master File
c/o Care of
C&E Code and Edit
CAS Correspondence Action Sheet
CCCO Campus Compliance Collection Operation
CI Criminal Investigation
CIS Correspondence Imaging System
CP Computer Paragraph
CPL Cycle Proof List
CSCO Compliance Services Collection Operations
CSPC Cincinnati Submission Processing Center or Cincinnati Submission Processing Campus
CTDWA Control-D WebAccess
DL Determination Letter
DLN Document Locator Number
DPO Document Perfection Operation
EEFax Enterprise Electronic Fax
E-File Electronically File
e.g. For Example
EIN Employer Identification Number
EMF Employee Master File
EN Establishment Number
EQSP Embedded Quality Submission Processing
EPSS Electronic Products and Services Support
ERC Error Reason Code
ERS Error Resolution System
etc. Et Cetera
Exam Examination
Fax Facsimile
FedEx Federal Express Corporation
FTF Failure To File
GFA Good Faith Agreement
GITCA Gaming Industry Tip Compliance Agreement
http HyperText Transfer (or Transport) Protocol
ICT Image Control Team
ID Identification or Identity
IDRS Integrated Data Retrieval System
ISRP Integrated Submission and Remittance Processing
IMF Individual Master File
IPU IRM Procedural Update
IRC Internal Revenue Code
IRS Internal Revenue Service
IT Information Technology
ITG Indian Tribal Government
LB&I Large Business and International
MFT Master File Tax
MMDDYYYY Month, Day, Year
N/A Not Applicable
NTRCP National Tip Reporting Compliance Program
OSPC Ogden Submission Processing Center or Ogden Submission Processing Campus
P.O. Post Office
PDS Private Delivery Service
PL Public Law
Pub Publication
R&C Receipt and Control
Rec’d Received
Rev. Proc. Revenue Procedure
RO Revenue Officer
RRA98 Restructuring and Reform Act of 1998
SBSE Small Business Self-Employed
SCAMPS Service Center Automated Mail Processing System
SD Source Document
SERP Servicewide Electronic Research Program
SLA Service Level Agreement
SME Subject Matter Expert
SP Submission Processing
SSN Social Security Number
TAC Taxpayer Assistance Center
TAS Taxpayer Advocate Service
TBOR Taxpayer Bill of Rights
TC Transaction Code
TCC Transmitter Control Code
TE Tax Examiner
TEGE Tax Exempt and Government Entities
TIPA Tax Increase Prevention Act
TIN Taxpayer Identification Number
TPEA Trade Preferences Extension Act
TRAC Tip Reporting Alternative Commitment
TRDA Tip Rate Determination Agreement
TSO Technical Services Operation
TY Tax Year
U.S. United States
UCC Uniform Commercial Code
UPS United Parcel Service
USC United States Code
USPS United States Postal Service
W&I Wage and Investment
YYYY Year
ZIP Zone Improvement Plan

 

Note:

The above list may not be all-inclusive.

Routing Guide for Attachments

All attachments to the return must be reviewed before the return can be considered processable.

Attachments should only be detached when specifically instructed.

Note:

Consider a return or document an "Original" if it has an original signature or has been stamped "Process as Original" .

Edit action trail(s) (e.g., "L3267 DETACHED" or similar language) in the lower left margin going vertically up the side of the return.

Follow general guidelines below for each attachment:

Routing Guide for Attachments

If And Then
Form 8027 Single Establishment Form 8027-T is not present, If attachments are present, arrange as follows:
  1. Form 8027

  2. Determination Letter (e.g., Letter 8027-B)

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Form 8027 Single Establishment Form 8027-T is present, Attach Form 8027-T behind Form 8027 and arrange any other attachments as indicated above.
Form 8027 Multiple Establishments Form 8027-T is present, Arrange as follows:
  1. Form 8027 (first in group)

  2. Form 8027-T

  3. If used for more than one establishment:

    1. Determination Letter (e.g., Letter 8027-B)

    2. Good-Faith Agreement

    3. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

    4. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

    5. Explanation for late filing

  4. Form 8027 (in Establishment Number order, if present)

    Note:

    Attachments that are for a particular establishment should be attached behind that Form 8027.

OriginalForm 8508, Request for Waiver From Filing Information Returns Electronically,   Route to:
Internal Revenue Service
Attn. Extension of Time Coordinator
240 Murall Drive, Mail Stop 4360
Kearneysville, WV 25430.
Copy of Form 8508 Attached to Form 8027 or Form 8027-T, Keep attached and arrange as follows:
  1. Form 8027)

  2. Determination Letter (e.g., Letter 8027-B)

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Note:

See IRM 3.11.180.3.4.2, Penalty Information - Form 8508, Request for Waiver From Filing Information Returns Electronically.

OriginalForm 8809, Application for Extension of Time To File Information Returns, Attached to Form 8027 or Form 8027-T , Keep attached and route to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0209
Copy of Form 8809 Attached to Form 8027 or Form 8027-T, Keep attached and arrange as follows:
  1. Form 8027)

  2. Determination Letter (e.g., Letter 8027-B)

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Note:

See IRM 3.11.180.3.1.3.1, Form 8809, Application for Extension of Time To File Information Returns.

Determination Letter Attached to Form 8027 or Form 8027-T,
  1. Keep original attached.

  2. Make a copy of the Determination Letter, notate the EIN (if not already indicated) and send it to following address:
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

Note:

See IRM 3.11.180.2.7(2), Definitions.

Letter 8027-B, Determination Letter Approving Specified Lower Rate Attached to Form 8027 or Form 8027-T, Keep attached and arrange as follows:
  1. Form 8027)

  2. Determination Letter (e.g., Letter 8027-B)

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Good-Faith Agreement, Attached to Form 8027 or Form 8027-T, Keep attached and arrange as follows:
  1. Form 8027)

  2. Determination Letter (e.g., Letter 8027-B)

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Letter 5380, Extension Approved

Note:

As of January 2015, filers of paper Form 8027 are no longer instructed to attach a copy of their approved extension to the Form 8027 when filed. The Service will no longer send an approval letter (e.g., Letter 2519 (CG) for the automatic 30-day extension. Requests for an additional extension of time to file information returns are not automatically granted. Generally, requests for additional time are granted only where it is shown that extenuating circumstances prevented filing by the date granted by the first request. An approval letter (e.g., Letter 5380) will be issued for an additional extension request.

Attached to Form 8027 or Form 8027-T, Keep attached.
Letter 5382, Approved Waiver Attached to Form 8027 or Form 8027-T , Keep attached.
Letter 2519 (CG), Approved Extension Request

Note:

Beginning fiscal year 2015, the Service will no longer send extension approval letters (e.g., Letter 2519 (CG)).

Attached to Form 8027 or Form 8027-T, Keep attached.
Explanation for late filing, Attached to Form 8027 or Form 8027-T, Keep attached and arrange as follows:
  1. Form 8027

  2. Determination Letter (e.g., Letter 8027-B

  3. Good-Faith Agreement

  4. Copy of Form 8809 or approval Letter 5380 (Extension Approved)

  5. Copy of approved waiver (Form 8508) from filing Form 8027 electronically

  6. Explanation for late filing

Gaming Industry Tip Compliance Agreement (GITCA), Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Tip Reporting Alternative Commitment (TRAC), Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Tip Rate Determination Agreement (TRDA), Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Revenue Procedure (Rev. Proc.) 2007-32 (Gaming Industry Tip Compliance Agreement (GITCA)), Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Revenue Procedure (Rev. Proc.) 2003-35 (Gaming Industry Tip Compliance Agreement (GITCA)), Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Form W-2,   Detach and consult with your manager for disposition instructions.
List of establishments,   See IRM 3.11.180.2.8(9), Document Review.
Requests for forms,   See IRM 3.11.180.2.8(11), Document Review.
Computer Paragraph (CP) 215 - Civil Penalty Notice - response or
Correspondence related to a penalty assessment or a penalty abatement request,
  See IRM 3.11.180.3.4.4, Replies to Penalty Assessment Notices.
Petitions to Reduce the Tip Rate and
User Fee (payment),
 
  1. Copy any current Form 8027 (tax year 2018 or tax year 2017) and process original.

  2. See IRM 3.11.180.2.8(12), Document Review.

Petitions in Oppositions of Tax Law Provisions Attached to Form 8027 or Form 8027-T,

Note:

No action trail needs to be edited when detaching a petition.

Route to:
IRS
≡ ≡ ≡ ≡
1111 Constitution Avenue, NW
Washington, DC 20224
Envelope,  
  1. Check envelope for remittance.

  2. If found, immediately hand carry to your manager.

Response to Letter 1858C,   Keep attached and edit based on the information provided.
Request for Acknowledgement   Keep attached. No action required.
Correspondence related to IRS requesting Form 8027 to be filed for multiple years, Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Correspondence related to IRS requesting Form 8027 to be filed for multiple years,   Route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Form 14039-B, Business Identity Theft Affidavit No
  1. If the envelope is addressed to a specific function or a specific function is indicated by an IRS CP notice or IRS letter:

    • Place the Form 14039-B on top of the return and

    • Route Form 14039-B and the return to the specific function

  2. If Ogden or Cincinnati receives a Form SS-4, Application for an Employer Identification Number, and Form 14039-B, route the returns to:
    Internal Revenue Service
    BMF Entity
    201 W. Rivercenter Blvd.
    Mail Stop 343
    Covington, KY 41011.

  3. For the following returns:

    • Loose Form 14039-B

    • No correspondence attached (e.g., no IRS CP notice or IRS letter)

    • The envelope is not addressed to a specific function


    Place the Form 14039-B on top of the return and route to the local Image Control Team (ICT).

    • Ogden - Mail Stop 6552

    • Cincinnati - Mail Stop 318G

Form 14196 (Filing Statement) or Correspondence related to Form 14196, Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Form 14196 (Filing Statement) or Correspondence related to Form 14196,   Route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 3267 (Delinquent 8027 Letter) or Correspondence related to Letter 3267, Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 3267 (Delinquent 8027 Letter) or Correspondence related to Letter 3267,   Route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 4639 (Delinquent 8027 Letter (2)) or Correspondence related to Letter 4639, Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 4639 (Delinquent 8027 Letter (2)) or Correspondence related to Letter 4639,   Route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 4640 (Incomplete 8027 Letter) or Correspondence related to Letter 4640, Attached to Form 8027 or Form 8027-T, Keep attached and route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 4640 (Incomplete 8027 Letter) or Correspondence related to Letter 4640,   Route to:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Unrelated, unanswered correspondence No action has been taken, Detach and route to the appropriate area.

State Code / ZIP Code Range / EIN Prefix

Prior to 2001, the first two digits of an EIN (the EIN Prefix) indicated the business was located in a particular geographic area. In 2001, EIN assignment was centralized, although all campuses can assign an EIN, if necessary.

As a result of the centralization effort, the EIN Prefix no longer has the same significance. The EIN Prefix now only indicates which campus assigned the EIN. Each campus has certain prefixes available for use, as well as prefixes that are solely for use by the online application and the Small Business Administration.

State Code / ZIP Code Range / EIN Prefix

State Code State ZIP Code Range Area Office EIN Prefix
AL Alabama 350-369 Birmingham 63
AK Alaska 995-999 Anchorage 92
AZ Arizona 850-865 Phoenix 86
AR Arkansas 716-729 Little Rock 71
CA California 900-961 (except 909) Laguna Niguel
N. Highlands
San Jose
Oakland
Los Angeles
33
68
77
94
95
CO Colorado 800-816 Denver 84
CT Connecticut 060-069 Hartford 06
DE Delaware 197-199 Wilmington 51
DC District of Columbia 200, 202-205 Baltimore 52
FL Florida 320-339, 341, 342, 344, 346, 347, 349 Jacksonville
Fort Lauderdale
59
65
GA Georgia 300-319, 399 Atlanta 58
HI Hawaii 967-968 Honolulu 99
ID Idaho 832-838 Boise 82
IL Illinois 600-629 Chicago
Springfield
36
37
IN Indiana 460-479 Indianapolis 35
IA Iowa 500-528 Des Moines 42
KS Kansas 660-679 Wichita 48
KY Kentucky 400-427 Louisville 61
LA Louisiana 700-714 New Orleans 72
ME Maine 039-049 Augusta 01
MD Maryland 206-219 Baltimore 52
MA Massachusetts 010-027, 055 Boston 04
MI Michigan 480-499 Detroit 38
MN Minnesota 550-567 St. Paul 41
MS Mississippi 386-397 Jackson 64
MO Missouri 630-658 St. Louis 43
MT Montana 590-599 Helena 81
NE Nebraska 680-693 Omaha 47
NV Nevada 889-898 Las Vegas 88
NH New Hampshire 030-038 Portsmouth 02
NJ New Jersey 070-089 Newark 22
NM New Mexico 870-884 Albuquerque 85
NY New York 004, 005, 100-149 Brooklyn
Manhattan
Albany
Buffalo
11
13
14
16
NC North Carolina 270-289 Greensboro 56
ND North Dakota 580-588 Fargo 45
OH Ohio 430-459 Cincinnati
Cleveland
31
34
OK Oklahoma 730-732
734-749
Oklahoma City 73
OR Oregon 970-979 Portland 93
PA Pennsylvania 150-196 Philadelphia
Pittsburgh
23
25
RI Rhode Island 028-029 Providence 05
SC South Carolina 290-299 Columbia 57
SD South Dakota 570-577 Aberdeen 46
TN Tennessee 370-385 Nashville 62
TX Texas 733, 750-799, 885 Austin
Dallas
Houston
74
75
76
UT Utah 840-847 Salt Lake City 87
VT Vermont 050-054, 056-059 Burlington 03
VA Virginia 201, 220-246 Richmond 54
WA Washington 980-994 (except 987) Seattle 91
WV West Virginia 247-268 Parkersburg 55
WI Wisconsin 530-549 Milwaukee 39
WY Wyoming 820-831 Cheyenne 83

State Codes and ZIP Codes Perfection Chart

State Codes and ZIP Codes

State Code State or Area ZIP State Code State or Area ZIP
AA America-Atlantic 34001 MS Mississippi 38601
AE America-Europe 09001 MO Missouri 63001
AP America-Pacific 96201 MT Montana 59001
AL Alabama 35001 NE Nebraska 68001
AK Alaska 99501 NV Nevada 88901
AZ Arizona 85001 NH New Hampshire 03001
AR Arkansas 71601 NJ New Jersey 07001
CA California 90001 NM New Mexico 87001
CO Colorado 80001 NY New York 00501
CT Connecticut 06001 NC North Carolina 27001
DE Delaware 19701 ND North Dakota 58001
DC District of Columbia 20001 OH Ohio 43001
FL Florida 32001 OK Oklahoma 73001
GA Georgia 30001 OR Oregon 97001
HI Hawaii 96701 PA Pennsylvania 15001
ID Idaho 83201 RI Rhode Island 02801
IL Illinois 60001 SC South Carolina 29001
IN Indiana 46001 SD South Dakota 57001
IA Iowa 50001 TN Tennessee 37001
KS Kansas 66001 TX Texas 75001
KY Kentucky 40001 UT Utah 84001
LA Louisiana 70001 VT Vermont 05001
ME Maine 03901 VA Virginia 20101
MD Maryland 20601 WA Washington 98001
MA Massachusetts 01001 WV West Virginia 24701
MI Michigan 48001 WI Wisconsin 53001
MN Minnesota 55001 WY Wyoming 82001

Penalty Tables

The table below is for IRC 6721 Penalty for Large Businesses with Gross Receipts of More Than $5 Million (Average annual gross receipts for the most recent 3 taxable years).

Penalty Tables

Time of Filing Penalty Rate Due
01-01-2016 thru 12-31-2016 (with inflation adjustments)
Due 01-01-2017 thru 12-31-2017 (with inflation adjustments) Due 01-01-2018 thru 12-31-2018 (with inflation adjustments) Due 01-01-2019 thru 12-31-2019 (with inflation adjustments)
Not more than 30 days late Per return $50 $50 $50 $50
Not more than 30 days late Maximum $529,500 $532,000 $536,000 $545,500
31 days late - August 1 Per return $100 $100 $100 $100
31 days late - August 1 Maximum $1,589,000 $1,596,500 $1,609,000 $1,637,500
After August 1 Per return $260 $260 $260 $270
After August 1 Maximum $3,178,500 $3,193,000 $3,218,500 $3,275,500
Intentional disregard Per return $520 $530 $530 $540
Intentional disregard Maximum No limitation No limitation No limitation No limitation

 

Note:

Increased penalty amounts may apply in the case of certain failures in the case of intentional disregard. See IRC 6721(e)(2).

The table below is for IRC 6721 Penalty for Small Businesses with Gross Receipts Equal to $5 Million or Less (Average annual gross receipts for the most recent 3 taxable years).

Penalty Tables

Time of Filing Penalty Rate Due
01-01-2016 thru 12-31-2016 (with inflation adjustments)*
Due 01-01-2017 thru 12-31-2017 (with inflation adjustments) Due 01-01-2018 thru 12-31-2018 (with inflation adjustments) Due 01-01-2019 thru 12-31-2019 (with inflation adjustments)
Not more than 30 days late Per return $50 $50 $50 $50
Not more than 30 days late Maximum $185,000 $186,000 $187,500 $191,000
31 days late - August 1 Per return $100 $100 $100 $100
31 days late - August 1 Maximum $529,500 $532,000 $536,000 $545,500
After August 1 Per return $260 $260 $260 $270
After August 1 Maximum $1,059,500 $1,064,000 $1,072,500 $1,091,500
Intentional Disregard Per return $520 $530 $530 $540
Intentional Disregard Maximum No limitation No limitation No limitation No limitation

 

Note:

Increased penalty amounts may apply in the case of certain failures in the case of intentional disregard. See IRC 6721(e)(2).