3.11.180 Allocated Tips

Manual Transmittal

November 12, 2021

Purpose

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

Material Changes

(1) IRM 3.11.180.2(1) Exception - Added "Revenue Procedure 2020-47" to the Gaming Industry Tip Compliance Agreement (GITCA) program administration. Added per Internal Revenue Bulletin (IRB) 2020-48.

(2) IRM 3.11.180.2(14) - Added "Revenue Procedure 2020-47" to the fourth bullet and added a new fifth bullet for "EmTRAC agreements" to the list of instances when Form 8027 would be referred to National Tip Reporting Compliance Program (NTRCP). Added per feedback from Chief Counsel.

(3) IRM 3.11.180.2.2(1) - Updated Taxpayer Bill of Rights (TBOR) content based on guidance from the Division Counsel/Associate Chief Counsel (National Taxpayer Advocate Program) and Branch 3 of the Associate Chief Counsel (Procedure and Administration) in the Internal Management Document (IMD) community e-mail dated March 12, 2021.

(4) IRM 3.11.180.2.2(4) - Moved Same Day Resolution by Operation from IRM 13.1.7.4 to IRM 13.1.7.5.

(5) IRM 3.11.180.2.4 - Reworded for plain language and moved paragraphs to be grammatically parallel. Renumbered remaining paragraphs.

(6) IRM 3.11.180.2.4(2) - Removed the Note because similar language appears under Taxpayer Advocate Service subsection.

(7) IRM 3.11.180.2.5(1) - Corrected the Use of Fax link per SERP request. (IPU 21U1077 issued 09/01/2021)

(8) IRM 3.11.180.2.5(5) - Moved "Leaving information on Answering Machines" from IRM 11.3.2, Disclosure of Official Information, Disclosure to Persons with a Material Interest, to IRM 10.5.1, Privacy and Information Protection, Privacy Policy. (IPU 21U0113 issued 01/20/2021)

(9) IRM 3.11.180.2.9(11) - Removed paragraph with instruction to use Form 4190 and Form 6112 which are obsolete. Renumbered remaining paragraph.

(10) IRM 3.11.180.3.1.1(1) a & b - Clarified instruction for editing Special Return Code per feedback from Chief Counsel.

(11) IRM 3.11.180.3.1.14(6) - Added instruction to correspond when negative amounts are present on Lines 4a, 4b or 4c.

(12) IRM 3.11.180.3.1.3.1(10) - Added a Note with publishing information for IRM 3.28.5, Processing Fill In Form 8809.

(13) IRM 3.11.180.3.3(5) - Corrected the Letter 1858C paragraphs listed in the Correspondence Guide. (IPU 21U1048 issued 08/18/2021)

(14) IRM 3.11.180.3.3 Correspondence Guide (5) and No Reply Chart (12) - Added instruction to correspond when negative amounts are present on Lines 4a, 4b or 4c.

(15) IRM 3.11.180.3.4.1(6) - Clarified applicable penalty instruction.

(16) IRM 3.11.180.4.2.11(7) - Added new paragraph with instruction to correspond when negative amounts are present on Lines 4a, 4b or 4c. Renumbered remaining paragraphs accordingly.

(17) Exhibit 3.11.180-7 - Removed outdated instruction under "Requests for Forms" in the Routing Guide for Attachments.

(18) Exhibit 3.11.180-10 - Updated the Penalty Tables for returns due 01/01/2022 thru 12/31/2022 per IRM 20.1.7, Penalty Handbook, Information Return Penalties.

(19) Plain Language changes include:

  • Used simpler words

  • Deleted unnecessary words

  • Changed wording in similar sections to match BMF Consistency template

(20) Editorial changes made throughout the IRM include:

  • Corrected spelling and punctuation

  • Corrected references, citations and links

  • Updated figures and exhibits

  • Updated dates, including received dates and tax periods throughout

  • Updated form titles

  • Deleted old line numbers throughout

Effect on Other Documents

IRM 3.11.180, Returns and Documents Analysis, Allocated Tips, dated November 20, 2020 (effective January 01, 2021), is superseded. The following IRM Procedural Updates (IPUs), issued January 20, 2021, through September 1, 2021, have been incorporated into this IRM: 21U0113 (issued 01/20/2021), 21U0301 (issued 02/24/2021 change for TY 2019 PY 2020/2021 only), 21U0506 issued (03/31/2021), 21U1048 (issued 08/18/2021) and 21U1077 (issued 09/01/2021.

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

(01-01-2022)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This section has instructions for processing the Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, and Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, when the taxpayer files more than one paper return. Form 8027 processing is at Ogden Submission Processing Campus (OSPC).

  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 documents for input through the Integrated Submission and Remittance Processing System (ISRP). In addition, Code and Edit (C&E) routes documents or attachments not related to return processing to the responsible function. C&E does not mathematically verify or check the validity of returns and documents being processed unless otherwise specified.

  2. Error Resolution (ERS) resolves validity, field and consistency errors on returns and documents using computer printed paper Error Registers. ERS uses the paper Error Registers and the return to correct error conditions and uses Integrated Data Retrieval System (IDRS) to research.

Authority

  1. Authority for these procedures is found in IRC Code Section 6721, Failure to file correct information returns, as required by IRC 6053 and corresponding Treasury regulations.

  2. All Policy Statements for Submission Processing are found in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

Responsibilities

  1. The Campus Director monitors operational performance for the Submission Processing campus.

  2. The Operations Manager monitors operational performance for their operation.

  3. The Team Manager/Lead monitors performance and ensures employees have the tools to perform their duties.

  4. The Team Employees follows the instructions found in this IRM and maintaining updated IRM procedures.

Program Management and Review

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

    • Code and Edit: Ensures documents are ready for transcription.

    • Error Resolution: Enters corrections on Service Center Replacement System (SCRS) paper Error Registers.

  2. Program Reports: The Batch Block Tracking System (BBTS) captures and stores data, which is used in performance monitoring and production projections. Employee Master File (EMF) system control reports are on the Control-D WebAccess (CTDWA). See IRM 3.11.180.2.7(2), Start-Up and End-of-Year Processing Information, for the description and frequency of EMF reports.

  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 are reviewed annually to make sure accurate and promote consistent tax administration.

Program Controls

  1. Quality Review conducts a statistical valid sample size review of completed work to make sure 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 display 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 help 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 3.11.180-6, Acronyms and Abbreviations, for a list of commonly used acronyms and abbreviations.

Related Resources

  1. These resources may assist in performing the work as outlined in this IRM:

    • Servicewide Electronic Research Program (SERP)

    • Integrated Data Retrieval System (IDRS)

    • Publication 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, 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 follow the terms of this Agreement may submit the Form 8027 information in an alternate form deemed acceptable by the Service. The GITCA program is administered under Rev. Proc. 2007-32, published in Internal Revenue Bulletin (IRB) 2007-22 and Rev. Proc. 2020-47, published in IRB 2020-48.

  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 found 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 should 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. If an employer is required to file 250 or more Forms 8027, then they must file electronically. See Publication 1239, Specifications for Electronic Filing of Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, for more information.

    Note:

    The Taxpayer First Act of 2019, enacted July 1, 2019, authorized the IRS and Treasury to issue regulations that could reduce the 250-return requirement for 2021 tax year returns. If these regulations are issued and effective for 2021 tax year returns required to be filed in 2022, an article will be posted at IRS.gov explaining the change. Otherwise, the 250-return threshold will apply for tax year 2021, as reflected in the 2021 Form 8027 instructions.

  7. 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).

  8. Form 8027 secured by Stakeholder Liaison is filed via Form 3210, Document Transmittal.

  9. 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.

  10. 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.

  11. For processing year 2022, only tax year 2021Form 8027 and tax year 2020Form 8027 will be processed.

  12. Route 2019 and priorForm 8027 to 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 (14), General Information.
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

  13. 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).

  14. If the Form 8027 has any of the following notations(including 2019 and prior):

    • Under Tip Rate Determination Agreement (TRDA)

    • Under Gaming Industry Tip Compliance Agreement (GITCA)

    • Under Tip Reporting Alternative Commitment (TRAC)

    • Under Rev. Proc. 2007-32 as modified by Rev. Proc. 2020-47

    • EmTRAC agreements
      Route 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 Forms 8027 that were filed by Indian tribal government entities and email to the Indian Tribal Government (ITG) Tip Analyst.

  15. 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

  16. 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).

  17. 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.

  18. 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. Submit IRM deviations in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

Taxpayer Advocate Service (TAS)

  1. The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For more information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights. Under TBOR, taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to give information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

  2. TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Wage and Investment (W&I) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, TAS Operations Assistance Request (OAR) Process.

  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 can’t be taken to resolve the taxpayer's issue the same day.

  4. The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution" :

    • The issue can be resolved within 24 hours.

    • IRS takes steps within 24 hours to resolve the taxpayer’s issue.

    See IRM 13.1.7.5, Same Day Resolution by Operations.

  5. When making a TAS referral, use Form 911, and route to TAS following your local procedures.

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

  2. The SLAs are found at https://irssource.web.irs.gov/TAS/SitePages/SLA.aspx.

Business Master File (BMF) Identification (ID) Theft

  1. BMF Identification (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft" , give the entire case to the manager/lead.

  2. The manager/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show 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

  1. The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA98), Section 3705(a), provides identification requirements for all IRS employees working tax-related matters.

  2. All IRS employees who communicate by telephone, face-to-face, or any other method of correspondence with taxpayers or their personal representatives, on tax-related matters must 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. Toll-free employees may also provide their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

    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 (sent to the taxpayer and authorized representatives) - All correspondence must include a telephone number that taxpayers can call for answers to questions. In addition, manually generated correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, Integrated Data Retrieval System (IDRS) number, and letter system number, which are systemically generated by IDRS. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

    4. Correspondex letters - Specific employee name and telephone number if the employee initiating the correspondence is in the best position to respond to any questions the taxpayer may have or if the taxpayer is being asked to provide more case-related information. If the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

  3. When taxpayer requests to speak with a specific employee who previously worked their inquiry or request, or complains about the level of service previously provided, make every attempt to resolve the taxpayer's inquiry. If unable to resolve the issue, refer the inquiry using established procedures to the manager.

  4. 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 give tax or account information.

  5. 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 provided the taxpayer (either telephone or in-person) his or her badge identification (ID Card) number on the first contact.

Use of Fax for Taxpayer Submissions

  1. Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable. For more information about accepting signed taxpayer documents by fax, see the most recent revision of the IRS Policy for Use of Fax, available at http://imdtrack.web.irs.gov/IG_Uploads/IRS.gov_No/NHQ-01-1019-0001.pdf

    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 to use.

  3. Indicate the fax paragraph on the approved Correspondence Action Sheet to inform the taxpayer of the fax options.

  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 21.1.3.2.4 Additional Taxpayer Authentication

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

    • IRM 10.5.1.6.7.2, Answering Machine or Voicemail

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

Integrated Automation Technologies (IAT)

  1. Integrated Automation Technologies (IAT) provides tools to IRS employees that simplify research, reduce keystrokes and increase the accuracy of regular work processes. When used with the IRS systems, it eliminates repetitive typing and assists in making precise decisions. IAT tools improve efficiency, productivity and quality by performing some functions automatically. Through more complex programming, they are designed to reduce fallout to other areas.

  2. Managers will instruct employees that using IAT is mandatory. They will make sure all employees receive IAT training.

    Note:

    Input penalties manually using Integrated Data Retrieval System (IDRS) when IAT is unavailable.

  3. See the IAT website at https://organization.ds.irsnet.gov/sites/WiMttIat/IATJobAids/default.aspx for a complete list of available tools and User Guides. Refer to the REQ54 tool, which is used to input the REQ54 adjustment, when assessing penalties on Form 8027.

Start-Up and End-of-Year Processing Information

  1. Start-Up Processing (for both paper and electronically filed returns) begins 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 correct personnel (e.g., IRM Analyst, programmer, Help Desk, Planning and Analysis (P&A) Analyst).

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

    1. In Code and Edit, if you receive a Form 8027 (tax year 2021 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 (14) and IRM 3.11.180.2 (15), General Information.

      Note:

      Ensure NTRCP receives all Form 8027 returns filed in the current processing year.

    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 more 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 before EMF82.
       

    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 more information on tax year.

    4. All penalty cases should be input by November 28, 2022.

      Reminder:

      After all penalty cases have been input, Planning & Analysis (P&A) 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 who customarily receive tip income if the employees at the establishment do not report a minimum amount of tips. The minimum amount is 8 percent (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 IRS granting a request for an allocation rate of less than 8 percent but not lower than 2 percent. A copy of this letter must be attached to the paper Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, if the allocation rate is less than 8 percent. If Form 8027 is filed electronically, a copy of the determination letter must be sent 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 shown) and route to:
      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, Approving Specified Lower Rate Determination, is used. This letter provides the taxpayer the lower rate to enter on Line 6 of 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.

    Note:

    All determination letters are for a specific time period not to exceed three years. All open-ended determination letters have been rescinded (the taxpayer was mailed Letter 5575 through certified mail) and, if applicable, a new determination letter was issued.

  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 set up on the Business Master File (BMF). If the employer uses a Certified Professional Employer Organization (CPEO), the name and EIN of the employer on the Form 8027 will not match the name and EIN on the Form 941. The CPEO name and EIN will be listed on the Form 941. The food and beverage employer should be listed on the Schedule R that is filed with the Form 941.

  4. Large Food or Beverage Establishment - A food or beverage operation that provides food or beverage for consumption on the premises; where tipping is a customary practice; and where there are normally more than ten employees on a typical business day during the preceding calendar year.

  5. Establishment Number (EN) - A unique five-digit number used to identify individual establishments that are being reported under the same Employer EIN. Each establishment should have a separate number and complete a separate Form 8027. For example, each establishment could be numbered consecutively, starting with "00001" . Once a number is assigned to an establishment, that same number should not be assigned to another establishment.

  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 tipped employees of each occupational category of employees who receive tips (e.g., waiters and waitresses, busboys, maitre d's) working in the establishment. The agreement must:

    1. Provide an allocation of the difference between total tips reported and 8 percent (or the lower rate) of gross receipts among tipped employees that approximates the actual distribution of tip income among the employees.

    2. Be effective the first day of a payroll period that begins after the date the agreement is adopted, but no later than January 1 of the next year.

    3. Be adopted when there are tipped employees in each occupational category who would be affected by the agreement.

    4. Allow for revocation by a written agreement adopted by at least two-thirds of the tipped employees in occupational categories affected by the agreement when it is revoked. The revocation is effective only at the beginning of a payroll period.

    When the agreement is adopted providing a tip allocation among tipped employees, combined with the tips reported by such employees, it will reflect a good faith approximation of the actual distribution of tip income. A copy of the Good-Faith Agreement (GFA) is no longer required to be attached to the Form 8027 but a copy should be retained in the employer’s records.

  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 send 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. 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 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 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 more instructions.

    2. Make sure there are no duplicate Forms 8027. 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.

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

  8. See Exhibit 3.11.180-7, 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 requesting a separate Form 8027 for each establishment. Without a separate form, the submission is considered unfiled and a Failure to File (FTF) penalty may apply. See IRM 3.11.180.3.3, Correspondence Preparation, for more 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 has a foreign address for the establishment address, route to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (14) and IRM 3.11.180.2 (15), General Information. Reporting is required only for establishments found in the 50 states and the District of Columbia.

    Caution:

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

  11. 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. Route 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 shows the payment amount, method of payment (check or money order), and the date sent 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. Line 1 through Line 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 entries present on Line 1 through Line 8.

    2. "N" - Final return without entries on Line 1 through Line 8 or "Not Liable" return without entries on Line 1 through Line 8.

      Caution:

      "Not Liable" returns will be processed in an abbreviated format. Line 1 through Line -8 will not be edited. Correspondence will not be initiated, and penalties will not apply.

      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 2022, only tax year 2021Form 8027 and tax year 2020Form 8027 will be processed.

  2. Route 2019 and prior Form 8027 to the following address; unless the form meets the criteria in IRM 3.11.180.2 (14), General Information.
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

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

    Note:

    If there is 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 (14) and IRM 3.11.180.2 (15), General Information.

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

  5. If Form 8027 is filed with an indication that the information is not for the year printed on the form, determine the tax year. If the information is for tax year 2020, circle the printed year and edit the two-digit year (20).

    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 Form 8027 is filed for tax year 2020 and the information is on the correct form, underline the tax year.

  7. If 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 reply confirms a non-final early filed return, hold the return until the next processing year.

    3. 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 was 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.

    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.
     

    Note:

    See IRM 3.11.180.3.1.1(1), Special Return Code, for instruction on "Not Liable" returns.

  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 was granted and the return is postmarked or 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 proper 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 shown in (2) above, are considered delinquent. Edit the received date to agree with the postmark date if the IRS Received Date stamp is after ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the legal or extended due date and the postmark date or shipment date is on or before the legal due date

  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 has 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:

    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). ERS tax examiners must enter eight numerics. If a received date error 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 shows 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 was faxed to another area of the Service and then sent to Submission for processing, do not enter the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Enter a Received Date according to normal procedures.

    Caution:

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

  13. Penalty Assessment Consideration - Failure to File. before 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 2022, Technical Services Operation (TSO) personnel will send OSPC 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.

    3. If the taxpayer provides reasonable cause, write "Reasonable Cause Accepted" in the upper left margin/side of the return and continue processing. 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 proper area for penalty assessment. Continue processing the original return.

Form 8809, Application for Extension of Time to File Information Returns
  1. Beginning in 2019, Form 8809 Application for Extension of Time to File Information Returns, will be processed at Ogden Submission Processing Campus (OSPC). 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 filed to request an initial or additional extension of time to file Form 8027 for the current tax year.

  3. Form 8809 must be filed on paper or electronically by the due date of the return for an 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 sending a second Form 8809 before the end of the first extension period.

  5. As of January 2015, the Service will no longer send an approval letter for the automatic 30-day extension.

  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.

  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 shown 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 filed 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. Route requests for an extension of time filed on paper Form 8809 to:
    Department of the Treasury
    Internal Revenue Service Center
    Ogden, UT 84201-0209

  10. For more information, see IRM 3.28.5, Processing Fill In Form 8809.

    Note:

    IRM 3.28.5, Processing Fill In Form 8809, is new and is scheduled to be published for the 2022 tax Year.

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.

  3. Taxpayers should 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 taxpayer 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 taxpayer must timely fileForm 8027 on acceptable paper forms with Ogden Submission Processing Campus (OSPC).

  6. Letter 5382, Waiver Approved, 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 found at the top of Form 8027 above the Employer's Name area. This is the common name the customers know for the business or the "Doing Business As" (DBA) name.

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

  3. If name is missing, research IDRS to perfect 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.

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

    Note:

    If the acronym "DBA" is present on the "Name of Establishment" line, then circle out “DBA”.

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 attachments. If EIN is not present or "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 more instructions.

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

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

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

    2. See IRM 3.11.180.2 (14) and IRM 3.11.180.2 (15), General Information.

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 State code. See Exhibit 3.11.180-8, 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 3.11.180-9, State Codes and ZIP Codes Perfection Chart, to perfect incomplete or missing ZIP codes.

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

    Note:

    If the employer uses a Certified Professional Employer Organization (CPEO), the name and EIN of the employer on Form 8027 will not match the name and EIN on the Form 941. The CPEO name and EIN will be listed on Form 941. The food and beverage employer should be listed on the Schedule R attached to the Form 941.

  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:

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

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

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

    Note:

    If the acronym "DBA" is present on the "Employer’s Name" line, then circle out "DBA" .

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 State code. See Exhibit 3.11.180-8, 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 3.11.180-9, State Codes and ZIP Codes Perfection Chart, to perfect 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 the Establishment Number box is blank but found on Form 8027, then edit the Establishment Number.

    Note:

    If the Establishment Number is greater than five digits, edit the last five digits of the number.

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

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

  4. 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 2022-13579, Code and Edit will circle out 2022. There is no need to circle out the dash/hyphen (-) since this is a numeric only field and ISRP will 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 Establishment Number instructions. See IRM 3.11.180.3.1.5, Employer Identification Number (EIN), for more 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 found below the entity area. Do not edit.

    Charge Receipts Indicator Box Criteria

    If Then
    The filer checks the "Yes" box, Line 1 and Line 2 must be completed.
    The filer checks the "Yes" box but does not complete Line 1 and Line 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, Line 1 and Line 2 may be blank. Do not correspond.
    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.
     

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

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

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

    2. If Line 1 and Line 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, Line 1 and Line 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 reply is received and Line 2 will not be greater than Line 1 as explained by the taxpayer, then route the return to National Tip Reporting Compliance Program (NTRCP). See IRM 3.11.180.2, General Information paragraph (15) for routing instructions.

    3. If undeliverable or no response is received after 45 days, edit a "1" on Line 2 if no amount present. Do not edit if an amount is 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 be zero but cannot be negative. Use Letter 1858C to correspond with the employer if negative amounts are present on these lines. See IRM 3.11.180.3.3, Correspondence Preparation. If undeliverable or no response is received after 45 days, consider unprocessable and route to National Tip Reporting Compliance Program (NTRCP). See IRM 3.11.180.2, General Information paragraph (15) for routing instructions.

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

  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 has 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 taxpayer response shows zero (0) on Lines 4a, 4b or 4c, then edit a zero (0).

    2. 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 was 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 EIN (if not already shown) and route to:
      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.

    Note:

    All determination letters are for a specific time period not to exceed three years. All open-ended determination letters have been rescinded (the taxpayer was mailed Letter 5575 through certified mail) and, if applicable, a new determination letter was issued.

  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 be multiple determination letters.

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

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

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

    Conversion Rate Table

    Percent (%) Rate 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
     

  7. If a lower rate is entered (2 percent or more, but less than 8 percent), 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 or no response is received after 45 days, or if 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.

  8. If a lower rate is entered (2 percent or more, but less than 8 percent), but the determination letter (e.g., Letter 8027-B shows an expired effective 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 have 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 percent 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 percent or more, but less than 8 percent), edit the percentage as granted in the letter. If the establishment has two allocation rates approved, check for the most current date on the letter and use that rate for the entire year.

    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 non suspense Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, to notify the employer of any changes. See IRM 3.11.180.3.3, Correspondence Preparation.

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, Place an "X" to the left of the negative amount and enter zero to the left of the "X’d" 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 non suspense Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, 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" .

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

    Exception:

    A signature is not required on a "Not Liable" return. Do not correspond. See IRM 3.11.180.3, Code and Edit Instructions, for more information.

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

    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 (14) and IRM 3.11.180.2 (15), General Information.

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

    • 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 more information.

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

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

    Note:

    A timely reply is received within 45 days of the letter date.

    1. If the reply is timely, associate with the original return and continue processing.

    2. If the reply is late and the return was processed as a No Reply, see IRM 3.11.180.3.5, Late Replies.

Disposition

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

Correspondence Preparation

  1. In compliance with 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 more 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 found during review and should have:

    • Current date

    • Name and address of the employer or establishment

    • Return number or title and tax year

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

    • 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

    • Name, phone number and duty hours of IRS to call with questions. See IRM 3.11.180.2.4, IRS Employee Contacts - RRA98, Section 3705(a).

    • Proper 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 shown on Form 8027-T Paragraph Z No IRM 3.11.180.2.9(6), Document Review
      Separate Form 8027 submissions are needed Paragraph 0 Yes IRM 3.11.180.2.9(9), Document Review
      EIN is incomplete or missing Paragraph L Yes IRM 3.11.180.3.1.5(4), Employer Identification Number (EIN), and IRM 3.11.180.4.2.8(3), Employer Identification Number (EIN)
      Charge Receipts Indicator "Yes" box is checked. Lines 1 and 2 are blank Paragraph M Yes IRM 3.11.180.3.1.13(2), Charge Receipts Indicator Box, and IRM 3.11.180.3.1.14(2), Money Amounts Lines 1 through 5
      Amount on Line 2 is not greater than the amount on Line 1 Paragraph N Yes IRM 3.11.180.3.1.14(4), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(5), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      Line 4c is incorrect or blank and an amount is reported on Line 4a or Line 4b Paragraph P No IRM 3.11.180.3.1.14(7), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(8), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      Negative amount is reported on Lines 4a, 4b or 4c Paragraph O Yes IRM 3.11.180.3.1.14(6), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(7), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      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 O Yes IRM 3.11.180.3.1.14(8), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(9), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      Amount is present on Line 4c only (Line 4a and Line 4b are blank Paragraph O Yes IRM 3.11.180.3.1.14(9), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(10), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      Amount is reported on Line 1 but no amounts are present on Lines 4a, 4b or 4c

      Note:

      Zero (0) is an amount.

      Paragraph O Yes IRM 3.11.180.3.1.14(10), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(11), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      No amount or incorrect amount is shown on Line 5 Paragraph Q and Paragraph S or Paragraph R and Paragraph S Yes IRM 3.11.180.3.1.14(11), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(12), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18
      Lower tip rate (center of Line 6) not supported by an IRS determination letter (e.g., Letter 8027-B) Paragraph T Yes IRM 3.11.180.3.1.15(8), Allocation Rate - Center of Line 6, and IRM 3.11.180.4.2.12(6), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      Lower tip rate replaced with standard 8 percent tip rate Paragraph U No IRM 3.11.180.3.1.15(8), Allocation Rate - Center of Line 6, and IRM 3.11.180.4.2.12(6), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      Lower tip rate (center of Line 6) and the IRS determination letter (e.g., Letter 8027-B) has an expired effective date Paragraph V No IRM 3.11.180.3.1.15(9), Allocation Rate - Center of Line 6, and IRM 3.11.180.4.2.12(7), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      No amount or incorrect amount is reported on Line 6 Paragraph W No IRM 3.11.180.3.1.16(2), Allocation Amount Line 6, and IRM 3.11.180.4.2.12(13), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      Amount on Line 7 is changed due to a change to Line 6 Paragraph X No IRM 3.11.180.3.1.17(1), Allocation of Tips Amount Line 7, and IRM 3.11.180.4.2.12(15), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      No amount or incorrect amount is shown on Line 7 Paragraph Y No IRM 3.11.180.3.1.17(1), Allocation of Tips Amount Line 7, and IRM 3.11.180.4.2.12(15), Error Reason Codes AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21
      Information appears to be split between establishments Paragraph 4 (zero) Yes IRM 3.11.180.4.4(3), Generated "Unpostable" Listing
      Signature is required on return(s) Paragraph K and Paragraph 3 Yes IRM 3.11.180.3.1.21(3), Signature
       

  6. See below for more selective paragraphs for Letter 1858C:

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

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

    3. Use Paragraph E and F as proper.

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

  7. Suspense the return for 45 days. Keep this file by date/EIN order or date/alpha order if the EIN is missing.

  8. If the taxpayer reply does not resolve or provide an answer to the correspondence issue then route the return to National Tip Reporting Compliance Program (NTRCP) for special handling. IRM 3.11.180.3.6, Unprocessable Documents.

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

  10. If undeliverable or no response is received after 45 days, refer to the No Reply Chart in paragraph 12 below.

  11. If working a return that is not processable, and current date is after October 31, 2022:

    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 before the purge.

    2. Route the return to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (14) and IRM 3.11.180.2 (15), General Information.

  12. 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 3.11.180.2.9(9), Document Review.

    2. Keep the establishment list attached.

    3. Make photocopy of Form 8027 and envelope.

    4. 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), Money Amounts Lines 1 through 5.

    2. Make photocopy of Form 8027 and envelope.

    3. Continue processing.

    Amount on Line 2 is not greater than the amount on Line 1,
    1. See IRM 3.11.180.3.1.14(4), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(4) ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18.

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

    3. Make photocopy of Form 8027 and envelope.

    4. Continue processing.

    Negative amount is reported on Lines 4a, 4b or 4c
    1. See IRM 3.11.180.3.1.14(6), Money Amounts Lines 1 through 5, and IRM 3.11.180.4.2.11(7), Error Reason Codes AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18.

    2. Consider the return unprocessable and route to National Tip Reporting Compliance Program (NTRCP). See IRM 3.11.180.2, General Information paragraph (15) for routing instructions.

    No amount or an incorrect amount is shown on Line 5,
    1. See IRM 3.11.180.3.1.14(11), Money Amounts Lines 1 through 5 and IRM 3.11.180.4.2.11(10), ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18.

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

    3. Make photocopy of Form 8027 and envelope.

    4. 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), Allocation Rate - Center of Line 6, and IRM 3.11.180.4.2.12(6), ERCs AA/AT - Money Amounts Lines 6 and 7 - Elements 19-21.

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

    3. Continue processing.

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

    2. Make photocopy of Form 8027 and envelope.

    3. Continue processing.

     

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

  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 more 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 follow 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 follow 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 more information on penalties and electronic filing.

  6. See Publication 1586 , Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for more 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 follow 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. Penalties under IRC 6721 also apply for filing returns without all required or correct information (including missing, incorrect and not currently issued TINs) and filing paper returns when electronic media is required. 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 3.11.180-10, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

  4. 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 $500, (not including inflationary adjustments) for returns due January 1, 2016 and after ($250 for returns due between 01-01-2011 through 12-31-2015).

    3. See Exhibit 3.11.180-10, Penalty Tables, for penalty rates and maximum amounts with inflationary adjustments.

    Note:

    See IRM 20.1.7, Penalty Handbook - Information Return Penalties, for more information on Intentional Disregard criteria.

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

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

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

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

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

    Example:

    If the employer has 3 establishments and each one is due the same penalty, then multiply the penalty amount by 3.

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

    1. A correction is an information return filed by the taxpayer to correct an information return that was previously filed to and successfully processed by IRS/Technical Services Operation (TSO), but had erroneous information.

      Note:

      Corrections should only be made to forms that have been filed 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 shown 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 shows 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 a particular type of return is required to be filed. 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. Taxpayers should file Form 8508 with IRS at least 45 days before the due date of the returns, but no later than the due date of the returns for which the waiver is being requested. IRS does not process waiver requests until January 1st of the calendar year the returns are due.

  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 taxpayer 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 taxpayer must timely fileForm 8027 on acceptable paper forms with the Ogden Submission Processing Campus (OSPC).

  8. Route waiver requests to:
    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. Photocopy current processing year 2021Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, (if the employer files for more than one establishment), and any other pertinent supporting documentation (e.g., copy of Form 8809 Application for Extension of Time to File Information Returns, envelope, etc.) if a penalty is being assessed. Use the photocopy for penalty processing. Continue normal processing of the original.

    Note:

    If you are processing a delinquent prior year 2020 return, it is unnecessary to make a photocopy. The Failure to File penalty (when applicable) can be assessed as soon as the failure is found. Refer to the instructions below before assessing the penalty.

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

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

    1. If EIN is present on extension lists, destroy photocopy.

    2. If EIN is not present on extension lists, then impose Failure to File penalty.

      Note:

      Refer to instructions below before assessing penalty.

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

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

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

  5. Before assessing the penalty:

    1. Check for Employment Code "F" (Federal) using Integrated Data Retrieval System (IDRS) Command Code (CC) ENMOD, BMFOLE or INOLES. If Employment Code "F" is present, do not assess the penalty. Continue processing the return.

    2. Check the Civil Penalty Module (MFT 13). Using the Employer’s EIN, research IDRS CC TXMOD for previous assessments on the tax period you are processing. If a previous assessment was entered, a Transaction Code 240 and Penalty Reference Number (PRN) 537 or 638 will be present on the module.

      Note:

      Impose no more than one penalty per return.

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

    Note:

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

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

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

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

    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 537 for Intentional Disregard or 638 for Failure to File.

      Note:

      The Penalty Reference Number (PRN) will generate a Transaction Code (TC) 240 along with the penalty amount that was assessed.

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

      Note:

      Enter money amount in dollars and cents and decimal (.) 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

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    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.

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

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

    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" if Code & Edit or "350" if Rejects

      • 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.): "537" if Intentional Disregard or "638" if Failure to File

      • 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

  12. 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.

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

  14. 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 Penalty Reference Number (PRN) "537" if Intentional Disregard or PRN "638" if Failure to File, instead of numbers assigned to Information Return Processing (IRP).

  15. All penalty cases should be input by November 28, 2022.

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 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing, after the 45-day suspense 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 (10), 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 had 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 has the requested information, recreate a Form 8027 and process.

    4. If there is insufficient information to recreate a Form 8027, route to National Tip Reporting Compliance Program (NTRCP) for special handling. See IRM 3.11.180.2 (14) and IRM 3.11.180.2 (15), General Information.

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

Unprocessable Documents

  1. Form 8027 is considered unprocessable when no further corrective course of action can take place in Submission Processing (SP) Code & Edit (C & E) or Error Resolution System (ERS).

    Caution:

    Make sure all IRM procedures have been followed before identifying the document as unprocessable.

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

  3. 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.

  4. If correspondence is impossible, follow guidelines for undeliverable or no response after 45 days. See IRM 3.11.180.3.3 (10), Correspondence Preparation.

  5. Route unprocessable documents to National Tip Reporting Compliance Program (NTRCP) for special handling to:
    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 display 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 make sure 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. Error reports for Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, are downloaded to Control D weekly. Error Resolution (ERS) uses the Control D reports listed below to print Error Register, resolve errors on Error Register and to identify output inventory.

    • EMF 01-40 - Report Name "8027 ERROR LISTING" is the Error Register. It is printed from Control D and used by the ERS tax examiner to resolve errors on paper and electronic documents. See Exhibit 3.11.180-3, Form 8027 Error Register for an example of Error Register.

    • EMF 01-41 - Report Name "FORM 8027 TAPE ERROR" is a transcript of the employers return of Tip Income. This report is used to assist ERS tax examiners in resolving errors on electronic source documents.

    • EMF 01-43 - Report Name "EMF01T RUN CONTROLS" is used by ERS to identify the volume of Form 8027 that was output (see column (E)).

  2. The paper register EMF 01-40 will only list errors. More than one field will print when one field of data is inconsistent with another field.

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

  4. Electronic source documents are found 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 EMF 01-41, which generates with the Error Register EMF 01-40. Use the EMF 01-41 to resolve errors on electronic source documents and make corrections to the EMF 01-40 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.

  5. Identify paper source documents by the presence of a Document Locator Number (DLN) literal and the 14-digit number. The source document is the actual Form 8027.

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 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 corrections on the register, so do not make just one correction and wait for it to loop to make the more 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 display 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 found on the Error Register is invalid (e.g., alpha in a money field). 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, ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18, for more 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, ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18, for more 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, ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18, for more 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, ERCs AA/AT/MA - Money Amounts Lines 1 through 5 - Elements 12 - 18, for information.

    Line 5 is less than Line 2.
    "AA" - Allocation amounts are inconsistent, Line 6 does not equal Line 5 times Tip Rate ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. See IRM 3.11.180.4.2.12, ERCs AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21, (1) through (9) for more 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, ERC AA - Method of Allocation, Lines 7a through 7c - Element 22, for more information.
    "AT" - Lines 4c, 6 and 7 are inconsistent,
    • See IRM 3.11.180.4.2.12, ERCs AA/AT - Money Amounts Lines 6 and 7 - Elements 19 - 21, for more 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, ERCs AA/AT - Money Amounts Lines 6 and 7 - Elements 19-21, for more 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.
  3. Error Reason Codes may be combined.

    Example:

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

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

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

    Element Numbers, Description, and Location on the Form 8027 Error Register

    Element Number Item Description Location on 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 display on 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 proper 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 have 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 Document Locator Number (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 "29" .

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

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

  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) has one position and must be blank or an alpha "G" .

  2. Enter "G" if:

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

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

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

Name of Establishment - Element 04
  1. The Name of Establishment may have 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 provided.

  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.

    3. Through IDRS research.

Establishment City - Element 05
  1. The Establishment City may have 25 alpha characters. 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.

Error Reason Code (ERC) SZ - Establishment State - Element 06
  1. Establishment State (Element 06) is two alpha characters.

  2. Error Reason Code "SZ" will display 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 enter 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 (14) and IRM 3.11.180.2 (15), General Information. Reporting is required only for establishments found in the 50 states and the District of Columbia.

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

Error Reason Code (ERC) SZ - Establishment ZIP Code - Element 07
  1. Error Reason Code "SZ" will display 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 3.11.180-8, 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 3.11.180-9, 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, enter Action Code 7.

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

  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.

    3. If not found, research IDRS using EIN.

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

    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 invalid EIN (having alphas, spaces, invalid EIN prefix, etc.).

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

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 have five numerics. 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.

Error Reason Codes AA/AT/MA -
Money Amounts
Lines 1 through 5 -
Elements 12 - 18
  1. Elements 12 through 18 may have 10 numerics and are dollars only.

  2. Error Reason Code "MA" will display 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 more 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, Information Return of Tip Income (Form 8027) Incomplete for Processing, 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. Enter Action Code 7 to clear the register.

     

  6. Line 3 may be zero or blank.

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

  8. 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, Information Return of Tip Income (Form 8027) Incomplete for Processing, to inform the employer of any change that is made to Line 4c. See IRM 3.11.180.3.3, Correspondence Preparation.

  9. 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.

  10. 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 has 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.

  11. 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.

    Note:

    Zero (0) is an amount.

    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.

  12. 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, enter Action Code 7 to clear register.

     

  13. 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.

Error Reason Codes AA/AT -
Money Amounts
Lines 6 and 7 -
Elements 19 - 21
  1. Elements 19 through 21 may have 10 numerics and are dollars only.

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

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

  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 percent to 8 percent.

  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 2019 and prior):

    • Under TRDA/Tip Rate Determination Agreement

    • Under GITCA/Gaming Industry Tip Compliance Agreement

    • Under TRAC/Tip Reporting Alternative Commitment

    • Under Rev. Proc. 2007-32

    • Under Rev. Proc. 2003-35
      Route 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 filed by Indian tribal government entities and email to Indian Tribal Government (ITG) Tip Analyst.

    1. When a rate lower than the 8 percent allocation rate is used, make sure a 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 shown) and route to:
      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.

      Note:

      All determination letters are for a specific time period not to exceed three years. All open-ended determination letters have been rescinded (the taxpayer was mailed Letter 5575 through certified mail) and, if applicable, a new determination letter was issued.

    2. Failure to attach a determination letter requires correspondence using Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing. 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 percent rate. Correspond using Letter 1858C to inform the employer that the standard 8 percent rate was used. See IRM 3.11.180.3.3, Correspondence Preparation.

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

    1. Disregard the lower rate and use the standard 8 percent 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 percent, disregard it and use the standard 8 percent rate.

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

  10. Error Reason Code "AT" will display 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 Line 6 and Line 4c, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

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

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

  13. If Line 6 is blank 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 non suspense 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 non suspense Letter 1858C to notify the employer of any adjustment. See IRM 3.11.180.3.3, Correspondence Preparation.

Error Reason Code (ERC) AA - Method of Allocation, Lines 7a through 7c - Element 22
  1. Method of Allocation, Lines 7a through 7c (Element 22) has one numeric position.

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

  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 Line 7a through Line 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 have four numeric 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. Tax Year (Element 24) has four numeric positions. The valid tax years are 2021 or 2020.

  2. If the tax year is 2019 or prior, enter Action Code "2" to reject the document.

  3. Route 2019 and prior Form 8027 to the following address; unless the forms meet the criteria in IRM 3.11.180.2 (14), General Information.
    Internal Revenue Service
    Attn. NTRCP/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 reply confirms a non-final early filed return, enter Action Code "2" to reject the document and hold the return until the next processing year.

    3. If the return is a "Final" , enter 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) (Element 25) must be blank or one alpha character. The alpha character is edited to the left of the "Final Return" check box (as close to that area as possible).

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

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

    Note:

    Integrated Submission and Remittance Processing (ISRP) transcribers will enter six (6) numerics (MMDDYY) at initial input. When the ISRP transcriber enters the field release, eight (8) numerics will display (MMDDYYYY).

  3. If a received date is present on a timely filed return, Code and Edit will 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.

  4. If a received date issue continues to loop, delete the register and re-input the return. When additional help is needed, contact the proper people (e.g., Planning and Analysis (P&A) Analyst, Headquarters Analyst, Headquarters Programmer, etc.).

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

    3. If not found, research IDRS using EIN.

Employer City - Element 29
  1. The Employer City (Element 29) must have alpha characters 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.

    3. If not found, research IDRS using EIN.

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

  2. A valid state (two-character code) is required for processing. Do not enter 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.

    3. If not found, research IDRS using EIN.

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

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

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

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

  4. If the ZIP Code is missing, see Exhibit 3.11.180-9, 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, enter Action Code 7.

Reject Register

  1. Reject reports for Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, are downloaded to Control D weekly. Rejects uses the Control D reports listed below to print Reject Register, resolve errors on Reject Register and to identify output inventory.

    • EMF 03-40 - Report Name "TIP INC 8027 REJ REG" is the Reject Register. It is printed from Control D and used by the Reject tax examiner to resolve errors on paper and electronic source documents. See Exhibit 3.11.180-4, Form 8027 Reject Register, for an example of Reject Register.

    • EMF 03-41 - Report Name "FORM 8027 TAPE-REJ" is a transcript of the employers return of Tip Income. This report is used to assist Reject tax examiners in resolving errors on electronic source documents.

    • EMF 03-42 - Report Name "EMF03 RUN CONTROLS" is used by Rejects to identify the volume of Form 8027 that was output (see column (D)).

  2. Error Resolution will reject records from EMF 01-40 Error Register when errors cannot be resolved. This action will generate EMF 03-40 Reject Register. In some cases, you will need to correspond. In other cases, you will consider the return unprocessable.

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

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

  5. After the letter is issued, file the return in the Correspondence Team to await reply.

  6. Allow 45 days for a reply.

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

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

    1. Electronic source documents are numbered with a Transmitter Control Code (TCC). Use the EMF 03-41 transcript to resolve Reject errors on electronic source documents.

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

    3. Include correspondence from the employer providing more information.

  9. 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 (10) and IRM 3.11.180.3.3 (11) Correspondence Preparation.

  10. 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 (14), IRM 3.11.180.2 (15), General Information, and IRM 3.11.180.4.5, Uncorrectable Unprocessable Documents.

  11. Late replies may be received in response to Letter 1858C after the 45-day suspense period has expired. See IRM 3.11.180.3.5, Late Replies, for more information to process late replies.

Generated "Unpostable" Listing

  1. Unpostable reports for Form 8027, are downloaded to Control D weekly. Rejects uses the Control D reports listed below to print Unpostable Register, resolve errors on Unpostable Register and to identify the output inventory.

    • EMF 02-40 - Report Name "EMF02 RUN CONTROLS" is used by Rejects to identify the volume of Unpostable records on Form 8027 that was output (see column (G)).

    • EMF 02-41 - Report Name "FORM 8027 TAPE" is a transcript of the employers return of Tip Income. This report is used to assist Reject tax examiners in resolving errors on electronic source documents.

    • EMF 02-42 - Report Name "TIP INCOME FORM 8027" is the Unpostable Register. It is printed from Control D and used by Reject tax examiners to resolve errors on paper and electronic documents. See Exhibit 3.11.180-5, Form 8027 Unpostable Register, for an example of Unpostable register.

  2. The "Unpostable" listing EMF 02-42 is generated in the same format as the Reject Register EMF 03-40, except there is no error sequence number. The "Unpostable" listing is titled, "Tip Income Form 8027 Unpostable Register" .

  3. Unpostable listing EMF 02-42 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

  4. A transcript EMF 02-41 will print 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 the 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, Information Return of Tip Income (Form 8027) Incomplete for Processing, to correspond with the employer. Explain that this is not acceptable. If No Reply, or the employer does not comply,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. See Exhibit 3.11.180-10, 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 EMF 02-41 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 Line 4c and Line 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 (14) and IRM 3.11.180.2 (15), General Information. Notate that duplicate forms were filed with the same EIN. These documents will not post because they will be duplicates of the re-input return.

  5. There is no difference between the paper and electronic "Unpostable" format. However, an electronic unpostable will generate two EMF 02-41 transcripts - one for the previously posted record and one for the record attempting to post, in lieu of a paper Form 8027.

  6. For electronic source documents, if an "Unpostable" listing EMF 02-42 is generated, it is possible that the electronic document was processed twice. Contact the Planning and Analysis (P & A) Staff to research if this situation occurs.

Uncorrectable Unprocessable Documents

  1. Examine the document to make sure there is no procedure to force processing without the required field data. See IRM 3.11.180.3.3 (12), Correspondence Preparation, for guidelines on "No Replies" .

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

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

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

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

      Note:

      For special handling address procedures, see IRM 3.11.180.2 (14) and IRM 3.11.180.2 (15), General Information.

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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Form 8027 Reject Register

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Form 8027 Unpostable 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
CPEO Certified Professional Employer Organization
CPL Cycle Proof List
CSCO Compliance Services Collection Operations
CTDWA Control-D WebAccess
DBA Doing Business As
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
IAT Integrated Automation Technologies
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
Planning & Analysis P&A
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 Zoning Improvement Plan
 

Note:

The above list may not be all-inclusive.

Routing Guide for Attachments

Review all attachments before considering the return processable.

Only detach attachments when instructed.

Note:

Consider a return or attachment an "Original" if it has an original signature or was 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.

Edit the name and EIN (if not present) on the detached document. Also, edit the received date (e.g., Rec’d MM/DD/YY) in the lower left margin of the detached document before routing.

Follow general guidelines below for each attachment:

Routing Guide for Attachments

If And Then
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Single Establishment, Form 8027-T, Transmittal of Employer’s Annual Information Return of Tip Income and Allocated Tips, is not present, If attachments are found, arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809, Application for Extension of Time to File Information Returns

  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 shown 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

    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 as follows:
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, Do not detach and arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809

  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, Do not detach and route as follows:
Local Batching Team
Ogden - Mail Stop 6054
Copy of Form 8809, Attached to Form 8027 or Form 8027-T, Do not detach and arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809

  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. Do not detach original.

  2. Make a copy of the Determination Letter, notate the EIN (if not already shown) and route as follows:
    Internal Revenue Service
    Attn. NTRCP/TW
    110 City Parkway
    Las Vegas, NV 89106

Note:

See IRM 3.11.180.2.8(2), Definitions.

Letter 8027-B, Approving Specified Lower Rate Determination, Attached to Form 8027 or Form 8027-T, Do not detach and arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809

  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, Do not detach and arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809

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

  6. Explanation for late filing

Letter 5382, Waiver Approved, Attached to Form 8027 or Form 8027-T, Do not detach. Continue processing.
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, Do not detach. Continue processing.
Explanation for late filing, Attached to Form 8027 or Form 8027-T, Do not detach and arrange as follows:
  1. Form 8027

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

  3. Good-Faith Agreement

  4. Copy of Form 8809

  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, Do not detach and route as follows:
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, Do not detach and route as follows:
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, Do not detach and route as follows:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Rev. Proc. 2007-32 (Gaming Industry Tip Compliance Agreement (GITCA)), Attached to Form 8027 or Form 8027-T, Do not detach and route as follows:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
6
Form W-2,   Detach and refer to your manager for disposition instructions.
List of establishments,   See IRM 3.11.180.2.9(9), Document Review.
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 current Form 8027 (tax year 2021 or tax year 2020) and process original.

  2. See IRM 3.11.180.2.9(11), Document Review.

Petitions in oppositions of tax law provisions, Attached to Form 8027 or Form 8027-T,

Note:

Do not edit an action trail when detaching a petition.

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

  2. If remittance is found, immediately hand carry to manager.

Response to Letter 1858C, Information Return of Tip Income (Form 8027) Incomplete for Processing,   Keep attached and edit based on the information provided.
Request for Acknowledgement,   Do not detach. No action required.
Correspondence related to IRS requesting Form 8027 to be filed for multiple years, Attached to Form 8027 or Form 8027-T, Do not detach and route as follows:
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 shown 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 receives a Form SS-4, Application for an Employer Identification Number, and Form 14039-B, route the returns to:
    Ogden - BMF Entity
    Mail Stop 6273

  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

Form 14196 Filing Statement, or correspondence related to Form 14196, Attached to Form 8027 or Form 8027-T, Do not detach and route as follows:
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, Do not detach and route as follows :
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, Do not detach and route as follows:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Letter 4640, Incomplete Form 8027, or correspondence related to Letter 4640, Attached to Form 8027 or Form 8027-T, Do not detach and route as follows:
Internal Revenue Service
Attn. NTRCP/TW
110 City Parkway
Las Vegas, NV 89106
Unrelated, unanswered correspondence, No action was taken, Detach and route to the proper area.

State Code - ZIP Code Range - EIN Prefix

Before 2001, the first two digits of an EIN (the EIN Prefix) show the business was found 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 shows 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 Over $5 Million (Average annual gross receipts for the most recent 3 taxable years).

Penalty Tables

Time of Filing Penalty Rate Due 01-01-2019 thru 12-31-2019 (with inflation adjustments) Due 01-01-2020 thru 12-31-2020 (with inflation adjustments) Due 01-01-2021 thru 12-31-2021 (with inflation adjustments) Due 01-01-2022 thru 12-31-2022 (with inflation adjustments)
Not more than 30 days late Per return $50 $50 $50 $50
Not more than 30 days late Maximum $545,500 $556,500 $565,000 $571,000
31 days late - August 1 Per return $100 $110 $110 $110
31 days late - August 1 Maximum $1,637,500 $1,669,500 $1,696,000 $1,713,000
After August 1 Per return $270 $270 $280 $280
After August 1 Maximum $3,275,500 $3,339,000 $3,392,000 $3,426,000
Intentional disregard Per return $540 $550 $560 $570
Intentional disregard Maximum No maximum No maximum No maximum No maximum
 

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 Less Than or Equal to $5 Million (Average annual gross receipts for the most recent 3 taxable years).

Penalty Tables

Time of Filing Penalty Rate Due 01-01-2019 thru 12-31-2019 (with inflation adjustments) Due 01-01-2020 thru 12-31-2020 (with inflation adjustments) Due 01-01-2021 thru 12-31-2021 (with inflation adjustments) Due 01-01-2022 thru 12-31-2022 (with inflation adjustments)
Not more than 30 days late Per return $50 $50 $50 $50
Not more than 30 days late Maximum $191,000 $194,500 $197,500 $199,500
31 days late - August 1 Per return $100 $110 $110 $110
31 days late - August 1 Maximum $545,500 $556,500 $565,000 $571,000
After August 1 Per return $270 $270 $280 $280
After August 1 Maximum $1,091,500 $1,113,000 $1,130,500 $1,142,000
Intentional Disregard Per return $540 $550 $560 $570
Intentional Disregard Maximum No maximum No maximum No maximum No maximum
 

Note:

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