Employer's Annual Information Return of Tip Income in Tucson, Arizona (2026)
Employers who fail to file the Employer's Annual Information Return of Tip Income risk IRS audits and penalties for unreported payroll taxes. This federally mandated report, also known as Form 8027, is submitted to the Internal Revenue Service (IRS) and must be filed by Tucson, Arizona businesses. Key facts:
- 48 fields — ApronPrep auto-fills 40
- $0–$0 government filing fees
- Varies processing time, though annual filing is due by the last day of February
Analyzed from Employer's Annual Information Return of Tip Income
83% from one compliance interview
Manual entry or document upload required
Why You Need a Employer's Annual Information Return of Tip Income
The Employer's Annual Information Return of Tip Income (Form 8027) is a federal mandate under Internal Revenue Code (Title 26), Section 6053. The statute requires every large food or beverage establishment—defined as one where tipping is customary and which normally employs more than 10 employees on a typical business day—to report tip income information annually to the IRS. In Tucson, this federal requirement is enforced by the IRS; there is no specific local Tucson or Arizona ordinance, but compliance is mandatory for any qualifying restaurant operating within the city. The purpose is to ensure all tip income is accounted for, allowing the IRS to verify that employees are reporting their tips and that employers are meeting their tax withholding and FICA (Social Security and Medicare) tax obligations on those tips.
Failure to file Form 8027, or filing it incorrectly, triggers a cascade of penalties that directly impact your business's finances and legal standing:
- Failure-to-file penalties: 5% of the unpaid tax required to be reported for each month (or part of a month) the return is late, up to a maximum of 25%.
- Failure-to-pay penalties: 0.5% of the unpaid tax for each month (or part of a month) the tax remains unpaid, also up to 25%.
- Interest charges on any unpaid tax and penalties from the due date until paid. The IRS interest rate is adjusted quarterly.
- Criminal prosecution risk for willful fraud or tax evasion, which can result in significant fines and imprisonment.
- Operational & financial strain: Unresolved penalties can lead to IRS liens or levies on business assets, complicate loan applications, and may violate terms in commercial leases that require compliance with all laws.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 filing year, the IRS has not announced major changes to Form 8027 requirements; always verify the latest form and instructions on IRS.gov before filing, as thresholds or e-filing mandates can be updated annually.
Who Needs a Employer's Annual Information Return of Tip Income?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Required if tipped employees report more than $20 in tips in any month, as mandated by IRS regulations. |
| Bar / Nightclub | Required | Required because employees receiving tips are generally present and must report cash or charged tips per IRS rules. |
| Food Truck | Required | Required if your mobile food service employs tipped staff and the monthly tip threshold of $20 is met for any employee. |
| Coffee Shop / Café | Not Required | Often exempt if tipping is minimal or tip jars are pooled by employees, not tracked per-employee; confirm with your tax advisor. |
See which restaurant types need this requirement — and which don't.
See Full Requirements →Field-by-Field Guide (48 Fields)
40 of 48 auto-filledAmended Return
checkboxCheck this box only if you are submitting this form to correct or update information from a previously filed 8027 for the same calendar year.
COMMON MISTAKE: Incorrectly checking this box when filing the initial annual return, which can delay processing as the IRS may flag it for review.
Final Return
checkboxCheck this box if your establishment permanently closed or stopped employing tipped employees during the reported calendar year.
COMMON MISTAKE: Failing to check this box for a closed business, which prevents the IRS from properly closing your account and can lead to future penalty notices.
Type: Alcoholic Beverages
checkboxCheck this box if your establishment's primary business is selling alcoholic beverages for consumption on the premises (e.g., a bar, tavern, or cocktail lounge).
COMMON MISTAKE: Selecting multiple establishment type checkboxes, as the IRS form instructs you to check only the one that most accurately describes your business.
Type: Meals Other Than Evening
checkboxCheck this box if your establishment primarily serves meals during breakfast or lunch hours, not in the evening.
Type: Evening and Other Meals
checkboxCheck this box if your establishment serves meals in the evening as well as during other times of the day.
Type: Evening Meals Only
checkboxCheck this box if your establishment serves meals only during evening hours (e.g., a dinner-only restaurant).
Accepts Credit Cards: Yes
checkboxCheck this box if your establishment accepted credit or debit cards as a form of payment from customers at any time during the calendar year.
COMMON MISTAKE: Incorrectly checking 'No' if you accepted cards, which is a data inconsistency the IRS can cross-reference with your gross receipts.
Accepts Credit Cards: No
checkboxCheck this box only if your establishment operated on a cash-only basis and did not accept any credit or debit card payments during the entire calendar year.
Line 7c: Allocation Method - Good Faith Agreement
checkboxCheck this box if you allocated tips using a written agreement between you and your employees, as permitted under IRS Revenue Procedure 2012-26.
COMMON MISTAKE: Checking this method without having the required written agreement documented and signed by employees, which does not meet the legal standard and can trigger an audit.
Line 7b: Allocation Method - Gross Receipts
checkboxCheck this box if you used the standard IRS gross receipts method to calculate and report allocated tip income for your employees.
COMMON MISTAKE: Selecting an allocation method that does not match the calculations reported elsewhere on the form (e.g., in Part III), creating a mismatch that results in a notice.
ApronPrep auto-fills 40 of 48 fields from a single compliance interview — no re-typing, no guessing what the government expects.
Top 5 Employer's Annual Information Return of Tip Income Mistakes
1. Misreporting or Omitting Allocated Tip Income (IRS Form 8027, Box 12)
Failing to correctly calculate and report the allocated tip amount for employees who under-reported their tips. This triggers an IRS mismatch notice. Based on ApronPrep's analysis, this is the leading cause of correspondence audits for Tucson restaurants. Avoid it by using the exact allocated amount calculated by your payroll system or manually per IRS Publication 1244 (Form 8027 instructions).
2. Using Incorrect Gross Receipts Figures (Form 8027, Section 1)
Entering net sales, credit card receipts only, or totals from the wrong tax year. The IRS compares this figure to your business tax return (Schedule C or Form 1120-S). A discrepancy can delay processing and prompt a query, adding 4–6 weeks to resolve. Ensure the figure includes all food, beverage, and non-alcoholic beverage sales from which tips are received, for the entire calendar year.
3. Incorrect Employee Social Security Numbers (SSNs) on Form 8027, Boxes 8-10
Transposing digits, using an outdated SSN after a name change, or entering an Individual Taxpayer Identification Number (ITIN) incorrectly. This prevents the IRS from crediting tip income to the correct employee's earnings record, which can later create problems for the employee's Social Security benefits. Double-check each SSN against your Form W-2 records before filing.
Skip the Paperwork on Your Employer's Annual Information Return of Tip Income
ApronPrep auto-fills 40 of 48 fields from one compliance interview.
No credit card required
Employer's Annual Information Return of Tip Income by City in Arizona
| City | Fee Range | Timeline |
|---|---|---|
| Mesa | ||
| Phoenix | ||
| Tucson |
Timeline: Varies
Track and Compile Tip Income Data for 2026
Gather all daily tip logs or POS system reports for the entire 2026 calendar year. This includes tip amounts reported by each employee, as well as any cash or charged tips allocated through your tip pooling policy. Have your 2026 IRS Form 8027 (Employer’s Annual Information Return of Tip Income) on hand to cross-reference totals. Employers often miss reconciling final tip allocations made after year-end adjustments, which can lead to discrepancies and IRS notices.
Prepare IRS Form 8027 and File Copy
Complete IRS Form 8027 for the 2026 tax year. You'll need your Employer Identification Number (EIN), establishment numbers, total receipts, charge receipts, and reported tip totals from Form 4070A logs or electronic records. Use the IRS’s e-file system for Form 8027 (Authorized IRS e-file Provider) or prepare paper filing. For establishments in Tucson with 250+ food/beverage employees or large volume reporting, ensure all supporting schedules are attached. The most common reason for IRS queries is mismatched totals between the allocated tip line and the sum of individual employee reports.
File Form 8027 and Furnish Statements
Submit the completed Form 8027 to the IRS by February 28, 2027 (the last day of February following the calendar year). This is not a tax payment form, but an informational return. Simultaneously, you must furnish Form W-2 to all affected employees by their regular deadline (typically January 31st), ensuring the tip income reported in Box 1 (Wages, tips, other compensation) and Box 7 (Social Security tips) aligns perfectly with the totals on your filed Form 8027. Use the IRS's EFTPS for any related FICA tax deposits. A mismatch between the W-2 Box 7 totals and Form 8027 is a primary audit trigger.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in Arizona.
ADA Compliance Self-Certification
federal
Alarm System Permit/Registration
local
Alcohol Server Training Certification
state
Annual Report Filing
state
See all co-required forms and how they connect to your compliance dossier.
See All RequirementsProcessing time varies. There is no standard government processing timeline for filing this annual information return with the IRS. After you electronically submit your Form 8027, it is logged immediately; confirm successful submission via the IRS filing system. Since this is a mandatory annual report and not a permit, there is no 'approval' timeline—the focus is on filing by the deadline to avoid penalties.
There are no government filing fees to submit Form 8027 to the IRS. This federal informational return is required for certain food and beverage establishments and does not carry a direct filing cost. Not legal advice—verify with the IRS.
No. The Employer’s Annual Information Return of Tip Income (Form 8027) is specific to the employer identification number (EIN) and location for which it was filed for a given tax year. If you move your restaurant, you must ensure your new address is updated with the IRS, but the annual filing itself is not transferable. Each filing is tied to a specific establishment's operations for a calendar year.
You must file this return annually with the IRS, by the last day of February each year for the previous calendar year. It is a recurring requirement, not a one-time permit, so there is no 'renewal'—you must submit a new report each year if your establishment meets the filing criteria. This annual reporting is separate from state-level filings like your Arizona Employer Withholding Tax Registration.
There is no physical inspection for this informational return. Compliance is verified through your submitted data. The IRS may conduct a payroll tax audit to reconcile the tip income you reported on Form 8027 with wages reported on Forms W-2 and your overall tax filings. Maintaining accurate daily tip records is critical, as discrepancies discovered during an audit can lead to penalties. Proper record-keeping supports other compliance areas, such as your Arizona Employee Right to Know Poster obligations regarding wage reporting.
About This Data
This guide is generated from ApronPrep's compliance dossier system, which uses 53 parallel AI authority experts to discover requirements, then downloads actual forms and generates field-level intelligence for each one.
For Arizona specifically, we have analyzed compliance dossiers for 3 cities (Mesa, Phoenix, Tucson), generating Rich FILs (Form Intelligence Layers) with 48 form fields analyzed for this requirement. Fee data is sourced from actual county department fee schedules, not estimates.
Our data is verified against official government sources and updated when regulatory changes are detected. If you find an error, please report it — accuracy is our core commitment.
Sources
- Internal Revenue Code (Title 26)
This Form Is One of 60+ Requirements.
ApronPrep discovers every permit your city requires — including the ones generic checklists miss. Pick your city for the complete package.