Employer's Annual Information Return of Tip Income in Salem, Oregon (2026)
Incorrect or missing payroll tax filings can trigger costly IRS audits and penalties, including fines for uncollected Social Security and Medicare taxes. This is for the Employer's Annual Information Return of Tip Income (Form 8027) for the Internal Revenue Service (IRS), which is required for qualifying food and beverage establishments in Salem, Oregon. This report is also known as the tipped income information return. Most applicants complete this in under 15 minutes with ApronPrep, which auto-fills 40 of 48 fields.
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Why You Need a Employer's Annual Information Return of Tip Income
The Employer's Annual Information Return of Tip Income (Form 8027) is mandated by federal law under Internal Revenue Code (IRC) Section 6053(c). This statute specifically requires large food or beverage establishments to annually report employee tip income to the IRS. Although Oregon does not impose an additional state-level requirement for this specific form, its federal mandate applies uniformly, including to qualifying establishments in Salem. The filing obligation is tied to your establishment's business operations, not to a local Salem or Marion County ordinance.
Failing to file Form 8027 by its deadline triggers a cascade of federal penalties, separate from any underlying tax liability. These are not discretionary warnings but automatic, statutory consequences:
- Failure-to-file penalty: 5% of the unpaid tax required to be reported, charged each month the return is late, up to a maximum of 25%.
- Failure-to-pay penalty: 0.5% of the unpaid tax per month, on top of the failure-to-file penalty.
- Interest charges: Accrued daily on any unpaid tax and penalties from the original due date.
- Operational & legal risk: Persistent non-compliance can trigger an IRS audit, leading to assessments for unreported FICA taxes. In cases of intentional fraud, criminal prosecution for tax evasion is possible, carrying potential fines and imprisonment.
- Business record-keeping failure: Inaccurate tip reporting creates discrepancies in your payroll records, which can invalidate your compliance with Fair Labor Standards Act (FLSA) minimum wage calculations and complicate lease or financing agreements that require clean financials.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 tax year, the IRS has not announced major changes to Form 8027 filing requirements or thresholds, but employers should verify the most current version of the form and instructions on IRS.gov when preparing to file.
Who Needs an Employer's Annual Information Return of Tip Income?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Required if tipped employees (e.g., servers, bartenders) who earn more than $20 in tips per month work at your establishment, per IRS Publication 1244. |
| Bar / Nightclub | Required | Required if bartenders, cocktail servers, or other staff earn tips, as they are considered 'tipped employees' subject to IRS Form 8027 reporting rules. |
| Food Truck | Required | Required only if you have employees (not owner-operators) who receive tips and your establishment qualifies as a 'large food or beverage establishment' under IRS rules. |
| Coffee Shop / Café | Not Required | Typically not required, as tipping is often optional and may not meet the 'large food or beverage establishment' threshold; review your average tip volume against IRS criteria. |
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 filing to correct a previously submitted Form 8027 for the same tax year; leave it unchecked for your original, on-time filing.
COMMON MISTAKE: Incorrectly checking this box for an initial filing, which can mislead the IRS and cause unnecessary scrutiny or a mismatch in their records.
Final Return
checkboxCheck this box only if your establishment permanently stopped operating as a food or beverage business during the tax year covered by this return.
COMMON MISTAKE: Checking this box because you closed for a seasonal period, which is incorrect and could prematurely terminate your tax account, leading to complications.
Type: Alcoholic Beverages
checkboxCheck this box if your establishment's primary business is serving alcoholic beverages (e.g., a bar or tavern) with or without food service.
COMMON MISTAKE: Checking multiple establishment type boxes, as you must select only one that best describes your primary business activity for IRS classification.
Type: Meals Other Than Evening
checkboxCheck this box if your establishment primarily serves meals during breakfast, lunch, or brunch hours, but not as a primary evening meal service.
COMMON MISTAKE: Selecting this category if you serve substantial dinner service, which may require selecting 'Evening and Other Meals' instead for accurate reporting.
Type: Evening and Other Meals
checkboxCheck this box if your establishment serves both evening dinner meals and other meals (like lunch or breakfast) as a significant part of business.
Type: Evening Meals Only
checkboxCheck this box only if your establishment's food service is exclusively or almost exclusively for evening dinner meals.
Accepts Credit Cards: Yes
checkboxCheck this box if your establishment accepted any credit or debit card payments for food and beverages during the tax year.
COMMON MISTAKE: Checking both 'Yes' and 'No'; you must select only one, as this affects how the IRS evaluates your reported charge receipt totals.
Accepts Credit Cards: No
checkboxCheck this box only if your establishment operated on a strictly cash-or-check basis for the entire tax year, with no card transactions.
COMMON MISTAKE: Selecting 'No' if you had any card sales, which creates a data inconsistency with your reported receipts and can trigger an IRS notice.
Line 7c: Allocation Method - Good Faith Agreement
checkboxCheck this box if you allocated tips to employees using a written, IRS-approved agreement between employer and employees, as described in IRS Publication 1244.
COMMON MISTAKE: Selecting this without having a proper, documented agreement in place, which does not meet the IRS legal standard and can lead to penalties for underreported tips.
Line 7b: Allocation Method - Gross Receipts
checkboxCheck this box if you used the IRS-prescribed gross receipts method to allocate tips, typically required when reported tips are less than 8% of your gross receipts.
COMMON MISTAKE: Incorrectly using this method when a valid Good Faith Agreement is in effect, or miscalculating the 8% threshold, which is a common source of IRS audits for this form.
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. Reporting Under ‘Total Tips’ Instead of ‘Gross Receipts’
Entering the establishment's total tip income (Form 8027, Box 8) in the ‘Gross receipts or sales’ field (Box 2) instead of the actual gross food and beverage sales. This inflates the ratio used to determine if tips are underreported, triggering an IRS discrepancy notice. Use your POS system's gross sales report for Box 2, not your tip allocation total.
2. Using Incorrect Establishment Numbers
Filing with a single Employer Identification Number (EIN) when your restaurant operates multiple ‘large food or beverage establishments’ (as defined by IRS rules) in Salem, each requiring its own Form 8027. The IRS will reject the consolidated filing, causing delays. Assign and use the unique 4-digit establishment number for each location as recorded in your payroll system.
3. Miscalculating the 8% Tip Rate Threshold
Failing to correctly compare reported tips (Box 6) to 8% of gross receipts (Box 2) to determine if you must allocate the shortfall. An arithmetic error here can lead to incorrect allocation amounts on employees' W-2s, requiring corrected filings and potential penalties. Double-check the calculation: (Box 6) / (Box 2) must be ≥ 0.08 to avoid allocation.
Skip the Paperwork on Your Employer's Annual Information Return of Tip Income
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Employer's Annual Information Return of Tip Income by City in Oregon
| City | Fee Range | Timeline |
|---|---|---|
| Eugene | ||
| Portland | ||
| Salem |
Timeline: From Document Gathering to IRS Submission
Gather Employee Tip Reports & Records
Collect Form 4070-A (Employee’s Daily Record of Tips) or equivalent tip reports from all tipped staff for the previous calendar year. You must also compile your own daily records of allocated tips, charged tips, and the establishment’s gross receipts. The IRS requires employers to keep employee tip reports for at least 4 years. Missing or incomplete reports for even one employee is a common audit trigger and can delay this filing.
Complete IRS Form 8027
Fill out Form 8027 (Employer’s Annual Information Return of Tip Income and Allocated Tips) using the aggregated annual data. Key sections include reporting gross receipts, total tips reported, and calculating any required tip allocation for employees who did not report enough. The form requires entries for each establishment location. Use IRS Publication 531 as a guide for complex calculations; errors in the tip allocation formula are a frequent cause of filing rejections.
Prepare and File with the IRS
File the completed Form 8027 by the annual deadline of February 28th (or March 31st if filing electronically). You must submit it to the IRS Service Center listed in the instructions, not your local Salem office. Paper filers must include a signed transmittal Form 8027-T. Most employers must also furnish statements (Copy B of Form 8027) to each employee by the same deadline. Missing the employee statement requirement can result in penalties, even if the main form was filed on time.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in Oregon.
ADA Compliance Self-Certification
federal
Alarm System Permit/Registration
local
Application for Employer Identification Number
federal
Articles of Organization (LLC) or Articles of Incorporation (Corporation)
state
See all co-required forms and how they connect to your compliance dossier.
See All RequirementsThe processing timeline for the Employer's Annual Information Return (Form 8027) varies significantly as it is processed by the Internal Revenue Service (IRS). The IRS does not provide a standard approval window for this specific form; confirmation is typically receipt of the processed copy mailed back to you or electronic filing confirmation. Contact the IRS or consult their publications for the most current processing estimates for the 2026 tax year.
There are no government filing fees for submitting the Employer's Annual Information Return (Form 8027) to the IRS, as confirmed by official data. This is an informational return required by federal tax law, not a permit application with an associated fee. Not legal advice — verify requirements with the IRS.
No, the Employer's Annual Information Return (Form 8027) is not transferable. This federal report is filed annually for a specific employer identification number (EIN) and business location. If you move your restaurant, you must file the return for the new address for the applicable tax year, and you may also need to update your local City Business License/Registration.
You must file this return annually. The Employer's Annual Information Return (Form 8027) reports tip income for your employees for the previous calendar year and is due to the IRS by the last day of February each year (e.g., February 28, 2027, for the 2026 tax year). This annual filing is separate from your regular payroll tax deposits and other recurring obligations like a Backflow Prevention Device Certification.
There is no physical inspection for the Employer's Annual Information Return (Form 8027). Compliance is verified through the IRS's review of your submitted data against employee tax returns and your payroll records. An IRS audit of your tip reporting would involve a review of your financial documents, not an on-site visit to your restaurant.
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 Oregon specifically, we have analyzed compliance dossiers for 3 cities (Eugene, Portland, Salem), 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)
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