Employer's Annual Information Return of Tip Income in Memphis, Tennessee (2026)
The IRS may impose penalties for failure to report your employees' tip income, which can include fines based on the unreported amounts. This is the Employer's Annual Information Return of Tip Income, also known as IRS Form 8027, for businesses in Memphis, Tennessee.
- 48 fields — ApronPrep auto-fills 40
- $0–$0 government filing fees (no federal fee for filing the form)
- Varies processing and preparation time, depending on record-keeping
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 (IRS Form 8027) is a federal mandate, not a local Memphis ordinance. It is required by the Internal Revenue Service under Internal Revenue Code § 6053 and implementing regulations (26 CFR § 31.6053-1). Any food and beverage establishment in Memphis (or nationwide) that employs more than 10 workers on a typical business day and where tipping is customary must file this form. The requirement exists regardless of Tennessee state tax law and is enforced directly by the IRS. Its purpose is to ensure all tip income is reported and subject to federal income and FICA taxes, closing a major gap in payroll tax compliance.
Failing to file Form 8027 triggers a cascade of IRS penalties and operational risks for your Memphis restaurant. The consequences are specific and severe:
- Failure-to-File Penalty: 5% of the unpaid tax due per month, capped at 25% of the total tax. This is assessed on the employer’s share of Social Security and Medicare taxes owed on unreported tips.
- Failure-to-Pay Penalty: 0.5% of the unpaid tax per month, also capped at 25%. This stacks with the failure-to-file penalty.
- Interest Charges: The IRS charges interest on any unpaid tax from the original due date. The rate is determined quarterly and compounds daily.
- Operational & Legal Risk: Persistent non-compliance can trigger a full IRS audit of your payroll, leading to back taxes, larger penalties, and potential loss of business deductions. It can also jeopardize your lease if financial solvency is questioned and may lead to criminal prosecution for willful tax evasion.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 tax year, the IRS has clarified that electronic filing of Form 8027 is now mandatory for employers who file 250 or more information returns, per the final regulations under IRC § 6051.
Who Needs a Employer's Annual Information Return of Tip Income?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Required if you have employees who customarily receive tips and are subject to payroll taxes under IRS rules. |
| Bar / Nightclub | Required | Required for bartenders and service staff who report tips, as per IRS Publication 531 and Form 8027 instructions. |
| Food Truck | Required | Required if you employ tipped service staff, regardless of the mobile nature of the business under federal tax law. |
| Coffee Shop / Café | Not Required | Typically not required unless you employ service staff who customarily receive tips, which is less common in counter-service models. |
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 this Form 8027 to correct a previously submitted return for the same tax year.
COMMON MISTAKE: Checking this box on your initial filing, which can cause the IRS to reject the return for being duplicative.
Final Return
checkboxCheck this box if your establishment permanently closed or you ceased operations as a food or beverage establishment during this tax year.
COMMON MISTAKE: Checking this box when you are still in operation, which signals to the IRS that no further returns are expected and can disrupt future filings.
Type: Alcoholic Beverages
checkboxCheck this box if your establishment's primary business is serving alcoholic beverages (e.g., a bar, tavern, or lounge).
COMMON MISTAKE: Selecting multiple establishment type checkboxes, as the IRS instructions require you to select only the one that best describes your primary business.
Type: Meals Other Than Evening
checkboxCheck this box if your establishment primarily serves meals during breakfast, brunch, or lunch hours (not primarily evening service).
COMMON MISTAKE: Selecting this and 'Evening Meals Only' for a full-service restaurant, which should instead select 'Evening and Other Meals'.
Type: Evening and Other Meals
checkboxCheck this box if your establishment serves meals during both evening and non-evening hours (e.g., a full-service restaurant open for lunch and dinner).
COMMON MISTAKE: Incorrectly selecting this for a bar that serves minimal food, which should typically select 'Alcoholic Beverages'.
Type: Evening Meals Only
checkboxCheck this box if your establishment serves meals only during the evening (e.g., a dinner-only restaurant).
Accepts Credit Cards: Yes
checkboxCheck this box if your establishment accepted payment via credit or debit card during any part of the tax year.
COMMON MISTAKE: Leaving both 'Yes' and 'No' unchecked, which is a common cause for IRS inquiry as it is a required field.
Accepts Credit Cards: No
checkboxCheck this box only if your establishment did not accept any credit or debit card payments at any time during the tax year.
COMMON MISTAKE: Checking 'No' when you have credit card sales, which creates a direct inconsistency with the gross receipts you report.
Line 7c: Allocation Method - Good Faith Agreement
checkboxCheck this box if you allocated tips to employees using a written, IRS-approved good faith agreement (as defined in IRS Revenue Ruling 2012-18).
COMMON MISTAKE: Selecting this method without having the formal, written agreement signed by employees, which does not meet the legal requirement.
Line 7b: Allocation Method - Gross Receipts
checkboxCheck this box if you used the standard gross receipts method for allocating tip income, as outlined in the IRS Instructions for Form 8027.
COMMON MISTAKE: Incorrectly calculating the allocation percentage, leading to a mismatch between the reported allocated tips and the supporting worksheets.
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 Aggregate Tip Totals Instead of Individual Employee Amounts
Entering only a grand total of all tips on the 8027 form, instead of the detailed, per-employee amounts on the 8027-T transmittal form. The IRS will reject the filing as incomplete, requiring a full correction and resubmission. To avoid, ensure you complete Form 8027-T for each employee, listing their Social Security Number and total tips received for the year, even if they reported zero tips. This mistake adds 2-4 weeks to your compliance timeline due to IRS correspondence.
2. Mismatching Tip Totals Between Forms 8027 and 8027-T
The total tips reported on the main Form 8027 (Line 1) does not equal the sum of all individual employee amounts reported on Forms 8027-T. This discrepancy triggers an automatic IRS notice and potential penalty calculation. Always cross-check that the figure in Form 8027, Part I, Line 1 matches the total from all your 8027-T forms before filing. A single data-entry error here is the most common cause of an IRS inquiry.
3. Filing with Incorrect or Missing Employer Identification Number (EIN)
Using an old EIN, a personal SSN, or leaving the EIN field blank on Form 8027. The IRS cannot process the return without a valid, current EIN assigned to your business entity. Double-check that the EIN on your Form 8027 exactly matches the EIN used on your quarterly Form 941 payroll tax returns. An incorrect EIN will result in a rejected filing and a delay in processing any potential FICA tip credit you may be claiming.
Skip the Paperwork on Your Employer's Annual Information Return of Tip Income
ApronPrep auto-fills 40 of 48 fields from one compliance interview.
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Employer's Annual Information Return of Tip Income by City in Tennessee
| City | Fee Range | Timeline |
|---|---|---|
| Knoxville | ||
| Memphis | ||
| Nashville |
Timeline for Employer’s Annual Information Return of Tip Income (Form 8027)
Gather Annual Payroll and Tip Data
Compile all payroll records for the calendar year, including each employee's W-2, total hours worked, and reported tips. You must also calculate your establishment's gross receipts from food and beverage sales. Missing or inconsistent tip data is the most common cause of an IRS notice or request for correction. Have your Employer Identification Number (EIN) and your accounting software reports ready.
Complete IRS Form 8027
Fill out all sections of IRS Form 8027, ensuring data matches your payroll records. Key sections include Part I (Employer Information), Part II (Establishment Information), and Part III (Tip Allocation Calculation). Use the IRS-provided worksheet to calculate allocated tips for employees who underreported. ApronPrep can auto-fill your business and EIN data directly from your profile. Enter all amounts in whole dollars.
Transcribe Data onto Form 8027-C
If you have more than one establishment, you must complete a separate Form 8027-C (Transmittal of Employer’s Annual Information Return of Tip Income) for each location. List the totals from all Forms 8027-C on your main Form 8027. A frequent mistake is transposing totals or failing to file Form 8027-C for each distinct business unit, which can trigger an inquiry.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in Tennessee.
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 timelines vary significantly, as this is a federal IRS tax filing. According to IRS.gov, e-filed returns are typically acknowledged within 24-48 hours, while paper filings can take 6-8 weeks for processing and confirmation. You should submit your completed Form 8027 well before its annual deadline to account for any mail delays or IRS review periods.
There is no government filing fee charged by the IRS for submitting Form 8027. However, you must ensure compliance with related state and local employer obligations, such as your Annual Report Filing with the Tennessee Secretary of State, which has its own separate fees. The lack of a fee for the tip return does not negate the legal requirement to file it accurately and on time.
No. Form 8027 is tied to your specific Employer Identification Number (EIN) and the tax year, not a physical address. If you move your restaurant, you must file your City Business License/Registration and other local permits for the new location, but your federal tip reporting responsibilities under the same EIN continue unchanged. The tip income return itself is not 'transferred'—it is filed annually for the business entity.
You must file a new Form 8027 for each calendar year by the last day of February of the following year. This is an annual filing requirement mandated by the Internal Revenue Code §6053(c). Unlike a permit that is 'renewed,' this is a recurring tax information report. You must file every year you operate a food or beverage establishment where tipping is customary, unless you qualify for an exemption.
There is no physical 'inspection' for this tax form. Instead, the IRS conducts audits or reviews of your records. An auditor will examine your payroll reports, tip allocation records (if applicable), and receipts to verify the figures reported on Form 8027 match your books. Failure to maintain adequate records to substantiate your filing can lead to penalties and adjustments, which is why accurate record-keeping is essential. Not legal advice—contact the IRS or a tax professional for guidance.
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 Tennessee specifically, we have analyzed compliance dossiers for 3 cities (Knoxville, Memphis, Nashville), 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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