Employer's Annual Information Return of Tip Income in Tacoma, Washington (2026)
Your payroll is vulnerable to costly IRS audits and penalties without the Employer's Annual Information Return of Tip Income, also known as Form 8027. This federally mandated report must be filed annually with the IRS by employers in Tacoma, Washington, who have food or beverage operations where tipping is customary. Key facts:
- 48 fields — ApronPrep auto-fills 40
- $0–$0 government filing fee
- Varies processing timeline
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 requirement for certain food and beverage establishments, mandated by the Internal Revenue Code (Title 26, § 6053). In Tacoma, this is enforced by the IRS, not the city or state, and is required for any establishment where tipping is customary and that employs more than 10 employees on a typical business day. This specific statute requires employers to report their employees' tip income, ensuring that Social Security and Medicare (FICA) taxes are properly calculated and withheld. The data from this form is cross-referenced by the IRS with employees' individual tax returns (Form 4137) and your payroll tax filings.
Submitting this report incorrectly, or not at all, triggers a cascade of financial and operational penalties. Failure to comply is not just a paperwork error; it's a tax filing violation that results in direct monetary penalties and potential legal action.
- Failure-to-file penalties of 5% of the unpaid tax for each month the return is late, up to a maximum of 25%.
- Failure-to-pay penalties of 0.5% of the unpaid tax for each month it remains unpaid.
- Interest accrues on any unpaid tax from the due date until payment is made.
- Significant discrepancies or intentional fraud can lead to criminal prosecution, including charges for tax evasion.
- Incorrect reporting can also cause problems with payroll audits, leading to unexpected tax liabilities, penalties from state agencies like the Washington Department of Revenue, and complications with business loan covenants or lease agreements that require tax compliance.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 filing year, the IRS has not announced major changes to Form 8027; however, employers should always verify the current version and instructions on the IRS.gov website prior to filing, as thresholds and e-file requirements can be updated annually.
Who Needs a Employer's Annual Information Return of Tip Income?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Required if you have employees who report more than $20 in monthly tips, per IRS Publication 1244 and the IRS mandate for Form 8027 filing. |
| Bar / Nightclub | Required | Required if you serve food, have tipped employees, and meet the IRS threshold for large food/beverage establishments. |
| Food Truck | Not Required | Generally not required unless the operation employs a waiter/waitress and meets the IRS gross receipts and tip criteria, which is rare for counter-service models. |
| Coffee Shop / Café | Not Required | Not typically required unless formal table service with designated tipped employees is provided; most operate on a counter-service, tip-jar model exempt from Form 8027. |
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 information on a previously filed return for the same tax year.
COMMON MISTAKE: Check both 'Amended Return' and 'Final Return' simultaneously, which confuses the IRS's processing system.
Final Return
checkboxCheck this box only if your establishment permanently closed before the end of the calendar year for which you are filing.
COMMON MISTAKE: Marking 'Final Return' for a seasonal closure or temporary shutdown, which is incorrect and may trigger an audit.
Type: Alcoholic Beverages
checkboxCheck this box if your establishment serves alcoholic beverages (beer, wine, liquor), regardless of food service.
COMMON MISTAKE: Checking multiple establishment type boxes when only one should be selected, based on your primary service.
Type: Meals Other Than Evening
checkboxCheck this box if your establishment primarily serves meals during breakfast, lunch, or brunch hours.
Type: Evening and Other Meals
checkboxCheck this box if your establishment serves meals during the evening and also during other parts of the day (e.g., lunch and dinner).
Type: Evening Meals Only
checkboxCheck this box if your establishment serves meals only during the evening (dinner service).
Accepts Credit Cards: Yes
checkboxCheck 'Yes' if customers can pay for food, beverages, or services with a credit or debit card at your establishment.
COMMON MISTAKE: Leaving both 'Yes' and 'No' unchecked, which is a common source of IRS inquiry letters.
Accepts Credit Cards: No
checkboxCheck 'No' if your establishment is cash-only or does not accept any form of credit or debit card payment.
COMMON MISTAKE: Checking 'No' but reporting credit card tip allocations on Line 8, creating a data inconsistency.
Line 7c: Allocation Method - Good Faith Agreement
checkboxCheck this box if you used a written, employer-employee agreement to allocate tip income, as described in IRS Revenue Ruling 2012-18.
COMMON MISTAKE: Selecting this method without having the required written agreement documented and available for IRS review.
Line 7b: Allocation Method - Gross Receipts
checkboxCheck this box if you used the IRS's prescribed gross receipts method (formula based on 8% of sales) to allocate tip income.
COMMON MISTAKE: Incorrectly calculating the gross receipts percentage or checking this box when another method was actually used.
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 Incorrect or Incomplete Employee SSNs and Names
Entering a nickname or middle initial instead of the legal name exactly as it appears on the employee's Social Security card, or transposing numbers in the SSN. The IRS uses this data to match employee-reported tip income on Form 4137, so mismatches trigger notices. A single incorrect SSN can generate a penalty notice for the employer, requiring a corrected return. Always verify names and SSNs using the employee's Form W-2 or a copy of their Social Security card.
2. Calculating Total Tips Incorrectly (Cash vs. Credit)
Failing to reconcile credit card/bank reported tips with cash tips reported by employees, leading to an inaccurate 'Total tips reported' in Box 7 of Form 8027. This often happens when cash tip pools aren't allocated correctly or daily tip records are incomplete. Errors here cause a mismatch with payroll records and can lead to IRS inquiries about underreported FICA tax. Use the establishment's daily sales and tip records to ensure Box 7 matches the sum of all employee tip statements for the year.
3. Missing the Large Food or Beverage Establishment (LFE) Determination
Incorrectly assuming your Tacoma establishment doesn't qualify as an LFE (typically >10 employees on a typical business day and food/beverage is served for on-premises consumption). Failing to file Form 8027 when required carries a $50 per return penalty. Conversely, filing when not required adds unnecessary administrative burden. Review IRS Publication 531 each year to confirm your establishment's LFE status based on average employee count and service type.
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 Washington
| City | Fee Range | Timeline |
|---|---|---|
| Seattle | ||
| Spokane | ||
| Tacoma |
Timeline: Typically 1-2 weeks to prepare and file, IRS processing time varies
Gather Tip Income Reports (Form 8027 and Employee Data)
Collect completed IRS Form 8027 for your establishment, along with detailed tip records for each employee (Form 4070A or equivalent). You must have each employee's name, SSN, and the total tips reported to you for the year, as required by IRS Publication 531. The most common delay is missing or mismatched Social Security Numbers on employee tip statements versus your payroll records.
Complete IRS Form 8027
Fill out the 2-page IRS Form 8027 for the tax year. Key sections include gross receipts, charged tips, and the employee tip report information from your gathered records. Pay close attention to Line 7 (Total Tips Reported) — this must match the sum of tips reported by all employees. ApronPrep auto-fills establishment and employer identification details, but you must manually enter the financial and tip report totals.
File with the IRS
Submit your completed Form 8027 to the IRS by the last day of February (e.g., February 28, 2027, for the 2026 tax year). File electronically using the IRS FIRE System for the fastest confirmation, or mail it to the IRS address listed in the instructions. Retain a copy of the submission confirmation (FIRE Transmission ID or certified mail receipt) for your records, as this is your proof of filing.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in Washington.
ADA Compliance Self-Certification
federal
Alarm System Permit/Registration
local
Annual Report Filing
state
Application for Employer Identification Number
federal
See all co-required forms and how they connect to your compliance dossier.
See All RequirementsProcessing timelines are listed as 'Varies' by the issuing authority, the Internal Revenue Service (IRS). For the Annual Information Return of Tip Income (Form 8027), the primary processing occurs after you file, which is due annually by the last day of February. There is no pre-approval timeline; you should allocate time to gather your staff's tip records and complete the form well before the deadline to avoid penalties.
The government filing fee for this federal requirement is $0–$0. The IRS does not charge a fee to file the Employer's Annual Information Return of Tip Income (Form 8027). It's important to maintain accurate payroll records to complete this form, which relates to your broader compliance with federal tax reporting and payment systems like EFTPS Enrollment (Electronic Federal Tax Payment System). Not legal advice — verify with the IRS.
No, this specific form cannot be 'transferred.' The Employer's Annual Information Return of Tip Income (Form 8027) is filed annually for a specific Employer Identification Number (EIN) and covers tip income for the reported tax year for that business. If you move your restaurant's location, you must continue to file this form under the same EIN, but you may need to update your address with the IRS and also secure a new City Business License/Registration with Tacoma.
This is not a permit that you renew. You are required to file the Employer's Annual Information Return of Tip Income (Form 8027) with the IRS every year. It is an annual reporting requirement for food and beverage establishments where tipping is customary. The form is due by the last day of February for the preceding calendar year, per IRS Publication 3144.
There is no physical inspection for this specific form. Compliance is verified through your filed paperwork and payroll records. The IRS may conduct an audit or review of your tax returns, which would include examining your Form 8027 and supporting documentation to ensure reported tip income matches your payroll records and receipts. Maintaining meticulous records is your best defense, as inaccuracies can trigger audits and penalties.
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 Washington specifically, we have analyzed compliance dossiers for 3 cities (Seattle, Spokane, Tacoma), 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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