The IRS Attacks: The Hand that Feeds It

 When I was a child, my mother surprised me one glorious morning with a Rottweiler puppy. https://askcompetentlawyer.com/ She justifiably handed me a piece of steak and explained that I was to give the steak to the Rottweiler because it would never bite the hand that feeds it. And, fingers in tact years later, she was correct. It seems the IRS never learned that lesson--their newest (and perhaps oldest) targets are restaurant owners. (Not surprising, as we all knew only audits satiate that IRS hunger).

The IRS requires employers to file an annual tip allocation return, Form 8027. While approximately 50,000 returns were filed last year, an independent firm the IRS hired estimates that figure should be tripled. The IRS plans to align its files with the independent firm's information and send letters of inquiry to non-filers.

If you own a restaurant and have not filed Form 8027 or know that there are problems with the form you filed, you need to contact a tax professional before the IRS contacts you.

On a related note, most restaurant employees are likely unaware that the IRS requires employees who receive tips to keep "sufficient proof" to show the amount of tip income for the year. The IRS considers a daily record ("tip diary") of tip income "sufficient proof". The IRS provides a form, Form 4070A, that employees may use to keep a daily record of tips. Using this particular form is not mandatory, but keeping "sufficient proof" of tip income is.