TaxBandits Knowledge Base

What amounts should I include in “Gross Receipts” when filing Form 8027?

When filing Form 8027, you must report the total gross receipts from food and beverage sales at your establishment. These figures are essential for determining tip reporting and allocation requirements.

Include the Following Amounts in Gross Receipts:

• Cash Sales: Payments received in cash for food and beverages.
• Charge Receipts: Payments are made via credit cards, debit cards, or other charges.
• Charges to a Hotel Room: If guests charge food and beverages to their hotel room, these amounts must be included. However, tips can be excluded if your accounting system properly separates them.
• Retail Value of Complimentary Items: If tipping is customary for complimentary food or beverages provided as part of a for-profit activity, their retail value must be included in gross receipts.

Note: Tips are generally not included in your gross receipts. However, if you’ve paid tips to your employees from cash sales, you need to include those tips in your gross receipts.

       Special Cases:

• Package Deals: If food and beverages are bundled with other services (e.g., hotel stays), estimate their portion based on cost + a reasonable profit.
   
• Nonallocable Receipts: Receipts from carryout sales or those with a 10% or more service charge added. Room service is NOT considered carryout.
   
• Complimentary Items:  If you give customers free food or drinks, these need to be included in your gross receipts only if:
  • Tipping is customary for the free items at your establishment
  • The free items are part of a paid activity that generates money (for example, drinks at a casino)
  • For example, if you give free drinks in a casino, you must count their value as part of your gross receipts. But if you give free snacks at your restaurant, you don’t need to count them.