For clubs and bars over the IRS’s large food-or-beverage establishment line

Reported tips under 8% come back on every W-2.

Octave works the whole Form 8027: the IRS’s seven-line 10-employee test from last year’s busiest and slowest months, lines 1 to 8 from the staff list, and — when reported tips fall under 8% of receipts — the allocation to each directly tipped employee, every step numbered as the instructions number them, for box 8 of their W-2.

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Opens in this browser with an invented club already in it. No account, no email address, nothing installed.

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The problem

The test is not a head count.

Form 8027 is owed where food or drink is served, tipping is customary, and the employer normally had more than 10 employees on a typical business day — measured by a seven-line worksheet of hours in the busiest and slowest months, not by counting staff. When tips reported come in under 8% of gross receipts, the shortfall is allocated among directly tipped employees by a six-step method.

10 employees

on a typical business day, measured by the IRS worksheet, and the return is owed.

IRS Form 8027 instructions →

March 31, 2026

the electronic filing date for the 2025 return.

IRS Form 8027 instructions →

of gross receipts: report less in tips, and the difference is allocated to staff W-2s.

Will not mark a return filed that does not add up.

Not a reminder. Mark it filed refuses, with the reason named, while the 10-employee test is incomplete, a line is missing, lines 4a, 4b or 8 disagree with the staff list, a lower rate has no IRS letter, an employee is missing a figure the allocation needs, or the W-2 step is not done. There is no override.

How it works

Test, year, staff, allocation

Run the test

Last year’s receipts, hours and days open by month. Octave picks the busiest and slowest months and works the seven lines.

Fill the year and staff

Lines 1 to 8, and each tipped employee’s gross receipts, tips reported and hours.

Allocate and file

The gross-receipts or hours method, every step shown, each amount for box 8 of the W-2. File, and mark it filed.

What it will never do

It works the return. It files nothing.

Octave builds every line and allocation. You file the return.

No filing.Nothing goes to the IRS. Octave gives you every line.

No payroll link.You put each allocation in box 8; Octave tells you the figure.

It is not an accountant.Not tax advice. Keep the records three years after the due date.

It never touches a payment.The licence is for software.

Pricing

Priced per establishment

One return a year, right the first time.

Most clubs

One establishment

$79/year

One club or bar over the line.

The seven-line employee test
Lines 1 to 8 from the staff list
Allocation step by step

Group

$199/year

Up to four establishments.

Everything in One establishment
A return per establishment
Export for your accountant

Yearly licence. Your bank statement says Octave Software. Refunded in full on request within 30 days. Your licence key is emailed to you within two working days of payment.

Checkout is our own bitcoin server, not a card processor — nobody we had to apply to and nobody who can close the account. The button takes you straight to it. Give your email address there — that is where your key is sent.

Questions

The ones we actually get asked

How do we know if we must file?

Octave runs the IRS’s seven-line worksheet on last year’s busiest and slowest months. More than 80 hours on line 7 means file.

Which allocation method?

Gross receipts, or hours worked — allowed only under 200 average employee hours per business day. Octave checks.

Is the arithmetic right?

Octave’s tests run the instructions’ own Line 7b example and land on the IRS’s figures, rounding dollar included.

Is this tax advice?

No. It is the worksheet your accountant would otherwise build by hand.

What do I actually get when I pay?

The demo on this page is the whole program, running on invented records. Paying gets you a licence key — one line of text, emailed to the address you give at checkout within two working days. Paste it into the program and from then on it keeps your own records. Until then, nothing you type into it is kept.

The key is checked inside the page, on your own machine. It never calls us, so there is still no account and nothing about your business goes anywhere. If you ever stop paying, your records stay exactly where they are, read-only, and Export still hands you every one of them.

Open the demo before February

The invented club reported tips at 5.3% of receipts. One server has no receipts on file, line 8 does not match the staff list, charged tips run far above reported ones, and the W-2 step is not done. Octave will not file it until every one is fixed.

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