No, if the reported tips from employees of a large food or beverage establishment are 8% or more of sales, the employer is not required to allocate tips to the employees. The requirement to allocate tips only applies when the total tips reported by employees during any payroll period are less than 8% (or an approved lower rate) of the establishment's gross receipts for that period. If the employees are reporting 8% or more, there would be no allocated tip amount.
Sources:
Rev. Proc. 86-21
Rev. Rul. 2012-18
§ 3121. Definitions
Instructions for Form 8027 (2023)
Publication 531 (2023)
§ 31.6053-3. Reporting by certain large food or beverage establishments with respect to tips.
