Shortfall allocation calculation

You can calculate the shortfall allocation of tips to tipped employees who did not report the minimum percentage required by the Internal Revenue Service (IRS) of their gross receipts with the Calculate Shortfall Allocation action in HR Payroll. To calculate shortfall allocation, Payroll and Tips must be enabled for an organization, allocation levels must be defined, the payroll cycle must be closed, released employee tips must exist, and gross receipts must be entered. See Tips setup.

The status of the employee tips and gross receipts processed by the Calculate Shortfall Allocation action with the Finalize Shortfall Calculation option depends on the date information:

• If their record date year is before the payroll year specified, the status is Previous Year Not Maintained.
• If their record date year is not before to the payroll year specified, the status is Current Year Not Maintained.
• If the action is run for year end, the status is Year End Close Performed.

To review the results of the shortfall allocation calculation, select the run from the list in Payroll Administrator > Tips Processing > Shortfall Allocation and click the Gross Receipts Shortfall and Hours Worked Shortfall tabs to view shortfall information by allocation level from the selected run. Open an allocation record to view shortfall amounts by employee.