How do I Calculate Shortfall Allocation for Year End Reporting?

When an establishment in which tipping is considered customary does not report the required minimum percent of its gross receipts as tip income received by its tipped employees, the establishment must calculate the shortfall amount and allocate that amount to those tipped employees who did not report the minimum required percent.

The Tips application offers two methods of calculating shortfall allocation:

• Hours Worked method (used more often)

• Individual Gross Receipts method (more labor intensive)

You can define the method and percent you want to use in the calculation when you define allocation levels for the company.

To keep track of the shortfall allocation amount throughout the year, you can run the Shortfall Allocation Calculation at anytime to calculate the shortfall allocation for employee reporting tip income in the company, process level, and year selected.