Proposed Collection; Comment Request for Forms 1065, 1065-B, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL and Related Attachments, 66743-66745 [2016-23424]
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<![CDATA[
Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices
maintenance, and purchase of services
to provide information.
Approved: September 21, 2016.
R. Joseph Durbala,
IRS, Tax Analyst.
[FR Doc. 2016–23403 Filed 9–27–16; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment
Request for Forms 1065, 1065–B, 1066,
1120, 1120–C, 1120–F, 1120–H, 1120–
ND, 1120–S, 1120–SF, 1120–FSC,
1120–L, 1120–PC, 1120–REIT, 1120–
RIC, 1120–POL and Related
Attachments
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice and request for
comments.
AGENCY:
The Internal Revenue Service,
as part of its continuing effort to reduce
paperwork and respondent burden,
invites the general public and other
Federal agencies to take this
opportunity to comment on proposed
and continuing information collections,
as required by the Paperwork Reduction
Act of 1995 (PRA), Public Law 104–13
(44 U.S.C. 3506(c)(2)(A)). This notice
requests comments on all forms used by
business entity taxpayers: Forms 1065,
1065–B, 1066, 1120, 1120–C, 1120–F,
1120–H, 1120–ND, 1120–S, 1120–SF,
1120–FSC, 1120–L, 1120–PC, 1120–
REIT, 1120–RIC, 1120–POL; and all
attachments to these forms (see the
Appendix to this notice). With this
notice, the IRS is also announcing
significant changes to (1) the manner in
which tax forms used by business
taxpayers will be approved under the
PRA and (2) its method of estimating the
paperwork burden imposed on all
business taxpayers.
DATES: Written comments should be
received on or before November 28,
2016 to be assured of consideration.
ADDRESSES: Direct all written comments
to Tuawana Pinkston, Internal Revenue
Service, Room 6526, 1111 Constitution
Avenue NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the form and instructions
should be directed to Allan Hopkins, at
Internal Revenue Service, Room 6129,
1111 Constitution Avenue NW.,
Washington, DC 20224, or through the
internet, at Allan.M.Hopkins@irs.gov.
SUPPLEMENTARY INFORMATION:
mstockstill on DSK3G9T082PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
18:04 Sep 27, 2016
Jkt 238001
Change in PRA Approval of Forms
Used by Business Taxpayers
Under the PRA, OMB assigns a
control number to each ‘‘collection of
information’’ that it reviews and
approves for use by an agency. A single
information collection may consist of
one or more forms, recordkeeping
requirements, and/or third-party
disclosure requirements. Under the PRA
and OMB regulations, agencies have the
discretion to seek separate OMB
approvals for business forms,
recordkeeping requirements, and thirdparty reporting requirements or to
combine any number of forms,
recordkeeping requirements, and/or
third-party disclosure requirements
(usually related in subject matter) under
one OMB Control Number. Agency
decisions on whether to group
individual requirements under a single
OMB Control Number or to disaggregate
them and request separate OMB Control
Numbers are based largely on
considerations of administrative
practicality.
The PRA also requires agencies to
estimate the burden for each collection
of information. Accordingly, each OMB
Control Number has an associated
burden estimate. The burden estimates
for each control number are displayed
in (1) the PRA notices that accompany
collections of information, (2) Federal
Register notices such as this one, and
(3) in OMB’s database of approved
information collections. If more than
one form, recordkeeping requirement,
and/or third-party disclosure
requirement is approved under a single
control number, then the burden
estimate for that control number reflects
the burden associated with all of the
approved forms, recordkeeping
requirements, and/or third-party
disclosure requirements.
As described below under the heading
‘‘New Burden Model,’’ the IRS’s new
Business Taxpayer Burden Model
(BTBM) estimates of taxpayer burden
are based on taxpayer characteristics
and activities, taking into account,
among other things, the forms and
schedules generally used by those
groups of business taxpayers and the
recordkeeping and other activities
needed to complete those forms. The
BTBM represents the second phase of a
long-term effort to improve the ability of
IRS to measure the burden imposed on
various groups of taxpayers by the
federal tax system. While the new
methodology provides a more accurate
and comprehensive description of
business taxpayer burden, it will not
provide burden estimates on a form-byform basis, as has been done under the
PO 00000
Frm 00124
Fmt 4703
Sfmt 4703
66743
previous methodology. When the prior
model was developed in the mid-1980s,
almost all tax returns were prepared
manually, either by the taxpayer or a
paid provider. In this context, it was
determined that estimating burden on a
form-by-form basis was an appropriate
methodology. Today, over 90 percent of
all business entity tax returns are
prepared using software or with
preparer assistance. In this
environment, in which many taxpayers’
activities are no longer as directly
associated with particular forms,
estimating burden on a form-by-form
basis is not an appropriate measurement
of taxpayer burden. The new model,
which takes into account broader and
more comprehensive taxpayer
characteristics and activities, provides a
much more accurate and useful estimate
of taxpayer burden.
Currently, there are 206 forms used by
business taxpayers. These include
Forms 1065, 1065–B, 1066, 1120, 1120–
C, 1120–F, 1120–H, 1120–ND, 1120–S,
1120–SF, 1120–FSC, 1120–L, 1120–PC,
1120–REIT, 1120–RIC, 1120–POL, and
their schedules and all the forms
business entity taxpayers attach to their
tax returns (see the Appendix to this
notice). For most of these forms, IRS has
in the past obtained separate OMB
approvals under unique OMB Control
Numbers and separate burden estimates.
The BTBM estimates the aggregate
burden imposed on business taxpayers,
based upon their tax-related
characteristics and activities. IRS
therefore will seek OMB approval of all
206 business-related tax forms as a
single ‘‘collection of information.’’ The
aggregate burden of these tax forms will
be accounted for under OMB Control
Number 1545–0123, which is currently
assigned to Form 1120 and its
schedules. OMB Control Number 1545–
0123 will be displayed on all business
tax forms and other information
collections. As a result of this change,
burden estimates for business taxpayers
will now be displayed differently in
PRA Notices on tax forms and other
information collections, and in Federal
Register notices. This new way of
displaying burden is presented below
under the heading ‘‘Proposed PRA
Submission to OMB.’’ Because 44 of the
206 forms used by business taxpayers
are also used by tax-exempt
organizations, trusts and estates and
other kinds of taxpayers, there will be
a transition period during which IRS
will report different burden estimates
for individual taxpayers (OMB Control
Number 1545–0074), business taxpayers
(OMB Control Number 1545–0123), and
another OMB Control Number for other
taxpayers using the same forms. For
E:\FR\FM\28SEN1.SGM
28SEN1
66744
Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices
those forms covered under OMB Control
Numbers 1545–0074 and/or 1545–0123
and also used by other taxpayers, IRS
will display the OMB Control Number
related to the other filers on the form
and provide the burden estimate for
those taxpayers in the form instructions.
The form instructions will refer readers
to the burden estimates for individual
and/or business taxpayers, as
applicable. The burden estimates for
business taxpayers will be reported and
accounted for as described in this
notice. The burden estimates for
individual taxpayers will continue to be
reported and accounted for under OMB
Control Number 1545–0074 using a
method similar to the method described
in this notice. The burden estimates for
other users of these forms will be
determined under prior methodology
based on form length and complexity.
New Burden Model
Data from the new BTBM revise the
estimates of the levels of burden
experienced by business taxpayers
when complying with the federal tax
laws. It replaces the earlier burden
measurement developed in the mid1980s. Since that time, improved
technology and modeling sophistication
have enabled the IRS to improve the
burden estimates. The new model
provides taxpayers and the IRS with a
more comprehensive understanding of
the current levels of taxpayer burden. It
reflects major changes over the past two
decades in the way taxpayers prepare
and file their returns. The new BTBM
also represents a substantial step
forward in the IRS’s ability to assess
likely impacts of administrative and
legislative changes on business
taxpayers.
The BTBM’s approach to measuring
burden focuses on the characteristics
and activities of business taxpayers
rather than the forms they use. Key
determinants of taxpayer burden in the
model are the type of entity, total assets,
total receipts, and activities reported on
the tax return (income, deductions,
credits, etc). In contrast, the previous
estimates primarily focused on the
length and complexity of each tax form.
The changes between the old and new
burden estimates are due to the
improved ability of the new
methodology to measure burden and the
expanded scope of what is measured.
These changes create a one-time shift in
the estimate of burden levels that
reflects the better measurement of the
new model. The differences in estimates
between the models do not reflect any
change in the actual burden experienced
by taxpayers. Comparisons should not
be made between these and the earlier
published estimates, because the models
measure burden in different ways.
Methodology
Burden is defined as the time and outof-pocket costs incurred by taxpayers to
comply with the federal tax system. As
has been done for individual taxpayer
burden since 2005, both the time
expended and the out-of-pocket costs
for business taxpayers are estimated.
The burden estimation methodology
relies on surveys that measure time and
out-of-pocket costs that taxpayers spend
on pre-filing and filing activities. The
methodology establishes econometric
relationships between tax return
characteristics and reported compliance
costs. The methodology controls for the
substitution of time and money by
monetizing time and reporting total
compliance costs in dollars. This
methodology better reflects taxpayer
compliance burden, because in a world
of electronic tax preparation, time and
out-of-pocket costs are governed by the
information required rather than the
form on which it is ultimately reported.
Importantly, even where various
businesses complete the same tax form
lines, the new methodology
differentiates the cost incurred to
complete those forms based on
characteristics of those businesses. Key
business characteristics that serve as
coefficients in the BTBM are:
• Entity type.
• Total assets.
• Total receipts.
• Return complexity.
The new model uses the following
classifications of business taxpayers:
• Partnerships (Forms 1065, 1065–B,
1066).
• Taxable corporations (Forms 1120,
1120–C, 1120–F, 1120–H, 1120–ND,
1120–SF, 1120–FSC, 1120–L, 1120–PC,
1120–POL).
• Pass-through corporations (Forms
1120–REIT, 1120–RIC, 1120–S).
Each classification is further refined
to separate large and small businesses,
where a large business is generally
defined as one having end of year assets
totaling more than $10 million.
Taxpayer Burden Estimates
Tables 1, 2, and 3 below show the
burden model estimates for each of the
three classifications of business
taxpayers. The data shown are the best
estimates for 2013 business entity
income tax returns available as of
February 2016. The estimates are subject
to change as new forms and data
become available.
Proposed PRA Submission to OMB
Title: U.S. Business Income Tax
Return.
OMB Number: 1545–0123.
Form Numbers: Forms 1065, 1065–B,
1066, 1120, 1120–C, 1120–F, 1120–H,
1120–ND, 1120–S, 1120–SF, 1120–FSC,
1120–L, 1120–PC, 1120–REIT, 1120–
RIC, 1120–POL and all attachments to
these forms (see the Appendix to this
notice).
Abstract: These forms are used by
businesses to report their income tax
liability. The data is used to verify that
the items reported on the forms are
correct, and also for general statistics
use.
Current Actions: Changes are being
made to the forms and the method of
burden computation.
Type of Review: Extension of
currently approved collections.
Affected Public: Businesses.
Estimated Number of Respondents:
10,900,000.
Total Estimated Time: 2.997 billion
hours.
Estimated Time per Respondent: 275
hours.
Total Estimated Out-of-Pocket Costs:
$52.56 billion.
Estimated Out-of-Pocket Cost per
Respondent: $4,822.
Note: Amounts below are for FY2015.
Reported time and cost burdens are national
averages and do not necessarily reflect a
‘‘typical’’ case. Most taxpayers experience
lower than average burden, with taxpayer
burden varying considerably by taxpayer
type. Detail may not add due to rounding.
mstockstill on DSK3G9T082PROD with NOTICES
TABLE 1
Number of returns
(millions)
Primary form filed or type of taxpayer
All Partnerships ..........................................................................................................
Small ..........................................................................................................................
VerDate Sep<11>2014
18:04 Sep 27, 2016
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PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
Burden
Average time
3.9
3.7
E:\FR\FM\28SEN1.SGM
290
270
28SEN1
Average cost
5,700
4,400
Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices
66745
TABLE 1—Continued
Burden
Number of returns
(millions)
Primary form filed or type of taxpayer
Large * ........................................................................................................................
Average time
0.2
610
Average cost
29,000
Forms 1065, 1065–B, 1066 and all attachments.
TABLE 2
Burden
Number of returns
(millions)
Primary form filed or type of taxpayer
All Taxable Corporations ...........................................................................................
Small ..........................................................................................................................
Large * ........................................................................................................................
Average time
2.1
2.0
0.1
315
280
1,250
Average cost
6,300
4,000
68,900
Forms 1120, 1120–C, 1120–F, 1120–H, 1120–ND, 1120–SF, 1120–FSC, 1120–L, 1120–PC, 1120–POL and all attachments.
TABLE 3
Burden
Number of returns
(millions)
Primary form filed or type of taxpayer
All Pass-Through Corporations .................................................................................
Small ..........................................................................................................................
Large ** ......................................................................................................................
Average time
4.9
4.8
0.1
245
240
610
Average cost
3,500
3,100
30,800
Forms 1120–REIT, 1120–RIC, 1120–S and all attachments.
* A large business is defined as one having end of year assets greater than $10 million.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB Control Number.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
mstockstill on DSK3G9T082PROD with NOTICES
Request for Comments
Comments submitted in response to
this notice will be summarized and/or
included in the request for OMB
approval. All comments will become a
matter of public record. Comments are
invited on: (a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and (e) estimates of capital
or start-up costs and costs of operation,
VerDate Sep<11>2014
18:04 Sep 27, 2016
Jkt 238001
maintenance, and purchase of services
to provide information.
Approved: September 19, 2016.
Allan Hopkins,
Tax Analyst.
[FR Doc. 2016–23424 Filed 9–27–16; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment
Request for Notice 2001–1
Internal Revenue Service (IRS),
Treasury.
AGENCY:
Notice and request for
comments.
ACTION:
The Department of the
Treasury, as part of its continuing effort
to reduce paperwork and respondent
burden, invites the general public and
other Federal agencies to take this
opportunity to comment on proposed
and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995,
Public Law 104–13 (44 U.S.C.
3506(c)(2)(A)). Currently, the IRS is
soliciting comments concerning Notice
2001–1, Employer-Designed Tip
Reporting Program for the Food and
Beverage Industry (EmTRAC).
SUMMARY:
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
Written comments should be
received on or before November 28,
2016 to be assured of consideration.
ADDRESSES: Direct all written comments
to Tuawana Pinkston, Internal Revenue
Service, Room 6526, 1111 Constitution
Avenue NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the notice should be directed
to Martha R. Brinson, Internal Revenue
Service, Room 6129, 1111 Constitution
Avenue NW., Washington, DC 20224, or
through the Internet at
Martha.R.Brinson@irs.gov.
SUPPLEMENTARY INFORMATION:
Title: Employer-Designed Tip
Reporting Program for the Food and
Beverage Industry (EmTRAC).
OMB Number: 1545–1716.
Notice Number: Notice 2001–1.
Abstract: Information is required by
the Internal Revenue Service in its
compliance efforts to assist employers
and their employees in understanding
and complying with Internal Revenue
Code section 6053(a), which requires
employees to report all their tips
monthly to their employers.
Current Actions: There are no changes
being made to the notice at this time.
Type of Review: Extension of a
currently approved collection.
Affected Public: Business or other forprofit organizations.
Estimated Number of Respondents
and/or Recordkeepers: 20.
DATES:
E:\FR\FM\28SEN1.SGM
28SEN1
]]>Agencies
[Federal Register Volume 81, Number 188 (Wednesday, September 28, 2016)]
[Notices]
[Pages 66743-66745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23424]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment Request for Forms 1065, 1065-B,
1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S, 1120-SF, 1120-FSC,
1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL and Related Attachments
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice and request for comments.
-----------------------------------------------------------------------
SUMMARY: The Internal Revenue Service, as part of its continuing effort
to reduce paperwork and respondent burden, invites the general public
and other Federal agencies to take this opportunity to comment on
proposed and continuing information collections, as required by the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13 (44 U.S.C.
3506(c)(2)(A)). This notice requests comments on all forms used by
business entity taxpayers: Forms 1065, 1065-B, 1066, 1120, 1120-C,
1120-F, 1120-H, 1120-ND, 1120-S, 1120-SF, 1120-FSC, 1120-L, 1120-PC,
1120-REIT, 1120-RIC, 1120-POL; and all attachments to these forms (see
the Appendix to this notice). With this notice, the IRS is also
announcing significant changes to (1) the manner in which tax forms
used by business taxpayers will be approved under the PRA and (2) its
method of estimating the paperwork burden imposed on all business
taxpayers.
DATES: Written comments should be received on or before November 28,
2016 to be assured of consideration.
ADDRESSES: Direct all written comments to Tuawana Pinkston, Internal
Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington,
DC 20224.
FOR FURTHER INFORMATION CONTACT: Requests for additional information or
copies of the form and instructions should be directed to Allan
Hopkins, at Internal Revenue Service, Room 6129, 1111 Constitution
Avenue NW., Washington, DC 20224, or through the internet, at
Allan.M.Hopkins@irs.gov.
SUPPLEMENTARY INFORMATION:
Change in PRA Approval of Forms Used by Business Taxpayers
Under the PRA, OMB assigns a control number to each ``collection of
information'' that it reviews and approves for use by an agency. A
single information collection may consist of one or more forms,
recordkeeping requirements, and/or third-party disclosure requirements.
Under the PRA and OMB regulations, agencies have the discretion to seek
separate OMB approvals for business forms, recordkeeping requirements,
and third-party reporting requirements or to combine any number of
forms, recordkeeping requirements, and/or third-party disclosure
requirements (usually related in subject matter) under one OMB Control
Number. Agency decisions on whether to group individual requirements
under a single OMB Control Number or to disaggregate them and request
separate OMB Control Numbers are based largely on considerations of
administrative practicality.
The PRA also requires agencies to estimate the burden for each
collection of information. Accordingly, each OMB Control Number has an
associated burden estimate. The burden estimates for each control
number are displayed in (1) the PRA notices that accompany collections
of information, (2) Federal Register notices such as this one, and (3)
in OMB's database of approved information collections. If more than one
form, recordkeeping requirement, and/or third-party disclosure
requirement is approved under a single control number, then the burden
estimate for that control number reflects the burden associated with
all of the approved forms, recordkeeping requirements, and/or third-
party disclosure requirements.
As described below under the heading ``New Burden Model,'' the
IRS's new Business Taxpayer Burden Model (BTBM) estimates of taxpayer
burden are based on taxpayer characteristics and activities, taking
into account, among other things, the forms and schedules generally
used by those groups of business taxpayers and the recordkeeping and
other activities needed to complete those forms. The BTBM represents
the second phase of a long-term effort to improve the ability of IRS to
measure the burden imposed on various groups of taxpayers by the
federal tax system. While the new methodology provides a more accurate
and comprehensive description of business taxpayer burden, it will not
provide burden estimates on a form-by-form basis, as has been done
under the previous methodology. When the prior model was developed in
the mid-1980s, almost all tax returns were prepared manually, either by
the taxpayer or a paid provider. In this context, it was determined
that estimating burden on a form-by-form basis was an appropriate
methodology. Today, over 90 percent of all business entity tax returns
are prepared using software or with preparer assistance. In this
environment, in which many taxpayers' activities are no longer as
directly associated with particular forms, estimating burden on a form-
by-form basis is not an appropriate measurement of taxpayer burden. The
new model, which takes into account broader and more comprehensive
taxpayer characteristics and activities, provides a much more accurate
and useful estimate of taxpayer burden.
Currently, there are 206 forms used by business taxpayers. These
include Forms 1065, 1065-B, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-
ND, 1120-S, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC,
1120-POL, and their schedules and all the forms business entity
taxpayers attach to their tax returns (see the Appendix to this
notice). For most of these forms, IRS has in the past obtained separate
OMB approvals under unique OMB Control Numbers and separate burden
estimates.
The BTBM estimates the aggregate burden imposed on business
taxpayers, based upon their tax-related characteristics and activities.
IRS therefore will seek OMB approval of all 206 business-related tax
forms as a single ``collection of information.'' The aggregate burden
of these tax forms will be accounted for under OMB Control Number 1545-
0123, which is currently assigned to Form 1120 and its schedules. OMB
Control Number 1545-0123 will be displayed on all business tax forms
and other information collections. As a result of this change, burden
estimates for business taxpayers will now be displayed differently in
PRA Notices on tax forms and other information collections, and in
Federal Register notices. This new way of displaying burden is
presented below under the heading ``Proposed PRA Submission to OMB.''
Because 44 of the 206 forms used by business taxpayers are also used by
tax-exempt organizations, trusts and estates and other kinds of
taxpayers, there will be a transition period during which IRS will
report different burden estimates for individual taxpayers (OMB Control
Number 1545-0074), business taxpayers (OMB Control Number 1545-0123),
and another OMB Control Number for other taxpayers using the same
forms. For
[[Page 66744]]
those forms covered under OMB Control Numbers 1545-0074 and/or 1545-
0123 and also used by other taxpayers, IRS will display the OMB Control
Number related to the other filers on the form and provide the burden
estimate for those taxpayers in the form instructions. The form
instructions will refer readers to the burden estimates for individual
and/or business taxpayers, as applicable. The burden estimates for
business taxpayers will be reported and accounted for as described in
this notice. The burden estimates for individual taxpayers will
continue to be reported and accounted for under OMB Control Number
1545-0074 using a method similar to the method described in this
notice. The burden estimates for other users of these forms will be
determined under prior methodology based on form length and complexity.
New Burden Model
Data from the new BTBM revise the estimates of the levels of burden
experienced by business taxpayers when complying with the federal tax
laws. It replaces the earlier burden measurement developed in the mid-
1980s. Since that time, improved technology and modeling sophistication
have enabled the IRS to improve the burden estimates. The new model
provides taxpayers and the IRS with a more comprehensive understanding
of the current levels of taxpayer burden. It reflects major changes
over the past two decades in the way taxpayers prepare and file their
returns. The new BTBM also represents a substantial step forward in the
IRS's ability to assess likely impacts of administrative and
legislative changes on business taxpayers.
The BTBM's approach to measuring burden focuses on the
characteristics and activities of business taxpayers rather than the
forms they use. Key determinants of taxpayer burden in the model are
the type of entity, total assets, total receipts, and activities
reported on the tax return (income, deductions, credits, etc). In
contrast, the previous estimates primarily focused on the length and
complexity of each tax form. The changes between the old and new burden
estimates are due to the improved ability of the new methodology to
measure burden and the expanded scope of what is measured. These
changes create a one-time shift in the estimate of burden levels that
reflects the better measurement of the new model. The differences in
estimates between the models do not reflect any change in the actual
burden experienced by taxpayers. Comparisons should not be made between
these and the earlier published estimates, because the models measure
burden in different ways.
Methodology
Burden is defined as the time and out-of-pocket costs incurred by
taxpayers to comply with the federal tax system. As has been done for
individual taxpayer burden since 2005, both the time expended and the
out-of-pocket costs for business taxpayers are estimated. The burden
estimation methodology relies on surveys that measure time and out-of-
pocket costs that taxpayers spend on pre-filing and filing activities.
The methodology establishes econometric relationships between tax
return characteristics and reported compliance costs. The methodology
controls for the substitution of time and money by monetizing time and
reporting total compliance costs in dollars. This methodology better
reflects taxpayer compliance burden, because in a world of electronic
tax preparation, time and out-of-pocket costs are governed by the
information required rather than the form on which it is ultimately
reported. Importantly, even where various businesses complete the same
tax form lines, the new methodology differentiates the cost incurred to
complete those forms based on characteristics of those businesses. Key
business characteristics that serve as coefficients in the BTBM are:
Entity type.
Total assets.
Total receipts.
Return complexity.
The new model uses the following classifications of business
taxpayers:
Partnerships (Forms 1065, 1065-B, 1066).
Taxable corporations (Forms 1120, 1120-C, 1120-F, 1120-H,
1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL).
Pass-through corporations (Forms 1120-REIT, 1120-RIC,
1120-S).
Each classification is further refined to separate large and small
businesses, where a large business is generally defined as one having
end of year assets totaling more than $10 million.
Taxpayer Burden Estimates
Tables 1, 2, and 3 below show the burden model estimates for each
of the three classifications of business taxpayers. The data shown are
the best estimates for 2013 business entity income tax returns
available as of February 2016. The estimates are subject to change as
new forms and data become available.
Proposed PRA Submission to OMB
Title: U.S. Business Income Tax Return.
OMB Number: 1545-0123.
Form Numbers: Forms 1065, 1065-B, 1066, 1120, 1120-C, 1120-F, 1120-
H, 1120-ND, 1120-S, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT,
1120-RIC, 1120-POL and all attachments to these forms (see the Appendix
to this notice).
Abstract: These forms are used by businesses to report their income
tax liability. The data is used to verify that the items reported on
the forms are correct, and also for general statistics use.
Current Actions: Changes are being made to the forms and the method
of burden computation.
Type of Review: Extension of currently approved collections.
Affected Public: Businesses.
Estimated Number of Respondents: 10,900,000.
Total Estimated Time: 2.997 billion hours.
Estimated Time per Respondent: 275 hours.
Total Estimated Out-of-Pocket Costs: $52.56 billion.
Estimated Out-of-Pocket Cost per Respondent: $4,822.
Note: Amounts below are for FY2015. Reported time and cost
burdens are national averages and do not necessarily reflect a
``typical'' case. Most taxpayers experience lower than average
burden, with taxpayer burden varying considerably by taxpayer type.
Detail may not add due to rounding.
Table 1
----------------------------------------------------------------------------------------------------------------
Burden
Primary form filed or type of taxpayer Number of returns -------------------------------------
(millions) Average time Average cost
----------------------------------------------------------------------------------------------------------------
All Partnerships....................................... 3.9 290 5,700
Small.................................................. 3.7 270 4,400
[[Page 66745]]
Large *................................................ 0.2 610 29,000
----------------------------------------------------------------------------------------------------------------
Forms 1065, 1065-B, 1066 and all attachments.
Table 2
----------------------------------------------------------------------------------------------------------------
Burden
Primary form filed or type of taxpayer Number of returns -------------------------------------
(millions) Average time Average cost
----------------------------------------------------------------------------------------------------------------
All Taxable Corporations............................... 2.1 315 6,300
Small.................................................. 2.0 280 4,000
Large *................................................ 0.1 1,250 68,900
----------------------------------------------------------------------------------------------------------------
Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL and all attachments.
Table 3
----------------------------------------------------------------------------------------------------------------
Burden
Primary form filed or type of taxpayer Number of returns -------------------------------------
(millions) Average time Average cost
----------------------------------------------------------------------------------------------------------------
All Pass-Through Corporations.......................... 4.9 245 3,500
Small.................................................. 4.8 240 3,100
Large **............................................... 0.1 610 30,800
----------------------------------------------------------------------------------------------------------------
Forms 1120-REIT, 1120-RIC, 1120-S and all attachments.
* A large business is defined as one having end of year assets greater than $10 million.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB Control Number.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Request for Comments
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (a) Whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information to be collected; (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology; and (e) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
Approved: September 19, 2016.
Allan Hopkins,
Tax Analyst.
[FR Doc. 2016-23424 Filed 9-27-16; 8:45 am]
BILLING CODE 4830-01-P
