Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
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 individual taxpayers: Form 1040, U.S. Individual Income Tax Return, and Schedules A, B, C, C-EZ, D, E, EIC, F, H, J, R, and SE; Form 1040A; Form 1040EZ; Form 1040NR; Form 1040NR-EZ; Form 1040X; and all attachments to these forms (see the Appendix to this notice).
Written comments should be received on or before May 30, 2014 to be assured of consideration.
Direct all written comments to Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at OIRA_Submission@OMB.EOP.GOV and (2) Treasury PRA Clearance Officer, 1750 Pennsylvania Ave. NW., Suite 8140, Washington, DC 20220, or email at PRA@treasury.gov.
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PRA Approval of Forms Used by Individual Taxpayers
Under the PRA, OMB assigns a control number to each “collection of information” that it reviews and approves for use by an agency. The PRA also requires agencies to estimate the burden for each collection of information. Burden estimates for each control number are displayed in (1) PRA notices that accompany collections of information, (2) Federal Register notices such as this one, and (3) OMB's database of approved information collections.
Taxpayer Burden Model
The Individual Taxpayer Burden Model (ITBM) estimates burden experienced by individual taxpayers when complying with Federal tax laws and incorporates results from a survey of tax year 2011 individual taxpayers, conducted in 2012 and 2013. The approach to measuring burden focuses on the characteristics and activities undertaken by individual taxpayers in meeting their tax return filing obligations.
Burden is defined as the time and out-of-pocket costs incurred by taxpayers in complying with the Federal tax system and are estimated separately. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation fees, the purchase price of tax preparation software, submission fees, photocopying costs, postage, and phone calls (if not toll-free).
The methodology distinguishes among preparation method, taxpayer activities, taxpayer type, filing method, and income level. Indicators of tax law and administrative complexity, as reflected in the tax forms and instructions, are incorporated into the model.
Preparation methods reflected in the model are as follows:
- Self-prepared without software,
- Self-prepared with software, and
- Use of a paid preparer or tax professional.
Types of taxpayer activities reflected in the model are as follows:
- Tax planning,
- Gathering tax materials,
- Use of services (IRS and other),
- Form completion, and
- Form submission.
Taxpayer Burden Estimates
Summary level results using this methodology are presented in Table 1 below. The data shown are the best forward-looking estimates available for income tax returns filed for tax year 2013.
Table 1 shows burden estimates based on current statutory requirements as of November 21, 2013 for taxpayers filing a 2013 Form 1040, 1040A, or 1040EZ tax return. Time spent and out-of-pocket costs are presented separately. Time burden is broken out by taxpayer activity, with record keeping representing the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation Start Printed Page 24499and submission fees, postage and photocopying costs, and tax preparation software costs. While these estimates do not include burden associated with post-filing activities, IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower post-filing burden.
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. For instance, the estimated average time burden for all taxpayers filing a Form 1040, 1040A, or 1040EZ is 12 hours, with an average cost of $210 per return. This average includes all associated forms and schedules, across all preparation methods and taxpayer activities. The average burden for taxpayers filing Form 1040 is about 15 hours and $280; the average burden for taxpayers filing Form 1040A is about 7 hours and $90; and the average for Form 1040EZ filers is about 4 hours and $30.
Within each of these estimates there is significant variation in taxpayer activity. For example, non-business taxpayers are expected to have an average burden of about 7 hours and $120, while business taxpayers are expected to have an average burden of about 24 hours and $430. Similarly, tax preparation fees and other out-of-pocket costs vary extensively depending on the tax situation of the taxpayer, the type of software or professional preparer used, and the geographic location.
Proposed PRA Submission to OMB
Title: U.S. Individual Income Tax Return
OMB Number: 1545-0074.
Form Numbers: Form 1040 and Schedules A, B, C, C-EZ, D, D-1, E, EIC, F, H, J, R, and SE; Form 1040A; Form 1040EZ; Form 1040NR; Form 1040NR-EZ, Form 1040X; and all attachments to these forms (see the Appendix to this notice).
Abstract: These forms are used by individuals 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 statistical use.
Current Actions: The change in estimated aggregate compliance burden can be explained by three major sources—technical adjustments, statutory changes, and discretionary agency (IRS) actions.
Technical Adjustments—The largest adjustments are from incorporation of updated tax return data, macroeconomic data, and survey data as well as refinements in the estimation methodology. Updating the FY13 macroeconomic data and incorporating new tax return data lead to the largest technical adjustments. The impact of each technical adjustment can be seen below.
| ||Change in filers||Change in time||Change in dollars|
|Updated FY13 Macroeconomic Data||−3,100,000||−32,000,000||−762,000,000|
|Updated Tax Return Data||0||−53,000,000||−1,486,000,000|
|Updated Survey Data||0||6,000,000||1,063,000,000|
|FY14 Population Estimates||1,700,000||4,000,000||908,000,000|
Statutory Changes—The primary drivers of the statutory changes are the phaseout of itemized deductions (American Taxpayer Relief Act of 2012), the Net Investment Income Tax (Health Care and Education Reconciliation Act of 2010), and the Additional Medicare Tax (Patient Protection and Affordable Care Act of 2010). The estimated impact of these items is as follows:
| ||Expected filers||Change in hours||Change in dollars|
|Phaseout of Itemized Deductions||2,300,000||<500,000||21,000,000|
|Net Investment Income Tax||2,800,000||4,000,000||202,000,000|
|Additional Medicare Tax||3,100,000||3,000,000||129,000,000|
IRS Discretionary Changes—Introduction of the Office in the Home Safe Harbor impacts approximately 600,000 filers and decreases time by 1,600,000 hours (rounded to 2,000,000 hours) and money by $7,000,000. All other IRS discretionary changes had a negligible impact on taxpayer burden.
Total—Taken together, the changes discussed above have decreased total hours by 69,000,000 hours and increased total dollars by 68,000,000.
Type of Review: Revision of currently approved collections.
Affected Public: Individuals or households.
Estimated Number of Respondents: 152,900,000.
Total Estimated Time: 1.855 billion hours (1,855,000,000 hours).
Estimated Time per Respondent: 12.13 hours.
Total Estimated Out-of-Pocket Costs: $31.717 billion ($37,717,000,000).
Estimated Out-of-Pocket Cost per Respondent: $207.
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 content 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 Start Printed Page 24500technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Approved on April 25, 2014.
Treasury Departmental Clearance Officer.
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BILLING CODE 4830-01-P
[FR Doc. 2014-09819 Filed 4-29-14; 8:45 am]
BILLING CODE 4830-01-P