[April 27, 2010] Proposed Collection; Comment Request for Form 1040 and Schedules A, B, C, C-EZ, D, D-1, E, EIC, F, H, J, R, and SE, Form 1040A, and Form 1040EZ, and All Attachments to These Forms Tweet Apr 27, 2010 (Treasury Department Documents and Publications/ContentWorks via COMTEX) -- 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 individual taxpayers: Form 1040, U.S. Individual Income Tax Return, and Schedules A, B, C, C-EZ, D, D-1, E, EIC, F, H, J, R, and SE; Form 1040A; Form 1040EZ; and all attachments to these forms (see the Appendix to this notice). DATES: Written comments should be received on or before May 27, 2010 to be assured of consideration. ADDRESSES: OIRA Desk Officer, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, [email protected]. FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to Chief, RAS:R:FSA, NCA 7th Floor, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224. mail to: SUPPLEMENTARY INFORMATION: 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. 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) OMB's database of approved information collections. The Individual Taxpayer Burden Model (ITBM) estimates burden experienced by individual taxpayers when complying with the Federal tax laws. The ITBM's approach to measuring burden focuses on the characteristics and activities of individual taxpayers in meeting their tax return filing compliance obligation. Key determinants of taxpayer burden in the model are the way the taxpayer prepares the return, e.g. with software or paid preparer, and the taxpayer's activities, e.g. recordkeeping and tax planning. Burden is defined as the time and out-of-pocket costs incurred by taxpayers in complying with the Federal tax system. Time expended and out-of-pocket costs incurred are estimated separately. The methodology distinguishes among preparation methods, taxpayer activities, types of individual taxpayer, filing methods, and income levels. Indicators of tax law and administrative complexity as reflected in tax forms and instructions are incorporated in the model. The preparation methods reflected in the model are: * Self-prepared without software. * Self-prepared with software. * Used a paid preparer. The types of taxpayer activities reflected in the model are: * Recordkeeping. * Form completion. * Form submission (electronic and paper). * Tax planning. * Use of services (IRS and paid professional). * Gathering tax materials. The methodology incorporates results from a new individual taxpayer survey for TY 2007 and conducted in CY 2008 and CY 2009. (Prior survey for TY 1999 and TY 2000 were conducted in CY 2000 and CY 2001). The new survey results capture the significant gains in productivity associated with the usage of tax preparation software and tax preparation services and large shifts in the population away from self preparation by hand towards use of the assisted methods (paid preparers and tax software). Summary level results using this methodology are presented in the table below. Taxpayer Burden Estimates Time spent and out-of-pocket costs are estimated separately. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples of out-of-pocket costs include tax return preparation and submission fees, postage, tax preparation software costs, photocopying costs, and phone calls (if not toll-free). Both time and cost burdens are national averages and do not necessarily reflect a "typical" case. For instance, the average time burden for all taxpayers filing a 1040, 1040A, or 1040EZ is estimated at 17.3 hours, with an average cost of $225 per return. This average includes all associated forms and schedules, across all preparation methods and all taxpayer activities. Taxpayers filing Form 1040 have an expected average burden of about 21.4 hours, and taxpayers filing Form 1040A and Form 1040EZ are expected to average about 8 hours. However, within each of these estimates, there is significant variation in taxpayer activity. Similarly, tax preparation fees vary extensively depending on the taxpayer's tax situation and issues, the type of professional preparer, and the geographic area. The data shown are the best forward-looking estimates available as of November 12, 2009, for income tax returns filed for 2009. The estimates are subject to change as new data become available. The estimates include burden for activities up through and including filing a return but do not include burden associated with post-filing activities. However, operational IRS data indicate that electronically prepared and e-filed returns have fewer arithmetic errors, implying a lower associated post-filing burden. Taxpayer Burden Model The table below shows burden estimates by form type and type of taxpayer. Time burden is further broken out by taxpayer activity. The largest component of time burden for all taxpayers is recordkeeping, as opposed to form completion and submission. In addition, the time burden associated with form completion and submission activities is closely tied to preparation method (self-prepared without software, self-prepared with software, and prepared by paid preparer). 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; 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 statistics use. Current Actions: The changes in aggregated compliance burden estimates can be explained in terms of three major components: Technical Adjustments, Statutory Changes, and Agency (IRS) Discretions. Technical Adjustments The largest adjustments are from the new survey data. The latest burden estimates are based on a new individual taxpayer survey for TY 2007 and conducted in CY 2008 and CY 2009. (Prior survey for TY 1999 and TY 2000 were conducted in CY 2000 and CY 2001). The new survey results capture the significant gains in productivity associated with the usage of tax preparation software and tax preparation services and large shifts in the population away from self preparation by hand towards use of the assisted methods (paid preparers and tax software). The economic recession in the past year also has a significant impact on burden estimates, reducing the filing volume and resulting in lower time and money burdens. The inclusion of Form 1040X has a significant positive impact on compliance burden estimates. The impact of including 1040X has actually out-weighted the impact of economic recession in terms of filing volume, but not in terms of burden changes (time and money). The burden associated with 1040X was not previously included in the aggregated burden estimates. Statutory Changes The primary drivers for the statutory changes are the American Recovery and Reinvestment Act (ARRA) of 2009 and related legislations. IRS Discretions Changes The IRS discretions changes include 1040X redesign, simplifications in filing Form 1099B/Schedule D/Form 1040, creation of Form 4506T-EZ, IRS support of the Free File Alliance, and changes to expand the eligibility of filing Form 3800 by individuals and businesses for general business credits. All these initiatives reduce time and money burdens for the taxpayers. These changes have resulted in an overall decrease of 86,792,628 total hours in taxpayer burden previously approved by OMB. Type of Review: Revision of currently approved collections. Affected Public: Individuals or households. Estimated Number of Respondents: 143,400,000. Total Estimated Time: 2.431 billion hours (2,431,000,000 hours). Estimated Time per Respondent: 17.3 hours. Total Estimated Out-of-Pocket Costs: $31.43 billion ($31,543,000,000). Estimated Out-of-Pocket Cost per Respondent: $225. 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 --This is a summary of a Federal Register article originally published on the page number listed below-- Notice and request for comments. Citation: "75 FR 22179" Federal Register Page Number: "22179" "Notices" [ Back To TMCnet.com's Homepage ]