E7-17232. 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 Schedules 1, 2, and 3, and Form 1040EZ, and All Attachments to These Forms

AGENCY:

Internal Revenue Service (IRS), Department of the 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 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 and Schedules 1, 2, and 3; Form 1040EZ; and all attachments to these forms (see the Appendix to this notice).

DATES:

Written comments should be received on or before October 30, 2007 to be assured of consideration.

ADDRESSES:

Direct all written comments to The OMB Unit, SE:W:CAR:MP:T:T:SP, Internal Revenue Service, Room 6129, 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 Chief, RAS:R:TSBR, NCA 7th Floor, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224, or through the Internet at [e-mail].

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. 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.

The Individual Taxpayer Burden Model (ITBM) estimates the levels of burden experienced by individual taxpayers when complying with the Federal tax laws. This model reflects major changes over the past two decades in the way taxpayers prepare and file their returns; more than 85 percent of all individual tax returns are prepared utilizing computer software, either by the taxpayer or a paid provider, and less than 15 are prepared manually. The ITBM's approach to measuring burden focuses on the characteristics and activities of individual taxpayers rather than the forms they use. 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 to comply with the Federal tax system. The time expended and the out-of-pocket costs are estimated separately. The methodology distinguishes among preparation methods, taxpayer activities, types of individual taxpayer, filing methods, and income levels.

Indicators of complexity in tax laws as reflected in tax forms and instructions are incorporated in the model. The preparation methods are:

• Self-prepared without software;
• Self-prepared with software;
• Used a paid preparer.

The types of taxpayer activities measured in the model are:

• Recordkeeping;
• Form completion;
• Form submission (electronic and paper);
• Tax planning (this activity completed at individual taxpayer discretion);
• Use of services (IRS and paid professional);
• Gathering tax materials.

The methodology incorporates results from a burden survey of 14,932 taxpayers conducted in 2000 and 2001, and estimates taxpayer burden based on those survey results. Summary level results using this methodology are presented in the table below.

Taxpayer Burden Estimates

Time burden is broken out by taxpayer activity. The largest component of time burden is record keeping at roughly 58 percent for all taxpayers, as opposed to form completion and submission at only about 14 percent. In addition, the time burden associated with form completion and submission activities are closely tied to preparation method. That is, these time burden estimates fluctuate according to preparation method.

Both time and cost average burdens are national averages, and do not necessarily reflect a “typical” case. The average time burden for all taxpayers filing a 1040, 1040A, or 1040EZ in 2006 was 26.5 hours, with an average cost of $207 per return. This average includes all associated forms and schedules, across all preparation methods and all taxpayer activities. Taxpayers filing Form 1040 had an average burden of 34.0 hours, and taxpayers filing Form 1040A and Form 1040EZ averaged 10.2 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 geographic area.

The data shown are the best estimates from tax returns filed for 2006 currently available as of July 20, 2007. The estimates are subject to change as new forms and data become available. The estimates do not include burden associated with post-filing activities. However, operational IRS data indicate that electronically prepared and e-filed returns have fewer errors, implying a lower overall post-filing burden.

Taxpayer Burden Model

The tables below show burden estimates by form type for Tax Years 2004, 2005, and 2006. The data are being presented for these three years because the 2006 estimates are based on an updated version of the ITBM. This updated version takes into account technical adjustments using improved data on taxpayer filing activities. Note that changes in burden reported for TY 2004 and 2005 versus prior published estimates, reflect not a change in actual burden but rather a change in methodology. Therefore, three years of data are presented below, based on the new methodology to show relative changes in burden over the past three years.

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 and Schedules 1, 2 and 3; 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: Changes are being made to some of the forms. These changes have resulted in an overall increase of 361,564,830 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: 133,912,900.

Total Estimated Time: 3.55 billion hours (3,548,691,850 hours).

Estimated Time per Respondent: 26.5 hours.

Total Estimated Out-of-Pocket Costs: $27.7 billion ($27,719,970,300).

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 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: August 27, 2007.

David C. Brown,

IRS Reports Clearance Officer.

Table 1.—Tax Year 2006 Taxpayer Burden Estimates for Individual Taxpayers, by Activity

Major form filed or type of taxpayer		Time burden (hours)						Money burden
	Percentage of returns	Average time						Average costs
		Average total time	Record keeping	Tax planning	Form completion	Form submission	All other
All Taxpayers	100	26.5	15.3	4.5	3.3	0.5	2.8	$207
Major Forms Filed
1040	68	34.0	20.3	5.9	3.8	0.6	3.4	268
1040A & 1040EZ	32	10.2	4.3	1.6	2.4	0.5	1.4	75
Type of Taxpayer
Wage and Investment	72	14.1	5.8	3.2	3.0	0.5	1.6	114
Self-Employed	28	58.1	39.5	7.9	4.3	0.7	5.8	444

Table 2.—Tax Year 2005 Taxpayer Burden Estimates for Individual Taxpayers, by Activity

Major form filed or type of taxpayer		Time burden (hours)						Money burden
	Percentage of returns	Average time						Average costs
		Average total time	Record keeping	Tax planning	Form completion	Form submission	All other
All Taxpayers	100	26.0	14.8	4.5	3.3	0.5	2.8	$195
Major Forms Filed
1040	68	33.4	19.8	5.9	3.7	0.6	3.4	253
1040A & 1040EZ	32	10.0	4.1	1.6	2.4	0.5	1.4	71
Type of Taxpayer
Wage and Investment	72	13.8	5.6	3.2	2.9	0.5	1.6	107
Self-Employed	28	57.0	38.4	7.9	4.2	0.7	5.8	420

Table 3.—Tax Year 2004 Taxpayer Burden Estimates for Individual Taxpayers, by Activity

Major form filed or type of taxpayer		Time burden (hours)						Money burden
	Percentage of returns	Average time						Average costs
		Average total time	Record keeping	Tax planning	Form completion	Form submission	All other
All Taxpayers	100	25.4	14.6	4.2	3.3	0.5	2.8	$185
Major Forms Filed
1040	68	32.5	19.5	5.4	3.7	0.6	3.4	242
1040A & 1040EZ	32	9.8	4.1	1.5	2.4	0.5	1.4	62
Type of Taxpayer
Wage and Investment	72	13.4	5.5	2.9	2.9	0.5	1.6	97
Self-Employed	28	55.8	37.9	7.3	4.2	0.7	5.7	408

Note:

Detail may not add to total because of rounding.

Appendix

Form	Filed by individuals and others	Title
1040		U.S. Individual Income Tax Return.
1040 A		U.S. Individual Income Tax Return.
1040 EZ		Income Tax Return for Single and Joint Filers With No Dependents.
1040 X		Amended U.S. Individual Income Tax Return.
1040 NR		U.S. Nonresident Alien Income Tax Return.
1040 NR-EZ		U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents.
926	X	Return by a U.S. Transferor of Property to a Foreign Corporation.
970	X	Application To Use LIFO Inventory Method.
972	X	Consent of Shareholder To Include Specific Amount in Gross Income.
982	X	Reduction of Tax Attributes Due To Discharge of Indebtedness (and Section 1082 Basis Adjustment).
1040 A-SCH 1		Interest and Ordinary Dividends for Form 1040A Filers.
1040 A-SCH 2		Child and Dependent Care Expenses for Form 1040A Filers.
1040 A-SCH 3		Credit for the Elderly or the Disabled+F66 for Form 1040A Filers.
1040 ES-E		Estimated Tax for Individuals.
1040 ES-OCR		Estimated Tax for Individuals (Optical Character Recognition Without Form 1040V).
1040 ES-OCR-V		Payment Voucher.
1040 ES-OTC		Estimated Tax for Individuals.
1040 ES/V-OCR		Estimated Tax for Individuals (Optical Character Recognition With Form 1040V)
1040 SCH A		Itemized Deductions.
1040 SCH B		Interest and Ordinary Dividends.
1040 SCH C	X	Profit or Loss From Business.
1040 SCH C-EZ	X	Net Profit From Business.
1040 SCH D		Capital Gains and Losses.
1040 SCH D-1		Continuation Sheet for Schedule D.
1040 SCH E	X	Supplemental Income and Loss.
1040 SCH EIC		Earned Income Credit.
1040 SCH F	X	Profit or Loss From Farming.
1040 SCH H	X	Household Employment Taxes.
1040 SCH J		Income Averaging for Farmers and Fishermen.
1040 SCH R		Credit for the Elderly or the Disabled.
1040 SCH SE		Self-Employment Tax.
1040 V		Payment Voucher.
1040 V-OCR		Payment Voucher.
1040 V-OCR-ES		Payment Voucher.
1045	X	Application for Tentative Refund.
1116	X	Foreign Tax Credit.
1128	X	Application To Adopt, Change, or Retain a Tax Year.
1310		Statement of Person Claiming Refund Due a Deceased Taxpayer.
2106 EZ		Unreimbursed Employee Business Expenses.
2106		Employee Business Expenses.
2120		Multiple Support Declaration.
2210 F	X	Underpayment of Estimated Tax by Farmers and Fishermen.
2210	X	Underpayment of Estimated Tax by Individuals, Estates, and Trusts.
2350		Application for Extension of Time To File U.S. Income Tax Return.
2439	X	Notice to Shareholder of Undistributed Long-Term Capital Gains.
2441		Child and Dependent Care Expenses.
2555 EZ		Foreign Earned Income Exclusion.
2555		Foreign Earned Income.
2848	X	Power of Attorney and Declaration of Representative.
3115	X	Application for Change in Accounting Method.
3468	X	Investment Credit.
3520	X	Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.
3800	X	General Business Credit.
3903		Moving Expenses.
4029		Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits.
4070 A		Employee's Daily Record of Tips.
4070		Employee's Report of Tips to Employer.
4137		Social Security and Medicare Tax on Unreported Tip Income.
4136	X	Credit for Federal Tax Paid On Fuels.
4255	X	Recapture of Investment Credit.
4361		Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners.
4562	X	Depreciation and Amortization.
4563		Exclusion of Income for Bona Fide Residents of American Samoa.
4684	X	Casualties and Thefts.
4797	X	Sales of Business Property.
4835		Farm Rental Income and Expenses.
4852		Substitute for Form W-2 or Form 1099-R.
4868		Application for Automatic Extension of Time To File Individual U.S. Income Tax Return.
4952	X	Investment Interest Expense Deduction.
4970	X	Tax on Accumulation Distribution of Trusts.
4972	X	Tax on Lump-Sum Distributions.
5074		Allocation of Individual Income Tax To Guam or the Commonwealth of the Northern Mariana Islands (CNMI).
5213	X	Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit.
5329		Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.
5471 SCH J	X	Accumulated Earnings and Profits (E&P) of Controlled Foreign Corporation.
5471 SCH M	X	Transactions Between Controlled Foreign Corporation and Shareholders or Other Related Persons.
5471 SCH N	X	Return of Officers, Directors, and 10%-or-More Shareholders of a Foreign Person Holding Company.
5471 SCH O	X	Organization or Reorganization of Foreign Corporation, and Acquisitions and Dispositions of Its Stock.
5471	X	Information Return of U.S. Persons With Respect To Certain Foreign Corporations.
5713 SCH A	X	International Boycott Factor (Section 999(c)(1)).
5713 SCH B	X	Specifically Attributable Taxes and Income (Section 999(c)(2)).
5713 SCH C	X	Tax Effect of the International Boycott Provisions.
5713	X	International Boycott Report.
5754	X	Statement by Person(s) Receiving Gambling Winnings.
5884	X	Work Opportunity Credit.
6198	X	At-Risk Limitations.
6251		Alternative Minimum Tax—Individuals.
6252	X	Installment Sale Income.
6478	X	Credit for Alcohol Used as Fuel.
6765	X	Credit for Increasing Research Activities.
8082	X	Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR).
6781	X	Gains and Losses From Section 1256 Contracts and Straddles.
8271	X	Investor Reporting of Tax Shelter Registration Number.
8275 R	X	Regulation Disclosure Statement.
8275	X	Disclosure Statement.
8283	X	Noncash Charitable Contributions.
8332		Release of Claim to Exemption for Child of Divorced or Separated Parents.
8379		Injured Spouse Claim and Allocation.
8396		Mortgage Interest Credit.
8453 OL		U.S. Individual Income Tax Declaration for an IRS e-file Online Return.
8453		U.S. Individual Income Tax Declaration for an IRS e-file Return.
8582 CR	X	Passive Activity Credit Limitations.
8582	X	Passive Activity Loss Limitations.
8586	X	Low-Income Housing Credit.
8594	X	Asset Acquisition Statement.
8606		Nondeductible IRAs.
8609 SCH A	X	Annual Statement.
8611	X	Recapture of Low-Income Housing Credit.
8615		Tax for Children Under Age 14 With Investment Income of More Than $1,600.
8621 A	X	Return by a Shareholder Making Certain Late Elections to End Treatment as a Passive Foreign Investment Company.
8621	X	Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.
8689		Allocation of Individual Income Tax To the Virgin Islands.
8693	X	Low-Income Housing Credit Disposition Bond.
8697	X	Interest Computation Under the Look-Back Method for Completed Long-Term Contracts.
8801	X	Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts.
8812		Additional Child Tax Credit.
8814		Parents' Election To Report Child's Interest and Dividends.
8815		Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989.
8818		Optional Form To Record Redemption of Series EE and I U.S. Savings Bonds Issued After 1989.
8820	X	Orphan Drug Credit.
8821	X	Tax Information Authorization.
8822	X	Change of Address.
8824	X	Like-Kind Exchanges.
8826	X	Disabled Access Credit.
8828		Recapture of Federal Mortgage Subsidy.
8829		Expenses for Business Use of Your Home.
8830	X	Enhanced Oil Recovery Credit.
8832	X	Entity Classification Election.
8833	X	Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).
8834	X	Qualified Electric Vehicle Credit.
8835	X	Renewable Electricity and Refined Coal Production Credit.
8836 SCH A		Third Party Affidavit.
8836 SCH B		Third Party Affidavit.
8836 SP		Comprobante de Residencia para los Hijos(as) Calificados(as).
8836 SP-SCH A		Declaracion Jurada del Tercero.
8836 SP-SCH B		Declaracion Jurada del Tercero.
8836		Qualifying Children Residency Statement.
8838	X	Consent To Extend the Time To Assess Tax Under Section 367—Gain Recognition Statement.
8839		Qualified Adoption Expenses.
8840		Closer Connection Exception Statement for Aliens.
8843		Statement for Exempt Individuals and Individuals With a Medical Condition.
8844	X	Empowerment Zone and Renewal Community Employment Credit.
8845	X	Indian Employment Credit.
8846	X	Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.
8847	X	Credit for Contributions to Selected Community Development Corporations.
8853		Archer MSAs and Long-Term Care Insurance Contracts.
8854		Initial and Annual Expatriation Information Statement.
8858	X	Information Return of U.S. Persons With Respect to Foreign Disregarded Entities.
8858 SCH M	X	Transactions Between Controlled Foreign Disregarded Entity and Filer or Other Related Entities.
8859		District of Columbia First-Time Homebuyer Credit.
8860	X	Qualified Zone Academy Bond Credit.
8861	X	Welfare-to-Work Credit.
8862		Information to Claim Earned Income Credit After Disallowance.
8863		Education Credits.
8864	X	Biodiesel Fuels Credit.
8865 SCH K-1	X	Partner's Share of Income, Credits, Deductions, etc.
8865 SCH O	X	Transfer of Property to a Foreign Partnership.
8865 SCH P	X	Acquisitions, Dispositions, and Changes of Interests in a Foreign Partnership.
8865	X	Return of U.S. Persons With Respect To Certain Foreign Partnerships.
8866	X	Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forcast Method.
8873	X	Extraterritorial Income Exclusion.
8874	X	New Markets Credit.
8878 SP		Autorizacion de firma para presentar por medio del IRS e-file—Solicitud de prorroga del plazo.
8878		IRS e-file Signature Authorization for Application for Extension of Time to File.
8879 SP		Autorizacion de firma para presentar por medio del IRS e-file.
8879		IRS e-file Signature Authorization.
8880		Credit for Qualified Retirement Savings Contributions.
8881	X	Credit for Small Employer Pension Plan Startup Costs.
8882	X	Credit for Employer-Provided Childcare Facilities and Services.
8885		Health Coverage Tax Credit.
8886	X	Reportable Transaction Disclosure Statement.
8889		Health Savings Accounts (HSAs).
8891		U.S. Information Return for Beneficiaries of Certain Cana
8896	X	Low Sulfur Diesel Fuel Production Credit.
8898		Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession.
8900	X	Qualified Railroad Track Maintenance Credit.
8901		Information on Qualifying Children Who Are Not Dependents (For Child Tax Credit Only).
8903	X	Domestic Production Activities Deduction.
9465 SP		Peticion para un Plan de Pagos a Plazos.
9465		Installment Agreement Request.
SS-4	X	Application for Employer Identification Number.
SS-8	X	Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
T (Timber)	X	Forest Activities Schedules.
W-4 P		Withholding Certificate for Pension or Annuity Payments.
W-4 S		Request for Federal Income Tax Withholding From Sick Pay.
W-4 SP		Certificado de descuentos del(la) empleado(a) para la retencion.
W-4 V		Voluntary Withholding Request.
W-4		Employee's Withholding Allowance Certificate.
W-5 SP		Certificado del pago por adelantado del Credito por Ingreso del Trabajo.
W-5		Earned Income Credit Advance Payment Certificate.
W-7 A		Application for Taxpayer Identification Number for Pending U.S. Adoptions.
W-7 SP		Solicitud de Numero de Identicacion Personal del Contribuyente el Servicio de Impuestos Internos.
W-7		Application for IRS Individual Taxpayer Identification Number.
Notice 160920-05		Deduction for Energy Efficient Commercial Buildings.
8906		Distills Spirits Credit.
8908		Energy Efficient Home Credit.
8910		Alternative Motor Vehicle Credit.
8911		Alternative Fuel Vehicle Refueling Property Credit.
8914		Exemption Amount For Taxpayers Housing Individuals Displaced by Hurricane Katrina.
8915		Qualified Hurricane Retirement Plan Distribution and Repayments.
1040ES (NR)		U.S. Estimated Tax for Nonresident Alien Individuals.
2350 SP		Solicitud de Prorroga para Presentar la Declaración del Impuesto sobre el Ingreso de los Estados Unidos.
4868 SP		Solicitud de Prorroga Automatica para Presentar la Declaracion del Impuesto sobre el Ingreso Personal de los Estados Unidos.
5695		Residential Energy Credits.
8888		Direct Deposit of Refund to More Than One Account.
8907		Nonconventional Source Fuel Credit.
8913	X	Credit For Federal Telephone Excise Tax Paid.
8919		Uncollected Social Security and Medicare Tax on Wages.