Supporting_Statement_1545-NEW_1099-K

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
This is a new form is in response to section 3091(a) of Public Law 110-289, the Housing Assistance Tax Act of 2008
(Div. C of the housing and economic Recovery Act of 2010). The form reflects payments made in settlement of
merchant card and third party network transactions for purchases of goods and/or services made with merchant cards
and through third party networks.

2. USE OF DATA
Form 1099-K will allow the capture of data that reports payments made in settlement of merchant card and third party
network transactions to be used to compare taxpayer-reported income on individual and corporate tax return forms with
data submitted by payment settlement entities.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
Upon approval, there are plans to offer electronic filing of Form 1099-K.

4. EFFORTS TO IDENTIFY DUPLICATION
We have attempted to eliminate duplication within the agency wherever possible. Payments that are reportable under
sections 6050W, 6041, and 6041A, are now reportable solely under section 6050W if they meet 6050W threshold
reporting requirements. If settlement payments do not meet the threshold for reporting under section 5060W, they will
continue to be reported under sections 6041 and 6041A, as appropriate.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
It has been certified that the regulations will not have a significant economic impact on a substantial number of small
entities. Parties required to report under section 6050W will be primarily banks with over $175 million in assets and
third partty settlement organizations, which require establishment of accounts with a central organization by a
substantial number of persons.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR
POLICY ACTIVITIES
Not applicable.

Form 14029 (Rev. 4-2009) Catalog Number 51944B Page 4

Department of the Treasury–Internal Revenue Service

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY
OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS,
AND DATA ELEMENTS
Periodic meetings are held between IRS personnel and representatives of the American Bar Association, the National
Society of Public Accountants, the American Institute of Certified Public Accountants, and other professional groups to
discuss tax law and tax forms. During these meetings, there is an opportunity for those attending to make comments
regarding Form 1099-K.
This new information collection request is being submitted as an emergency. The IRS published a Federal Register
notice on January 26, 2011 @ 76 FR 4744, soliciting public comments on this new collection, with the comment period
closing on March 28, 2011.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 U.S.C. 6103.

11. JUSTIFICATION OF SENSITIVE QUESTIONS
Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION
List the number of responses, time per response, and total burden for each form included in the submission.
Form
Responses
Response
Hours
1099-K
2000
18 minutes
620
Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide
information are not available at this time.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
After consultation with various functions within the Service, we have determined that the cost of developing,
printing, processing, distribution and overhead for the form is $500,000.

15. REASONS FOR CHANGE IN BURDEN
This is a new information reporting requirement based on legislative action on July 30,2008. Form 1099-K was created
to report payments made in settlement of merchant card and third party network transactions . This will result in a
burden increase of 620 hours and 2,000 responses.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
See attached.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB PRA SUBMISSION FORM
Not appliable.

19. REASON FOR EMERGENCY SUBMISSION
On July 30, 2008, as part of the Housing Assistance Tax Act of 2008, Div. C of the Housing and Economic Recovery
Act of 2008, Public Law (P.L.) 110-289, section 6050W of the Code was enacted, requiring the creation of the new
Form 1099-K. Delay in providing this form to the public, will prevent timely collection of information required by code
section 6050W, and will not allow taxpayers to perform the necessary adjustments to paper and computerized
record-keeping systems to report the information required by new code section 6050W and its’ regulations; which were
issued via Treasury Decision (T.D.) 9496 on August 16, 2010.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service