1545-2205_Supporting_Statement_OCT2012_REV

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
This 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.
In response to the Federal Register notice (77 FR 50210), dated August 20, 2012, we received no comments during
the comment period regarding this form.
A comment was received from the Information Reporting Program Advisory Committee (IRPAC) on March 28, 2011, in
response to IRS' solicition for comments. Comments received from IRPAC addressed concerns of section 6050W and
fall outside of the scope of the PRA.

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
20 minutes
680
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
As suggested by OMB, our Federal Register noticed dated August 20, 2012, requested public comments on estimates
of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and
costs of operation, maintenance, and purchase of services to provide information. However, we did not recieve any
response from taxpayers on this subject. As a result, estimates of the cost burdens 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
Box 2 has been reshaded and the words "Merchant category code" for reporting the most significant merchant
category code used when reporting payment transactions by merchant cards or third party payments have been
removed; Box 4 has been unshaded and the words "Federal income tax withheld" have been added for reporting
backup withholding under IRC 3406 for tax years beginning after December 31, 2011, and Boxes 6a-6c have been
added for reporting the three most significant merchant category codes for transactions reported on this form.
This change resulted in a increase of 60 burden hours attributed to program change due to agency discretion.

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
Not applicable.

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

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Department of the Treasury–Internal Revenue Service