SUPPORTING STATEMENT
OMB#1545-1617
REG-124069-02 (Final) Section 6038 - Returns Required with Respect to Controlled Foreign Partnerships; REG-118966-97 (Final) Information Reporting with Respect to Certain Foreign Partnership
CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
REG-118966-97
Section 6038 of the Code requires controlling partners of foreign partnerships and certain shareholders of foreign corporations to furnish information reports to the Service. Section 6038(a)(5) gives the Service authority to require similar information reporting from 10-percent partners of foreign partnerships which are controlled by U.S. persons holding at least 10‑percent interests.
Section 6038(a)(3) limits reporting until the Service prescribes the time and manner of reporting. Section 6038(d) gives the Secretary the authority to allow one information report in cases where two or more United States persons would be required to report.
The regulations prescribe the time and manner of reporting under section 6038. In addition, the regulations exercise the Service's authority to require reporting for certain 10‑percent partners in controlled foreign partnerships.
REG-124069-02
Section 6038 of the Code requires information reporting by certain U.S. partners with interests in controlled foreign partnerships.
Treas. Reg. § 1.6038-3 provides that a U.S. person, which owns a 10% or greater interest in a controlled foreign partnership, must annually report information relating to that foreign partnership on Form 8865 (OMB#1545-1668), “Return of U.S. Persons with Respect to Certain Foreign Partnership.”
Treas. Reg. § 1.6038-3 sets forth detailed reporting requirements for filing Form 8865 when the foreign partnership is also required to file Form 1065 (OMB#1545-0099), U.S. Return of Partnership Income. However, this rule does not directly address the filing requirements for Form 8865, when a United States partner files electronically its income tax return (including any attachments such as Form 8865).
Treas. Reg. § 1.6038-3 provides that a United States partner must follow the filing requirements that are specified in the instructions for Form 8865 when the United States partner must file Form 8865 and the foreign partnership completes and files Form 1065 or Form 1065-B(OMB#1545-0123), U.S. Return for Electing Large Partnerships. This amendment would facilitate revisions to the filing requirements for Form 8865, (such as electronic filing of Form 8865).
USE OF DATA
This information is required by the IRS to identify foreign partnerships and foreign corporations which are controlled by United States persons.
USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
IRS Publications, Regulations, Notices and Letters are to be electronically enabled on an as practicable basis in accordance with the IRS Reform and Restructuring Act of 1998.
EFFORTS TO IDENTIFY DUPLICATION
We have attempted to eliminate duplication within the agency wherever possible.
METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
There are no methods to minimize burden on small businesses or other small entities.
CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES.
Consequences of less frequent collection on federal programs or policy activities would result in taxpayers attempting to duplicate filing requirements.
SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
There are no special circumstances requiring data collection to be inconsistent with Guidelines in 5 CFR 1320.5(d)(2).
CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS
REG-118966-97
A notice of proposed rulemaking (REG‑118966‑97) was published in the Federal Register on September 9, 1998 (63 FR 48144). A public hearing was held on November 10, 1998. After consideration of all written comments, a final regulation was published in the Federal Register on December 28, 1999 (64 FR 72545).
REG-124069-02
A notice of proposed rulemaking (67 FR 78202) was published simultaneously with the temporary regulations (67 FR 78202) in the Federal Register on December 23, 2002. A final regulation was published.
We received no comments during the comment period in response to the Federal Register notice dated July 27, 2015 (80 FR 44430).
EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
No payment or gift has been provided to any respondents.
ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 USC 6103.
JUSTIFICATION OF SENSITIVE QUESTIONS
No personally identifiable information (PII) is collected.
ESTIMATED BURDEN OF INFORMATION COLLECTION
REG-118966-97
Section 1.6038‑3(a) requires that every United States person that controls a foreign partnership must complete and file an annual information return on Form 8865 (Information Return of U.S. Persons With Respect to Certain Foreign Partnerships). The burden of complying with the reporting requirement will be reflected on Form 8865.
Section 1.6038‑3(c)(4) requires that a United States person who does not furnish an information return must file a statement with the person's income tax return indicating that the filing requirement has been or will be satisfied, identifying the person who has or will file the return, identifying the IRS Service Center where the return was or will be filed, and providing any additional information as Form 8865 (or a replacement form) and the accompanying instructions may require. We estimate that 600 taxpayers will be required to comply with the proposed collection of information under 1.6038‑3(c)(4). We estimate that it will take approximately .83 hours, on average, to comply with the reporting requirement. The total burden for this reporting requirement is 500 hours.
REG-124069-02
The final regulation amends Treas. Reg. § 1.6038‑3 to provide that a United States partner must follow the filing requirements that are specified in the instructions for Form 8865 when the United States partner must file Form 8865 and the foreign partnership completes and files Form 1065 or Form 1065‑B.
ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
There are no capital/start-up or ongoing operation/ maintenance cost associated with this information collection.
ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
There are no estimated annualized costs to the federal government.
REASONS FOR CHANGE IN BURDEN
This request is for the reinstatement of an expired information collection. There is no actual change in burden.
PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
There are no plans for tabulation, statistical analysis and publication.
REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
We believe that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulations sunset as of the expiration date. Taxpayers are not likely to be aware that the Service intends to request renewal of the OMB approval and obtain a new expiration date before the old one expires.
EXCEPTIONS TO THE CERTIFICATION STATEMENT
There are no exceptions to the certification statement.
Note: The following paragraph applies to all of the collections of information in this submission:
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.
| File Type | application/msword |
| File Title | #1545-1617 supporting statement |
| Author | Internal Revenue Service |
| Last Modified By | Department of Treasury |
| File Modified | 2016-05-02 |
| File Created | 2016-04-12 |