Supporting Statement

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Supporting Statement
Internal Revenue Service
(Form 8621) Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund
OMB No #1545-1002
                   

 1.  CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

A U.S. shareholder who invests in a foreign investment company must file Form 8621 to report income from that company or make an election to extend the time for payment of tax, and compute additional interest and tax on “excess distributions.” 
       
 2.  USE OF DATA 

The IRS uses Form 8621 to determine if the shareholder has correctly computed his or her income tax, has correctly elected computed any additional tax and interest.

 3.  USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

IRS has no plans at this time to offer electronic filing because of the low volume compared to the cost of electronic enabling.

 4.  EFFORTS TO IDENTIFY DUPLICATION

The information obtained through this collection is unique and is not already available for use or adaptation from another source.

 5.  METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES

The collection of information requirement will not have a significant economic impact on a substantial number of small entities.

 6.  CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES

If the Internal Revenue Service (IRS) did not collect this information, the IRS would not be able to determine if the shareholder has correctly computed his or her income tax, has correctly elected computed any additional tax and interest hindering the IRS in meeting its mission.


    7. 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).

    8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS

In response to the Federal Register notice dated March 19, 2018 (83 FR 12079), we received no comments during the comment period regarding Form 8621.

    9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS

No payment or gift has been provided to any respondents.  

10.  ASSURANCE OF CONFIDENTIALITY OF RESPONSES

Generally, tax returns and tax return information are confidential as required by 26 USC 6103.

11.  JUSTIFICATION OF SENSITIVE QUESTIONS

A privacy impact assessment (PIA) has been conducted for information collected under this request as part of the “Information Returns Processing (IRP)” and a Privacy Act System of Records notice (SORN) has been issued for these systems under Treasury/IRS 22.061 – Information Return Master File; Treasury/IRS 24.030 – CADE-Individual Master File; Treasury/IRS 34.037- IRS Audit Trail and Security Records System. The Department of Treasury PIAs can be found at http://www.treasury.gov/privacy/PIAs/Pages/default.aspx.

Title 26 USC 6109 requires inclusion of identifying numbers in returns, statements, or other documents for securing proper identification of persons required to make such returns, statements, or documents and is the authority for social security numbers (SSNs) in IRS systems.


12.  ESTIMATED BURDEN OF INFORMATION COLLECTION

The burden estimation is as follows:


	Authority
Description
      # of Respondents
#Responses per Respondent
Annual Responses
Hours per Response
Total Burden
    
    Secs. 1296
    and 1298
Form 8621
     1,333
1
1,333
48.99
65,304
     Total

     1,333 

   1,333
48.99
 65,304

The total number of burden estimate hours for non-individual   filer’s is reflected in 1545-1002, individual filer’s burden is under 1545-0074, and business filer’s burden is under 
1545-0123.  

    Estimates of annualized cost to respondents for the hour burdens shown above are not available at this   
    time.
  	
13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

To ensure more accuracy and consistency across its information collections, IRS is currently in the process of revising the methodology it uses to estimate burden and its costs. Once this methodology is complete, IRS will update this information collection to reflect a more precise  estimate of burden and costs.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

The Federal government cost estimate is based on a model that considers the following three cost factors for each information product: aggregate labor costs for development, including annualized start up expenses, operating and maintenance expenses, and distribution of the product that collects the information.  

The government computes cost using a multi-step process.  First, the government creates a weighted factor for the level of effort to create each information collection product based on variables such as; complexity, number of pages, type of product and frequency of revision.  Second, the total costs associated with developing the product such as labor cost, and operating expenses associated with the downstream impact such as support functions, are added together to obtain the aggregated total cost.  Then, the aggregated total cost and factor are multiplied together to obtain the aggregated cost per product.  Lastly, the aggregated cost per product is added to the cost of shipping and printing each product to IRS offices, National Distribution Center, libraries and other outlets. The result is the Government cost estimate per product.

The government cost estimate for this collection is summarized in the table below.

Product
Aggregate Cost per Product (factor applied)

Printing and Distribution

Government Cost Estimate per Product
Form 8621
11917
+
0
=
11917
Instructions 8621
3972
+
0
=
3972
Grand Total
15889



15889
Table costs are based on 2016 actuals obtained from IRS Chief Financial Office and Media and Publications
* New product costs will be included in the next collection update. 


15.  REASONS FOR CHANGE IN BURDEN

On page 1, in the identifying information section above Part I, we added a checkbox for a “Qualified Insurance Corporation Election” to reflect P.L. 115-97, section 14501.  


The above changes will result in a program change increase of 333 hours and a new total burden of 65,304 hours.

IRS is also making this submission for renewal purposes.

16.  PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

There are no plans for tabulation, statistical analysis and publication.

    17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE

	IRS believes that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulation sunsets 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.

    18. EXCEPTIONS TO THE CERTIFICATION STATEMENT

There are no exceptions to the certificate 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.