2019-05-13_SS_1545-0115rSC

SUPPORTING STATEMENT

Internal Revenue Service

Miscellaneous Income

Form 1099-MISC

OMB Control No. 1545-0115

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Section 6041 of the Internal revenue Code requires an information return to be filed for payments of $600 or more in rents, prizes and awards (but not for services rendered),medical payments by health insurers, nonemployee compensation and crop insurance proceeds and any amount of fishing boat proceeds. $10 or more of royalties, certain substitute payments, golden parachute payments, and an indication of direct sales of $5,000 or more Form 1099-MISC is used to report all of these payments. You also must file Form 1099- MISC for each person from whom you have withheld any federal income tax, under the backup withholding rules regardless of the amount of the payment.

2. USE OF DATA

IRS uses the information to verify compliance with the reporting rules and to verify that the recipient has included the proper amount of income on his or her income tax return.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Form 1099-MISC is electronically enabled.

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

This collection has no impact on small businesses or entities . The recordkeeping/reporting requirement is considered to be the minimum necessary to insure compliance with existing regulations under §301.6041-1.   

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

Form 1099-MISC, Miscellaneous Income, reflects the annual reporting of income from section 6041. If reported less frequently, the agency could not to verify compliance with the reporting rules, nor verify that the recipient has included the proper amount of income on his or her income tax return.

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 04, 2019(84 FR 13392), we received no comments during the comment period regarding Form 1099-MISC.

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

RESPONDENTS

No payments 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 “Filing Information Returns Electronically (Fire)” system and a Privacy Act System of Records notices (SORN) has been issued for these systems under Treas./IRS 24.030-Customer Account Data Engine Individual Master File; and Treas./IRS 34.037–IRS Audit Trail and Security Records System. The Internal Revenue Service PIAs can be found at: https://www.irs.gov/uac/Privacy-Impact-Assessments-PIA. or at: https://www.irs.gov/pub/irs-pia/fire-pia.pdf.

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

Form 1099-MISC, under section 6041 requires information return be filed for payments of $600 or more in rents, prizes and awards (but not for services rendered), medical payments by health insurers, and nonemployee compensation, any fishing boat proceeds, and royalties of $10 or more to be reported.

It is anticipated that there will be 99,447,800 respondents that respond once with a response time of .18 minutes totaling 30,828,818 burden hours.

The burden estimate is as follows:

Form	Number of Respondents	Responses per Respondent	Annual Responses	Hours per Response	Total Burden
Form 1099-MISC	99,447,800	1	30,000	.31	30,828,818
Totals	99,447,800	1	30,000	.31	30,828,818

The following regulations impose no additional burden. Please continue to assign OMB number 1545-0115 to these regulations:

1.6041-1(a) 1.6041A-1

1.6041-1(d) 1.6045-2(a)

1.6041-1(e) 1.6045-2(f)

1.6041-1(g) 1.6050A-1

1.6041-4(a) 1.6050-2

1.6041-6

We have reviewed these regulations and have determined that the reporting requirements contained in them are entirely reflected on Form 1099-MISC. The justification appearing in Item 1 of Supporting Statement applies both to these regulations and to Form 1099-MISC.

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 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

After consultation with various functions within the Service, we have determined that the cost of developing, printing, processing distribution, and overhead for Instructions & Form 1099-MISC is $458,322.

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 startup 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 1099-MISC	$83,165		$337,170		$420,335
Instructions for 1099-MISC	$14,216		$23,771		$37,987
Total	$97,381.00		$360,941.00		$458,322.00
Table costs are based on 2018 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

There is no change to the form previously approved by OMB. There are changes to the burden due to adjustments in estimated number of respondents. We are making this submission for renewal purposes only.

	Requested	Program Change Due to New Statue	Program Change Due to Agency Discretion	Change Due to Adjustment in Agency Estimate	Change Due to Potential Violation of the PRA	Previously Approved
Annual Number of Responses for this IC	99,447,800	0	0	12,650,803	0	86,796,997
Annual IC Time Burden (Hours)	30,828,818	0	0	3,921,748	0	26,907,070

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

We believe 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 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.