Ss 1545-1430

SUPPORTING STATEMENT

Internal Revenue Service

Form 945, Annual Return of Withheld Federal Income Tax/Voucher;

Form 945-A, Annual Record of Federal Tax Liability;

Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund;

TD 8672, Reporting of Payroll withheld tax liabilities

OMB Control Number 1545-1430

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Internal Revenue Code (IRC) Section 3402(o)(1)(B) requires employers to deduct and withhold income tax from any payment of an annuity to an individual, if at the time the payment is made a request that such annuity be subject to withholdings.

IRC Section 3402(q) requires income tax withholding on gambling winnings. IRC Section 3402(r) requires income tax withholding on distributions of Indian gaming profits to tribal members. IRC Section 3402 also requires income tax withholding on retirement pay for service in the Armed Forces of the United States. IRC Section 3405 requires payers of pensions, annuities, and certain other deferred income to withhold income tax from most payments. IRC Section 3501 states that all these taxes will be collected by the Secretary and paid over to the U.S. Treasury.

Section 3406 of the IRC requires certain payers to withhold 31% of reportable payments if payees fail to furnish payers with the correct taxpayer identification number.

Section 6011 of the IRC and sections 31.6011(a)‑1, and 31.6011(a)‑4 of the Employment Tax Regulations require payers to report amounts withheld for income.

Title 26 Sections 31.6302(c)‑1, 2, & 3 of the regulations require employers to deposit the withheld income tax with an authorized depository within specified time limits.

Non-payroll income tax withholding is reported on Form 945, Annual Return of Withheld Federal Income Tax. These non-payroll items include backup withholding and withholding on pensions, annuities, IRAs, military retirement, and gambling winnings and Indian gaming profits.

The deposit requirements for Forms 945 and employment tax returns (e.g., Form 941) are separate, they cannot be combined. Although, the deposit rules for the two forms will be basically the same. Form 945 filers who deposit using the semiweekly deposit schedule will report their tax liabilities on Form 945‑A, Annual Record of Federal Tax Liability.

Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund is filed to correct income tax withholding and or backup withholding information previously reported on Form 945. Taxpayers can choose to either file a claim or an adjusted return of withheld federal income tax.

Form 945‑V, the Form 945 Payment Voucher, will be filed with Form 945 by those taxpayers whose total taxes for the year are less than $2500 and paying in full with timely filed return, or a monthly schedule depositor making a payment in accordance with the Accuracy of Deposits Rule, under section 11 of publication 15.

Final regulations (TD 8672), relates to the reporting of nonpayroll withheld income taxes under section 6011 of the Internal Revenue Code. These regulations require a person to file Form 945, Annual Return of Withheld Federal Income Tax, only for a calendar year in which the person is required to withhold Federal income tax from non-payroll payments. TD 8672 is the regulation that is manifested in Form 945 in this collection and the associated burden is accounted for in the Form 945.

2. USE OF DATA

The data is used by the Internal Revenue Service (IRS) to verify that the correct taxes have been paid.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Electronic filing of the 945 form series is currently available.

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 IRS proactively works with both internal and external stakeholders to minimize the burden on small businesses, while maintaining tax compliance. The Agency also seeks input regarding the burden estimates from the public via notices and tax product instructions. This information collection is for individual taxpayers; therefore, there will be minimal if any impact to small businesses.  The forms can be filed electronically, which further reduces any burden to small businesses.

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

Consequences of less frequent collection would result in the IRS beingunable to monitor compliance with the Federal tax rules related to the reporting and deposit of nonpayroll withheld income taxes under section 6011, thereby engendering the inability of the IRS to meet 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

We received no comments during the comment period in response to the Federal Register notice dated November 17, 2020, (85 FR 73352).

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

No payment or gift will be 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 “Business Master File (BMF)” system and a Privacy Act System of Records notice (SORN) has been issued for this system under IRS 24.046-Customer Account Data Engine Business Master File.  The Internal Revenue Service PIAs can be found at https://www.irs.gov/uac/Privacy-Impact-Assessments-PIA.

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 estimate is as follows:

Authority	Description	Number of Respondents	Number Responses per Respondent	Annual Responses		Average Hours per Response	Total Burden
IRC §§ 3402 and 6011	Forms 945/945-V and 945-A	57600	1		57600	6.89 hrs.	396864
IRC §§ 3402 and 6011	945-X	1718	1		1718	8.39 hrs.	14,414
Totals		59,318			59,318		411,278

The following regulations impose no additional burden. Please continue to assign OMB number 1545-1430 to these regulations.

31.3401(a)-1(b)(12) 31.6071(a)-1

31.6109-1 31.6413(a)-1

31.3401(a)(8)(A)(2) 31.6205-1

31.6001-6 31.6414-1(a)

31.6011(a)-6,7,8,9 31.6302-1,2,3

31.6011(b)-2 31.6313(a)-1

31.3402(r)-1

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

The primary cost to the government consists of the costs of printing, the forms. We estimate that the costs of printing the forms are $93,978.

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 945	$46,476		$2,543		$49,019
Instructions Form 945	$7,746		$1,065		$8,811
Form 945-A	$16,783		$0		$16,783
Form 945X	$13,903		$0		$13,903
Instructions for 945X	$5,462		$0		$5,462
Grand Total	$90,370		$3,608		$93,978
Table costs are based on 2020 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

Changes were made to the burden previously approved to update the estimated number of responses based on the most recent filing data. The annual number of responses requested is 59,318 (a decrease of 161,533 from the previously approved 220,851). No changes have been made to the form. The change in estimated responses results in an overall hourly decrease of 1,098,312 (current burden estimate is 411,278 and previously approved was 1,509,590). TD 8672 is the regulation that is manifested in Form 945 in this collection and the associated burden is accounted for in the Form 945.

	Requested	Program Change Due to New Statute	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	59,318	0	0	-161,533	0	220,851
Annual Time Burden (Hr.)	411,278	0	0	-1,098,312	0	1,509,590

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 form 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 for this collection.

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.