Supporting Statement_1545-0002

SUPPORTING STATEMENT

Internal Revenue Service

Employee Representative's Quarterly Railroad Tax Return

OMB # 1545-0002

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

The Railroad Retirement Tax Act imposes taxes on an employee representative, which are based on compensation. These taxes are comprised of Tier 1 and Tier 2 taxes. The amount of compensation subject to each tax is different.

The Tier 1 tax rate is 12.4%. It applies only to the first $137,700 paid to you during 2020 for services performed as an employee representative. The Tier 1 Medicare tax rate is 2.9%. It applies to all compensation paid to you during 2020 for services performed as an employee representative. The Tier 1 Additional Medicare Tax is 0.9%. It applies to compensation paid to you during 2020 that exceeds $200,000 for services performed as an employee representative.

The Tier 2 tax rate on employee representatives is 13.1%. It applies only to the first $102,300 paid to you during 2020 for services performed as an employee representative.

Internal Revenue Code section 3211 imposes three taxes on the compensation received by employee representatives. Section 31.6011(a)-2 of the Employment Tax Regulations requires the employee representative to file the return quarterly. Form CT-2 is used to report railroad retirement taxes imposed on compensation received by employee representatives.

2. USE OF DATA

IRS uses the data to ensure that the correct taxes are paid. IRS sends the duplicate copy of Form CT-2 to the Railroad Retirement Board for their use in reconciling amounts of earnings credited to earnings records against the amounts of earnings reported as taxable.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Due to the low number of filers, the IRS has no plans to offer electronic filing for this collection.

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

There are no small entities affected by this collection.

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

This form is used to report railroad retirement taxes imposed on compensation received by employee representatives. Less frequent collections of this information could create inconsistencies in reporting and verifying the proper amount of tax due on the compensation received.

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

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 meeting, there is an opportunity for those attending to make comments regarding Form CT-2.

In response to the Federal Register notice dated December 7, 2020 (85 FR 78936), we received no comments during the comment period regarding this collection effort.

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

There are no special circumstances requiring data collection to be inconsistent with Guidelines in 5 CFR 1320.5(d)(2).

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 http://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

Form CT-2 is used to report railroad retirement taxes imposed on compensation received by employee representatives. We estimate that the total burden for this requirement is 132 hours, based on 112 respondents and 1.17 hour per response.

OMB Collection	Authority	Form	Annual Responses	Hours per Response	Total Burden
1545-0002	31.6011	CT-2	112	1.17	132
	IRS TOTAL		112		132

Please continue to assign OMB number 1545-0002 to these regulations.

31.6011(a)-2

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

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. At the present time, the IRS estimates an annual cost of printing to be $42,649.

Product	Labor & Downstream Impact Costs		Print & Shipping Costs		Government Cost Estimate per Product
CT-2	$ 42,649		$ 0		$42,649
Grand Total	$ 42,649		$ 0		$42,649

15. REASONS FOR CHANGE IN BURDEN

There are no changes being made to the burden previously approved.

This submission is being made 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 form and / or 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 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 if 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.