2022 Supporting Statement 1545-1810

SUPPORTING STATEMENT

Internal Revenue Service

Form 8881, Credit for Small Employer Pension Plan Start-up Costs

OMB Control No. 1545-1810

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Form 8881 was created under section 619(a) of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16, provided for a new credit for small employers and expanded by sections 104 and 105 of the Further Consolidated Appropriations Act 2020, Public Law 116-94.

Eligible small employers use Form 8881, Part I, to claim the credit for qualified startup costs incurred in establishing or administering an eligible employer plan. The Part I credit is allowed under section 45E of the Internal Revenue Code (IRC). Part II, is used to claim the credit for first including an eligible automatic contribution arrangement in an eligible employer plan. The Part II credit is allowed under section 45T of the IRC.

2. USE OF DATA

The form is used by eligible employers to claim a credit for start up costs and retirement related education of employees regarding a new qualified retirement plan.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

We are offering electronic filing, with over 50% of respondents reporting electronically.

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 is no burden on small businesses or entities by this collection due to the inapplicability of the authorizing statute to this type of entity.

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

A less frequent collection would prevent the IRS from verifying eligible employers to claim a credit for start-up costs and retirement qualified retirement plan. This would affect the employer (taxpayer) and government in ensuring proper tax compliance.

1. 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).

7. 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 (86 FR 51955), dated September 17, 2021, we received no comments during the comment period regarding Form 8881.

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

No payment or gift has been provided to any respondents.

7. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

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

7. 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-Business Master File and IRS 34.037-Audit Trail and Security Records System.  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. 

7. ESTIMATED BURDEN OF INFORMATION COLLECTION

Burden estimation:

Authority Public Law	Document	# Respondents	# Responses Per Respondent	Annual Responses	Time Per Response	Total Burden
P.L. 107-16 Sec. 619(a)	Form 8881	66,667	1	66,667	4.74	316,002
Totals				66,667		316,002

7. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

There are no start-up costs associated with this collection.

7. 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 8881 & Instructions	16,097	+	0	=	16,097
Total	16,097	+	0	=	16,097
Table costs are based on 2021 actuals obtained from IRS Chief Financial Office and Media and Publications
* New product costs will be updated in the next revision of this collection.

7. REASONS FOR CHANGE IN BURDEN

There is a change in burden. The form added an additional 5 lines, to figure the increase in the credit limitation causing an increase in burden. The burden has increased from 235,335 to 316,002 (80,667).

	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	66,667	0	0	0	0	66,667
Annual Time Burden (Hrs.)	316,002	0	80,667	0	0	235,335

7. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

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

7. 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.

7. 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.