SUP STAT (1545-2157) - clean

SUPPORTING STATEMENT

Internal Revenue Service

TD 9605, Payout Requirements for Type III Supporting Organizations That Are Not Functionally Integrated

OMB Control Number 1545-2157

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Internal Revenue Code (IRC) Section 509(f)(1) requires a Type III supporting organization to provide to each of its supported organizations such information as the Secretary may require to ensure that the Type III supporting organization is responsive to the needs or demands of its supported organization(s). Treasury Decision (TD) 9605 contains both final regulations and temporary regulations regarding the requirements to qualify as a Type III supporting organization that is operated in connection with one or more supported organizations. The regulations reflect changes to the law made by the Pension Protection Act of 2006. The regulations affect Type III supporting organizations and their supported organizations. The collections of information are in Treasury Regulations sectino1.509(a)-4(i)(2)(iii) and 1.509(a)–4(i)(6)(v).

To implement this provision, the regulations require that each taxable year, a Type III supporting organization must provide to each of its supported organizations: (A) a written notice addressed to a principal officer of the supported organization identifying the supporting organization and describing the amount and type of support it provided to the supported organization in the past year; (B) a copy of the supporting organization’s most recently filed Form 990; and (C) a copy of the supporting organization’s governing documents, including any amendments. Copies of governing documents need only be provided once. The regulations provide that the required notice and documents may be delivered by electronic media. Organizations must satisfy the notification requirement to qualify as a Type III supporting organization and should, therefore, retain proof of delivery in their records.

2. USE OF DATA

The information will be used as a tool by a supported organization to ensure that its supporting organizations are responsive to its needs. Additionally, a supporting organization will be required to maintain copies of these statements so that it can prove to the IRS that it is an organization that qualifies as a Type III supporting organization under IRC section 509(f)(1).

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

This is a third-party disclosure requirement between Type III supporting organizations and their supported organizations, thus there is no information being reported to IRS. The regulations do permit this disclosure to be transmitted 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. This is a specific requirement of Congress and is not duplicative of any other requirement of a Type III supporting organization. The notification requirements for Type III supporting organization must be made “for each taxable year.”

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

The regulation is not able to provide any flexibility for small entities. Further, the regulations will not impact a substantial number of small entities. The collection of information under Treasury Regulations section 1.509(a)–4(i)(2) will impose a minimal burden on the affected organizations because all of the information that must be provided is information that the organizations are already required to maintain.

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

Consequences of less frequent collection would result in the IRS not being able to verify the requirements that it is an organization that qualifies as a Type III supporting organization under IRC section 509(f)(1).

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 April 10, 2024 (89 FR 25329), IRS received no comments during the comment period regarding TD 9605.

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

No gifts or payments are being 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

No sensitive personally identifiable information is being collected by the agency. This is a third-party disclosure requirement. 

12. ESTIMATED BURDEN OF INFORMATION COLLECTION

The collection of information under Treasury Regulations section 1.509(a)–4(i)(2) flows from IRC section 509(f)(1)(A), which requires a Type III supporting organization to provide to each of its supported organizations such information as the Secretary may require, to ensure, that the Type III supporting organization is responsive to the needs or demands of its supported organization(s).

The collection of information under Treasury Regulations section 1.509(a)–4(i)(6)(v) is required only if a Type III supporting organization that is not functionally integrated wishes for certain amounts set aside for a specific project to count toward the distribution requirement imposed by § 1.509(a)–4(i)(5)(ii).

Burden estimates is as follows:

Authority	Description	# Respondents	# Responses Per Respondent	Total Annual Responses	Hours Per Response	Total Burden
IRC § 509	TD 9605	6,089	1	6,089	2	12,178
Totals		6,089		6,089		12,178

The following regulation impose no additional burden. Please continue to assign OMB number

1545-2157 to this regulation:

1.509(a)-4

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

There are no start-up or maintenance costs for this collection. The collection does not require respondents to obtain specialized equipment or professional services.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

This is a third-party disclosure requirement. As such, there is no cost to the federal government.

15. REASONS FOR CHANGE IN BURDEN

There is no change in the paperwork burden previously approved by OMB. However, the

estimated number of responses were updated based on current filing data. This collection is also

being submitted 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

The IRS believes 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 IRS 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 this 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.

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