OMB No. 1513-0054 Supporting Statement (03-2025)

DEPARTMENT OF THE TREASURY

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

Supporting Statement –– Information Collection Request

OMB Control Number 1513–0054

Offer in Compromise of Liability Incurred under the Provisions of Title 26 U.S.C.

Enforced and Administered by TTB; Collection Information Statements

for Individuals and Businesses

Changes Since Last Approval

In this Supporting Statement, TTB is updating the information provided in Questions 8, 12, 13, 14, and 15 to reflect, respectively, the latest 60-day notice publication information, estimated respondent burden and labor costs, respondent non-labor costs, Federal Government costs, and the adjustments associated with this information collection request.

A. Justification

1. What are the circumstances that make this collection of information necessary, and what legal or administrative requirements necessitate the collection? Also align the information collection to TTB’s Line of Business/Sub-function and IT Investment, if one is used.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers chapter 51 (distilled spirits, wines, and beer), chapter 52 (tobacco products, processed tobacco, and cigarette papers and tubes), and sections 4181–4182 (firearms and ammunition excise taxes) of the Internal Revenue Code of 1986 (IRC), as amended (26 U.S.C.). TTB administers those IRC provisions pursuant to section 1111(d) of the Homeland Security Act of 2002, as codified at 6 U.S.C. 531(d). The Secretary of the Treasury (Secretary) also has delegated certain IRC administrative and enforcement authorities to TTB through Treasury Order 120–01.

The IRC at 26 U.S.C. 7122 provides that the Secretary may compromise any civil or criminal case, including tax liabilities, arising under the IRC. That section also directs the Secretary to issue guidelines for the submission and evaluation of “offers in compromise,” which are voluntary monetary settlements of alleged IRC-based liabilities made by proponents in lieu of civil or criminal proceedings.

Under that IRC authority, the TTB regulations at 27 CFR 70.482 allow TTB-regulated proponents to make an offer in compromise for any civil or criminal liability arising under the IRC prior to referral of the case to the Department of Justice, but only if there is doubt as to the validity of the liability and/or a respondent’s ability to pay the liability. That section also states TTB will accept compromise of criminal liabilities only for regulatory violations that were not committed with the intent to defraud. In addition, § 70.482(d) requires proponents to submit IRC-based offers in compromise on form TTB F 5640.1, Offer in Compromise of Liability Incurred under Provisions of Title 26 U.S.C. Enforced and Administered by the Alcohol and Tobacco Tax and Trade Bureau. Proponents use the form to identify themselves, the alleged liability and its statutory or regulatory source, the reasons for making the offer in compromise, the amount of the offer, and any proposed payment plan. Also, as provided in § 70.482(d), if a proponent bases an offer in compromise on their inability to pay the alleged liability, TTB may require the submission of financial information documenting that inability. Individuals provide such information on TTB F 5600.17, Collection Information Statement for Individuals, while business proponents complete TTB F 5600.18, Collection Information Statement for Businesses.

If accepted by TTB, the compromise is a settlement between the Federal Government and the proponent of the alleged IRC-based liabilities. Neither party can reopen accepted offers, except in cases of fraud or asset concealment by the proponent or a mutual mistake of material fact. This collection is necessary to protect the revenue as it allows TTB to determine if it should accept an offer in compromise or if it should pursue civil penalties or criminal prosecution against the alleged violator, which may be more costly to, and carry greater litigation risks for, the Federal Government.

This information collection request is aligned with the following Line of Business/Sub-function: General Government / Taxation Management.

2. How, by whom, and for what purpose is this information used?

TTB personnel examine each offer in compromise and any required financial information to evaluate the adequacy of the proponent’s compromise offer in relation to the alleged IRC liability and the extent of any claimed financial hardship. This allows TTB to determine if it should accept the offer or if TTB should refer the case to the Department of Justice for civil or criminal action. Such referrals may be more costly to, and carry greater litigation risks for, the Federal Government. In addition, neither party can reopen accepted compromise offers, except in cases of fraud or asset concealment by the proponent or a mutual mistake of material fact. As such, this collection request is necessary to protect the revenue.

3. To what extent does this collection of information involve the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology? What consideration is given to use information technology to reduce burden?

Given the specific and unique nature of the offer in compromise and the financial information provided by a proponent under this collection request, TTB believes that the use of advanced information technology for its submission and processing will not reduce its burden. Currently, forms TTB F 5640.1, F 5600.17, and F 5600.18 are available to the public as fillable-printable forms on the TTB website at https://www.ttb.gov/public-information/forms.

4. What efforts are used to identify duplication? Can similar information already available be used or modified for use for the purposes described in Item 2 above?

The offer in compromise and financial information provided under this collection request is specific and unique to the proponent and their alleged IRC-based liabilities. As far as TTB can determine, similar information is not available elsewhere.

5. If this collection of information impacts small businesses or other small entities, what methods are used to minimize burden?

To comply with 26 U.S.C. 7122, all businesses, regardless of size, and all individuals making an offer in compromise of alleged IRC-based liabilities must provide the required information. TTB believes the collected information is the minimum necessary for TTB to determine if it should accept an offer in compromise.

6. What consequences to Federal program or policy activities and what, if any, technical or legal obstacles to reducing burden will occur if this collection is not conducted or is conducted less frequently?

Proponents submit the required information only when they have an alleged IRC-based liability and seek to settle the case through an offer in compromise prior to any civil or criminal proceedings. As such, TTB cannot conduct this collection request less frequently. In addition, if TTB did not conduct this collection request, TTB would have to act against proponents with IRC-based liabilities through Department of Justice civil or criminal proceedings, which may be more costly to, and carry greater litigation risks for, the Federal Government.

7. Are there any special circumstances associated with this information collection that would require it to be conducted in a manner inconsistent with OMB guidelines? (See 5 CFR 1320.5(d)(2).)

There are no special circumstances associated with this information collection that would require it to be inconsistent with OMB guidelines.

8. What effort was made to notify the general public about this collection of information? Summarize the public comments that were received and describe the action taken by the agency in response to those comments.

To solicit comments from the public, TTB published a “60-day” comment request notice for this information collection request in the Federal Register on November 29, 2024, at 89 FR 94871. TTB received no comments on this collection in response.

9. Was any payment or gift given to respondents, other than remuneration of contractors or grantees? If so, why?

No payment or gift is associated with this information collection request.

10. What assurance of confidentiality was provided to respondents, and what was the basis for the assurance in statute, regulations, or agency policy?

TTB provides no specific assurance of confidentiality for this information collection request. However, TTB regards pending offers in compromise and any related financial statements as taxpayer information, which the IRC at 26 U.S.C. 6103 protects from disclosure unless that section authorizes such action. In the case of accepted offers in compromise, the IRC at 26 U.S.C. 6103(k) specifically requires information regarding such actions to be made available for public inspection, and TTB F 5640.1 contains a Disclosure Statement informing respondents of that public disclosure requirement. (See 27 CFR 70.802(a) and Question 16 as to how and what extent TTB discloses the collected information.)

11. What is the justification for questions of a sensitive nature? If personally identifiable information (PII) is being collected in an electronic system, identify the Privacy Impact Assessment (PIA) that has been conducted for the information collected under this request and/or the Privacy Act System of Records notice (SORN) issued for the electronic system in which the PII is being stored.

This information collection request contains no questions of a sensitive nature. However, this request does collect personally identifiable information (PII) in a government electronic system, the Case Management System, for which TTB has conducted a Privacy and Civil Liberties Impact Assessment (PCLIA). In addition, the collected information is included within TTB’s record system, titled “Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB) .001—Regulatory Enforcement System of Records” for which TTB published a System of Records Notice (SORN) on October 11, 2022, at 87 FR 61435. Links to TTB’s PCLIAs and SORN may be found on the TTB website at https://www.ttb.gov/public-information/foia.

12. What is the estimated hour burden of this collection of information?

Estimated Respondent Burden: Based on recent data, TTB estimates the annual respondent burden for this information collection request as follows:

Information Collection	No. of Respondents (1 response each)	Total Responses	Hours per Response	Total Burden Hours
Offers in Compromise (For Individuals, filed on TTB F 5640.1)	2	2	2 hrs.	4 hrs.
Offers in Compromise (For Businesses, filed on TTB F 5640.1)	48	48	2 hrs.	96 hrs.
Collection Information Statements for Individuals (Filed on TTB 5600.17.)	2	2	3 hrs.	6 hrs.
Collection Information Statements for Businesses (Filed on TTB 5600.18.)	28	28	3 hrs.	84 hrs.
TOTALS	80	80	2.375 hrs.	190 hrs.

Estimated Respondent Labor Costs: While proponents are not required to engage the services of a lawyer, accountant, or other professional to make an offer in compromise, TTB is basing the estimated maximum respondent labor cost for this collection on the use of a lawyer employed in the beverage and tobacco product manufacturing industries. Based on a fully-loaded labor rate of $142.34 per hour for such lawyers, TTB estimates the maximum annual respondent labor costs for this information collection request as follows:¹

Respondent Labor Costs for OMB No. 1513–0054 (Lawyers in the Beverage Manufacturing Industry @$142.34 per hour)
Avg. Time / Response	Labor Cost / Response	Responses / Respondent	Labor Costs / Respondent	Total Respondents	Total Labor Costs
2.375 hours	$338.06	1	$338.06	80	$27,044.80

* All labor costs rounded to the nearest whole cent.

Recordkeeping Burden: There is no stated recordkeeping period for this information collection request.

13. What is the estimated annual cost burden to respondents or record keepers resulting from this information collection request (excluding the value of the hour burden in Question 12 above)?

There are no start-up, capital, or annual maintenance, operational or overhead costs associated with this occasional information collection request. As such, respondents only incur postage and mailing supply costs for the submission of this information collection request, which TTB estimates to be $16.00 per respondent (priority mail flat rate envelope via certified mail) and $800.00 for 50 respondents (includes the 30 respondents also filing Collection Information Statements).

14. What is the annualized cost to the Federal Government?

There are no TTB overhead costs associated with this occasional information collection request, and there are no printing and distribution costs to TTB due to the availability of its forms on the TTB website (see https://www.ttb.gov/public-information/forms). As such, there are only Federal Government labor costs associated with this information collection request, and TTB estimates those costs as follows:

Labor Costs for Personnel at TTB’s National Revenue Center in Cincinnati, Ohio, for OMB No. 1513–0055
Position	Fully-loaded Labor Rate per Hour2	Processing Time per Response	Labor Costs per Response	Responses Processed	Total TTB Labor Costs
GS–5, Step 5, Clerk	$37.18	0.2 hour	$7.44	80	$595.20
GS–11, Step 5 Auditor or Specialist	$68.17	11 hours	$749.87	80	$59,989.60
GS–14, Step 5 Attorney**	$114.82	5 hours	$574.10	16**	$9,185.60
GS–15, Step 5 Director, Tax Services Div.	$135.05	4 hours	$540.20	80	$43,216.00
GS–15, Step 5, Deputy Ass’t Administrator	$135.05	0.5 hours	$67.53	80	$5,402.40
TOTALS	($71.4908)	20.7 hours	$1,479.86	80	$118,388.80

* Labor costs rounded to the nearest whole cent unless otherwise noted.

** TTB estimates that only 20 percent of IRC-based offers in compromise require review by a TTB attorney.

15. What is the reason for any program changes or adjustments reported?

There are no program changes associated with this information collection request at this time, and TTB is submitting it for extension purposes only. As for adjustments, due to changes in agency estimates, TTB is increasing the overall estimated annual respondent burden associated with this collection, from 40 respondents to 80, from 40 total responses to 80, from an average of 2.25 hours per response to 2.375, and the total annual burden from 90 hours to 190. While the number of individuals responding to this collection has decreased, these overall burden adjustments result from an increase in the number of business respondents submitting IRC-based offers in compromise on form TTB F 5640.1, and an increase in the number of such respondents submitting supporting financial data on TTB F 5600.18. In addition, TTB is revising the Federal Government labor costs associated with this information collection request to more accurately reflect how this information collection is processed within TTB due to the availability of more complete data.

16. Outline plans for tabulation and publication for collections of information whose results will be published.

Under the IRC’s general prohibition on disclosure of taxpayer information in 26 U.S.C. 6103, TTB does not publicly disclose information regarding pending and rejected IRC-related offers in compromise. However, in the case of offers in compromise accepted by TTB, the IRC at 26 U.S.C. 6103(k) specifically requires disclosure of the offer’s information to the extent necessary to allow for their inspection by the public, and TTB F 5640.1 contains a statement informing respondents of this disclosure requirement. Under the TTB regulations at 27 CFR 70.802(a), to make the required disclosure, TTB creates a record for each accepted compromise using internal form TTB F 5640.3, Abstract and Statement, which TTB posts on its website (see https://www.ttb.gov/fo/administrative-cases). The posted statement identifies the proponent of the offer in compromise, the facts regarding the offer and its amount, and TTB’s rationale for accepting the offer; however, TTB redacts any permit, case, and taxpayer identification numbers from the posted statement.

17. If seeking approval to not display the expiration date for OMB approval of this information collection, what are the reasons that the display would be inappropriate?

As a cost saving measure for both TTB and the public, TTB is seeking approval not to display the expiration date for OMB approval of this information collection on forms TTB F 5640.1, Offer in Compromise of Liability Incurred under Provisions of Title 26 U.S.C. Enforced and Administered by the Alcohol and Tobacco Tax and Trade Bureau, TTB F 5600.17, Collection Information Statement for Individuals, and TTB F 5600.18, Collection Information Statement for Businesses. By not displaying that date, TTB will not have to update these occasionally-used forms each time OMB reapproves this information collection request. Similarly, respondents and other businesses will not have to update stocks of the paper forms, self-produced electronic copies of the forms, or versions of the forms made for sale to other businesses. Additionally, not displaying the information collection’s OMB approval expiration date on the paper forms will avoid confusion among members of the public who may have copies of the forms with different expiration dates in their possession.

18. What are the exceptions to the certification statement?

(c) See item 5 above.

(f) This is not a recordkeeping requirement.

(i) No statistics are involved.

(j) See item 3 above.

B. Collections of Information Employing Statistical Methods.

This information collection request does not employ statistical methods.

1 The Private Sector Fully-loaded Labor Rate per Hour = Hourly wage x 1.44 to account for employee benefit costs. Per the most recent U.S. Department of Labor, Bureau of Labor Statistics, wage data for NAICS 312000—Beverage and Tobacco Product Manufacturing, the estimated fully-loaded labor rate per hour for lawyers (23–1011) is $142.34, based on a mean hourly wage of $98.85. See https://www.bls.gov/oes/current/naics3_312000.htm. TTB notes that lawyers in the firearms and ammunition industry (see NAICS 3320A1–Fabricated Metal Product Manufacturing) have a lower wage rate than those in the beverage and tobacco manufacturing industry, as do accountants and other related professionals in all TTB-regulated industries.

2 Federal Government Fully-loaded Labor Rate = Hourly wage rate x 1.63 to account for benefit costs. Per the most recent Office of Personnel Management (OPM) hourly wage data, the fully-loaded labor rates per hour for Federal employees in the Cincinnati, Ohio, wage area are: (1) $33.27 for GS–5 (step 5), based on an hourly wage of $22.81; (2) $68.17 for GS–11 (step 5), based on an hourly wage of $41.82; (3) $114.82 for GS-14 (step 5), based on an hourly wage of $70.44; and $120.85 for a GS–15 (step 5), based on an hourly wage of $82.85. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2025/CIN_h.pdf.

OPI:NRC OMB No. 1513–0054 Supporting Statement (03–2025)