Proposed Collection; Comment Request for Trust and Estate Income Tax Returns and Related Forms

<NOTICE> DEPARTMENT OF THE TREASURY <SUBAGY>Internal Revenue Service</SUBAGY> <SUBJECT>Proposed Collection; Comment Request for Trust and Estate Income Tax Returns and Related Forms</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Internal Revenue Service (IRS), Treasury. <HD SOURCE="HED">ACTION:</HD> Notice and request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (PRA). The IRS is soliciting comments on Trust and Estate Income Tax Returns and Related Forms. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> Written comments should be received on or before November 12, 2024 to be assured of consideration. </DATES> <HD SOURCE="HED">ADDRESSES:</HD> Direct all written comments to Andres Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or by email <E T="03">pra.comments@irs.gov.</E> Include 1545-0092 or Trust and Estate Income Tax Returns and Related Forms in the subject line. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Requests for additional information or copies of the form and instructions should be directed to Jason Schoonmaker at (801) 620-2128, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet, at <E T="03">jason.m.schoonmaker@irs.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Change in PRA Approval of Forms Used by Trusts and Estates</HD> Under the PRA, OMB assigns a control number to each “collection of information” that it reviews and approves for use by an agency. A single information collection may consist of one or more forms, recordkeeping requirements, and/or third-party disclosure requirements. Under the PRA and OMB regulations, agencies have the discretion to seek separate OMB approvals for forms, recordkeeping requirements, and third-party reporting requirements or to combine any number of forms, recordkeeping requirements, and/or third-party disclosure requirements (usually related in subject matter) under one OMB Control Number. Agency decisions on whether to group individual requirements under a single OMB Control Number or to disaggregate them and request separate OMB Control Numbers are based largely on considerations of administrative practicality. The PRA also requires agencies to estimate the burden for each collection of information. Accordingly, each OMB Control Number has an associated burden estimate. The burden estimates for each control number are displayed in (1) the PRA notices that accompany collections of information, (2) <E T="04">Federal Register</E> notices such as this one, and (3) in OMB's database of approved information collections. If more than one form, recordkeeping requirement, and/or third-party disclosure requirement is approved under a single control number, then the burden estimate for that control number reflects the burden associated with all of the approved forms, recordkeeping requirements, and/or third-party disclosure requirements. As described below under the heading “Updated Burden Estimate Methodology,” the IRS's currently accepted burden estimate methodology, referred to as the IRS Taxpayer Burden Model, is based on taxpayers' tax reporting experience taking into account, among other things, the forms and schedules used by those taxpayers and the recordkeeping and other activities needed to complete those forms. The transition of the trust and estate income tax reporting burden represents the IRS's continued effort to improve the ability of IRS to measure the burden imposed on various groups of taxpayers by the federal tax system. While the improved methodology provides a more accurate and comprehensive description of the trust and estate income tax reporting burden, it will not provide burden estimates on a form-by-form basis, as has been done under the previous methodology. When the prior model, known as the legacy Arthur D. Little (ADL) model was developed in the mid-1980s, almost all tax returns were prepared manually, either by the taxpayer or a paid provider. In this context, it was determined that estimating burden on a form-by-form, line-by-line basis was an appropriate methodology. Trust and estate income tax returns are increasingly being prepared using software or with preparer assistance. In this current reporting environment, in which many taxpayers' activities are no longer as directly associated with particular forms, estimating burden on a form-by-form basis is not an appropriate method of estimating taxpayer burden. The IRS Taxpayer Burden Model, which takes into account broader and more comprehensive taxpayer characteristics and activities, provides a much more accurate and useful estimate of taxpayer burden. Currently, there are 152 forms and 27 regulations used by trust and estates pertaining to their income tax reporting requirements. These include Forms 1041, 1041 A, 1041 ES, 1041 ES (OCR), 1041 N, 1041 QFT, 1041 SCH D, 1041 SCH I, 1041 SCH J, 1041 SCH K-1, 1041 T, 1041 V, 172, 461, 926, 965 A, 982, 1040 SCH C, 1040 SCH E, 1040 SCH F, 1040 SCH H, 1045, 1065 SCH D, 1065 SCH K-2, 1116, 1116 SCH B, 1116 SCH C, 2210, 2210 F, 2439, 3115, 3468, 3800, 4136, 4255, 4562, 4684, 4797, 4952, 4970, 4972, 5227, 5329, 5471, 5471 SCH E, 5471 SCH G1, 5471 SCH H, 5471 SCH I1, 5471 SCH J, 5471 SCH M, 5471 SCH O, 5471 SCH P, 5471 SCH Q, 5471 SCH R, 5713, 5713 SCH B, 5713 SCH C, 5884, 5884 A, 6198, 6252, 6478, 6765, 6781, 7205, 7207, 7210, 7211, 7213, 7217, 7218, 8082, 8275, 8275 R, 8453 FE, 8582, 8582 CR, 8586, 8594, 8609 A, 8611, 8621, 8697, 8801, 8820, 8824, 8825, 8826, 8829, 8830, 8833, 8835, 8844, 8845, 8846, 8855, 8858, 8858 SCH M, 8864, 8865, 8865 SCH G, 8865 SCH H, 8865 SCH K-1, 8865 SCH K-2, 8865 SCH K-3, 8865 SCH O, 8865 SCH P, 8866, 8873, 8879 F, 8881, 8882, 8886, 8896, 8903, 8904, 8908, 8910, 8911, 8911 SCH A, 8912, 8918, 8932, 8933, 8933 SCH A, 8933 SCH B, 8933 SCH C, 8933 SCH D, 8933 SCH E, 8933 SCH F, 8936, 8938, 8941, 8949, 8960, 8978, 8978 SCH A, 8990, 8992, 8992 SCH A, 8994, 8995, 8995 A, 8995 A SCH A, 8995 A SCH B, 8995 A SCH C, 8995 A SCH D, 8997, 8582-CR, 8609-A, T, and their schedules (see the Appendix to this notice). For most of these forms, IRS has in the past obtained separate OMB approvals under unique OMB Control Numbers and separate burden estimates. The IRS Taxpayer Burden Model methodology estimates the aggregate burden imposed on trusts and estates, based upon their reporting-related characteristics and activities. IRS therefore will seek OMB approval of all 152 trust and estate income tax forms as a single “collection of information.” The aggregate burden of these tax forms will be accounted for under OMB Control Number 1545-0092, which is currently assigned to Form 1041. OMB Control Number 1545-0092 will be displayed on all trust and estate income tax forms and related information collections. As a result of this change, burden estimates for trust and estate income taxes will now be displayed differently in PRA Notices on tax forms and other information collections, and in <E T="04">Federal Register</E> notices. This new way of displaying burden is presented below under the heading “Proposed PRA Submission to OMB.” <HD SOURCE="HD1">Updated Burden Estimate Methodology</HD> The IRS Taxpayer Burden Model methodology revises the estimates of the levels of burden experienced by trusts and estates when complying with their federal reporting requirements pertaining to income taxes. It replaces the legacy ADL model methodology developed in the mid-1980s. Since that time, improved technology and modeling sophistication have enabled the IRS to improve the burden estimates. The IRS Taxpayer Burden Model methodology provides taxpayers and the IRS with a more comprehensive understanding of the current levels of taxpayer burden. It reflects major changes over the past two decades in the way taxpayers prepare and file their returns. The IRS Taxpayer Burden Model methodology also represents a substantial step forward in the IRS's ability to assess likely impacts of administrative and legislative changes on trusts and estates. The IRS Taxpayer Burden Model methodology focuses on the characteristics and activities of trusts and estates rather than solely focusing on the forms they file. Key determinants of taxpayer burden in the model are the type of trust or estate, the number of beneficiaries, level of the trust or estate's income, and the complexity of the trust or estate's income generated from assets and investments. Indicators of tax law and administrative complexity, as reflected in the tax forms and instructions, are incorporated into the model. Tax compliance burden does not include a taxpayer's tax liability, economic inefficiencies caused by sub-optimal choices related to tax deductions or credits, or psychological costs. The legacy ADL model methodology primarily focused on the number of line items of each tax form. The changes between the old and new burden estimates are due to the improved ability of the IRS Taxpayer Burden Model methodology to measure burden and the expanded scope of what is measured. These changes create a one-time shift in the estimate of imposed burden. It is important to note that the difference between the legacy ADL estimate and the IRS Taxpayer Burden Model estimate do not reflect any change in the actual burden imposed by taxpayers. <HD SOURCE="HD1">Methodology</HD> Burden is defined as the time and out-of-pocket costs incurred by taxpayers to comply with their federal tax reporting responsibilities. As has been done for individual taxpayer burd ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 43k characters. 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