SuppStmnt Form 1125-A and 1125-E

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Form 1120, U.S. Corporation Income Tax Return, was re-designed for tax year 2011. Cost of Goods Sold had been
calculated on Schedule A; Compensation of Officers had been calculated on Schedule E. It was deemed to be more
efficient to present the data in separate formats. Form 1125-A, Cost of Goods Sold", is used to calculate and deduct
the costs of goods sold for certain entities. In the new form, entering either a dollar amount or the percentage of
closing inventory computed under LIFO is no longer an option. Form 1125-E, Compensation of Officers, is used to
provide a detailed report of the deduction for compensation of officers. A separate form was created to remove a
schedule not needed by smaller corporations, simplifying the tax return, and providing more space and flexibility for
other changes on the tax return.

2. USE OF DATA
The actual data captured will not change in any material way. It will be used as it has previously been used.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
We are currently offering electronic filing on Forms 1125-A and Form 1125-E.

4. EFFORTS TO IDENTIFY DUPLICATION
The requested information will not be duplicated. The information collected on forms 1125-A and 1125-E will be
summarized on form 1120, as well as other forms, on a single line entry. Instructions for Cost of Goods sold will be
removed from the form 1120 instructions, as well as from the instructions for other forms and be separately presented
as related to form 1125-A. Instructions for Compensation of Officers will be removed from the form 1120 instructions,
as well as from the instructions for other forms and be separately presented as related to form 1125-E.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
There is no change to the existing burden on small businesses as a consequence of carving-out Cost of Goods Sold or
Compensation of Officers reporting onto their own specific forms.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR
POLICY ACTIVITIES
There is no change in the frequency of collection.

Form 14029 (Rev. 4-2009) Catalog Number 51944B Page 4

Department of the Treasury–Internal Revenue Service

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Non-applicable.

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 meetings, there is an opportunity for those attending to make comments
regarding Forms 1125-A and 1125-E.
In response to the Federal Register notice dated July 26, 2011 (76 FR 44657-44658), we received no comments
during the comment period regarding Forms 1125-A or 1125-E.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

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
Not Applicable

12. ESTIMATED BURDEN OF INFORMATION COLLECTION
The burden estimate is as follows:
Form

Number of Responses

Time per Response

Hours

1125-A
1125-E

3,560,000
3,000,000

8 Hours 44 minutes
4 Hours 30 minutes

31,185,600
12,900,000

Total Hours

44,085,600
Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

Page 5

Department of the Treasury–Internal Revenue Service

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide
information are not available at this time.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
The primary cost to the government consists of the cost of printing.

15. REASONS FOR CHANGE IN BURDEN
This is a new collection

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not Applicable

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
See attachment.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB PRA SUBMISSION FORM
Not applicable. 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 must be the administration of any internal
revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

19. REASON FOR EMERGENCY SUBMISSION
N/A

Form 14029 (Rev. 4-2009) Catalog Number 51944B

Page 6

Department of the Treasury–Internal Revenue Service