F1120-PC_Sup Stmnt

SUPPORTING STATEMENT

(IRS Form 1120-PC)

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Internal Revenue Code section 831 imposes a tax on insurance companies other than life insurance companies. Internal Revenue Code section 6012 requires every corporation subject to taxation under subtitle A to file a return with respect to such income taxes.

2. USE OF DATA

The form provides the IRS with the information necessary to determine whether taxpayers are complying with the law, that the correct amount of tax has been computed and paid, and to gather information required to allow the Secretary of the Treasury to compute the effectively connected income for foreign insurance companies doing business in the United States.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Some electronic filing will be provided for Form 1120-PC and Schedule M-3.

4. EFFORTS TO IDENTIFY DUPLICATION

We have attempted to eliminate duplication within the agency wherever possible.

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

Not applicable.

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

Not applicable.

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

Not 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 Form 1120-PC.

In response to the Federal Register Notice dated July 6, 2011 (76 FR 39473), we received no comments during the comment period regarding Form 1120-PC.

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

Not applicable.

9. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

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

9. JUSTIFICATION OF SENSITIVE QUESTIONS

Not applicable.

9. ESTIMATED BURDEN OF INFORMATION COLLECTION

The burden estimate is as follows:

Number of Time per Total

Responses Response Hours

Form 1120-PC 2,200 204.23 449,306

F1120-PC(Sch M-3) 2,000 111.47 222,940

Total 4,200 672,246

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

We have reviewed the following regulations and have determined that the reporting requirements contained in them are entirely reflected on Form 1120-PC. The justification appearing in item 1 of the supporting statement applies both to these regulations and to Form 1120-PC.

Please continue to assign OMB number 1545-1027 to these regulations.

1.6012-2(c)(2)&(3) 1.821-1,3,4 1.824-1,3

7.0 1.822-6,8,9 1.825-1

1.820-2 1.823-2,5,6 1.826-1,2,4,6

9. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

As suggested by OMB, our Federal Register Notice dated July 6, 2011 (76 FR 39473), requested public comments on estimates of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. However, we did not receive any response from taxpayers on this subject. As a result, estimates of the cost burdens 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 this form. We estimate that the cost of printing Form 1120-PC is $24,542.

15. REASONS FOR CHANGE IN BURDEN

On Form 1120-PC line changes were made, within

Schedules E and H, to clarify the new restrictions on the deduction of 100% of unearned premiums by section 833 organizations, enable section 833 organizations to determine whether they meet the 85% medical loss ratio mandated by IRC 833(c)(5) and for qualifying section 833 organizations to compute the special deduction and the ending adjusted

surplus (Pub. L. 111-148, section 9016 and IRC 833(c)(5)). A question was added to Schedule I for corporations to indicate whether they have uncertain tax positions (Announcements 2010-9 and 2010-17, and 2010-30). This results in a net increase of 23,028 burden hours.

We are making this submission to renew the OMB approval.

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 FORM 83-I

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 the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

OMB EXPIRATION DATE

We believe the public interest will be better served by not printing an expiration date on the form(s) in this package.

Printing the expiration date on the form will result in increased costs because of the need to replace inventories that become obsolete by passage of the expiration date each time OMB approval is renewed. Without printing the expiration date, supplies of the form could continue to be used.

The time period during which the current edition of the form(s) in this package will continue to be usable cannot be predicted. It could easily span several cycles of review and OMB clearance renewal. In addition, usage fluctuates unpredictably. This makes it necessary to maintain a substantial inventory of forms in the supply line at all times. This includes supplied owned by both the Government and the public. Reprinting of the form cannot be reliably scheduled to coincide with an OMB approval expiration date. This form may be privately printed by users at their own expense. Some businesses print complex and expensive marginally punched continuous versions, their expense, for use in their computers. The form may be printed by commercial printers and stocked for sale. In such cases, printing the expiration date on the form could result in extra costs to the users.

Not printing the expiration date on the form(s) will also avoid confusion among taxpayers who may have identical forms with different expiration dates in their possession.

For the above reasons we request authorization to omit printing the expiration date on the form(s) in this package.