SUPPORTING STATEMENT
(Regulation EE-12-78)
OMB # 1545-0806
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Section 408(a)(2) permits an institution other than a bank to be the trustee of an individual retirement account. Section 1.408-2(e)(1) of the Income Tax Regulations provides that such an institution must file a written application with the Service demonstrating its ability to act as trustee. Section 1.408-2(e)(2) requires an applicant to demonstrate in detail in his written application the ability to act within the accepted rules of fiduciary conduct.
Certain reporting and recordkeeping requirements 1) must be demonstrated by an applicant in his written application and 2) are imposed in connection with the ongoing activities of a nonbank trustee. These are:
26 CFR 1.408-2(e)(5)(iii)(C)
This regulation imposes a continuing requirement that applicants must have their books and records audited on an annual basis. A report of the audit must be included in the written application. Also, the report must be made part of the applicant’s records.
26 CFR 1.408-2(e)(5)(vii)
This regulation requires applicants and approved nonbank trustees to keep their fiduciary records separate and distinct from other records. Also, the fiduciary records must contain full information relative to each account. Records must be kept of all pending litigation in which the nonbank trustee is a part as a result of the exercise of its fiduciary powers.
26 CFR 1.408-2(e)(6)(iv)
This regulation requires that applicants or previously approved nonbank trustees notify the Commissioner in writing of any change that affects the continuing accuracy of any representation made in the application, whether the change occurs before or after the applicant receives a notice of approval.
26 CFR 1.408-2(e)(7)(iii)
This regulation provides that an applicant must not accept a fiduciary account until after the plan administrator or person establishing the account is furnished with a copy of the written notice of approval issued by the IRS. Section 1.408-2(e)(7)(iv) of the Regulations provides, in part, that the notice of approval issued to an applicant will be revoked if the Commissioner determines that the applicant is unwilling or unable to administer fiduciary accounts in a manner consistent with the nonbank trustee requirements.
26 CRF 1.408-2(e)(7)(v)(B)
This regulation affords an applicant 60 days after the receipt of a proposed revocation to submit a written statement of facts, law, and argument opposing such action. The applicant also has the right to request a conference in the National Office.
2. USE OF DATA
The IRS uses the information contained in the written application in order to decide whether a particular applicant has the capability to act as a nonbank trustee. After the IRS approves an applicant to act as a nonbank trustee, certain recordkeeping requirements are imposed. The IRS uses these requirements to insure that accounts are administered according to sound fiduciary principles. An annual independent audit is required to insure that the nonbank trustee records are accurate and complete. If the IRS revokes a previously issued notice of approval to act as a nonbank trustee, certain appeal procedures are provided, and the IRS uses the information so gathered to decide the disposition of the revocation action.
3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
We have no plans to offer electronic filing. IRS publication, regulations, notices and letters are to be electronically enabled on an as practicable basis in accordance with the IRS Reform and Restructuring Act of 1998.
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
We have been unable to reduce the burden for small businesses.
6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES
IRS would not be able to adequately approve nonbank trustee applications and IRS enforcement regarding these rules would be greatly diminished.
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 November 10, 2016 (81 FR 79097), we received no comments during the comment period regarding Regulation EE-12-78.
9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO
RESPONDENTS
No payment or gift has been 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
There is no (PII) Personally Identifiable Information collected with this collection.
12. ESTIMATED BURDEN OF INFORMATION COLLECTION
We estimate that the burden for the recordkeeping and reporting requirements in these existing regulations is as follows:
Recordkeeping
Number of Annual hrs./ Total Retention
Regulation Recordkeepers Recordkeeper Hours Period
26 CFR 1.408-2(e)
(5) (iii)(C) 9 .25 2 6 yrs.
26 CFR 1.408-2(e)
(5) (vii) 9 .25 2 6 yrs.
18 4
Reporting
Number of Number of Re- Average Hours
Regulations Responses Porting Hours Per responses
26 CFR 1.408-2(e)
(6) (iv) 12 3 .25
26 CFR 1.408-2(e)
(7)(iii) 9 2 .25
26 CFR 1.408-2(e)
(7)(v)(B) 2 4 2.0
Total 23 9
These burden estimates were prepared after consultation with persons knowledgeable in the appropriate areas of the Internal Revenue Code.
Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.
13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
There are no start-up costs associated with this collection.
14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
There is no annualized cost to the federal government.
15. REASONS FOR CHANGE IN BURDEN
There is no change in the paperwork burden previously approved by OMB. We are making this submission to renew the OMB approval.
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
We believe that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulation sunsets as of the expiration date. Taxpayers are not likely to be aware that the Service 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 the 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.
File Type | application/msword |
File Title | SUPPORTING STATEMENT |
Author | Department of Treasury |
Last Modified By | Department of Treasury |
File Modified | 2017-01-19 |
File Created | 2017-01-19 |