2017-07-31 SS 1545-1201r.rtf

SUPPORTING STATEMENT

Internal Revenue Service

Assets Election to Expense Certain Depreciable Business

(T.D. 8121- Designated by TD 8455, as amended by TD 9146 and TD 9209)

OMB Number 1545-1201

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Section 179 of the Code provides an election for taxpayers to expense the cost or portion of the cost of certain depreciable business assets placed in service in a taxable year. The collections of information in the regulations are in §§ 1.179–2 and 1.179–5. This information is required by §1.179–2 to ensure that married individuals filing separate returns properly allocate the cost of

section 179 property elected to be expensed in a taxable year and that the dollar limitation is properly allocated among the component members of a controlled group. Also, this information is required by § 1.179–5 to ensure the specific identification of each piece of acquired section 179 property and reflect how and from whom such property was placed in service. This information will be used for audit and examination purposes.

Section 1.179-2(b)(7)(ii) requires the common parent corporation to file a separate statement attached to the income tax return on which the election is made to claim an expense deduction under section 179. If separate returns are filed by some or all component members of the group, each component member not included in a consolidated return must file a separate statement attached to the income tax return on which an election is made to claim a deduction under section 179. The statement must include the name, address, employer identification number, and the taxable year of each component member of the controlled group, a copy of the allocation agreement signed by persons duly authorized to act on behalf of the component members, and a description of the manner in which the deduction under section 179 has been divided among the component members.

The recordkeeping requirement and ordering rule required by section 1.179-3(e) of the regulations insures that taxpayers use their carryover of disallowed deduction in the proper order. This selection must be evidenced on the taxpayer's books and records and be applied consistently in subsequent years.

The regulations reflect changes to the law made by section 202 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 and section 201 of the American Jobs Creation Act of 2004.

2. USE OF DATA

The information required by section 1.179-2(b)(6) of the regulations will be used by the Internal Revenue Service to ensure that married individuals filing separate returns properly allocate the cost of section 179 property elected to be expensed in a taxable year.

The information required by section 1.179-2(b)(7)(ii) of the regulations will be used by the Internal Revenue Service to ensure that the dollar limitation is properly apportioned among the component members of a controlled group.

The Internal Revenue Service will use the information required by the recordkeeping and ordering rule (section 1.179-3(e)) during an audit or examination to ensure that taxpayers use their carryover of disallowed deduction in the proper order.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

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 and in this case not practicable either because the taxpayer is attaching a copy of a signed allocation agreement or the requirement is recordkeeping.

4. EFFORTS TO IDENTIFY DUPLICATION

The information obtained through this collection is unique and is not already available or use or adaption from another source.

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

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information in these regulations will not have a significant economic impact on a substantial number of small entities.

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

The information required is needed to verify compliance with Section 179 of the Treasury Regulations. A less frequent collection of taxes and tax information could adversely affect the government’s effectiveness and would reduce the oversight of the public in ensuring compliance with Internal Revenue Code and hinder the IRS from meeting its mission.

5. 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).

5. 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 (82 FR 28941), dated June 26, 2017, we received no comments during the comment period regarding these regulations.

5. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO

RESPONDENTS

No payment or gift has been provided to any respondents.

5. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

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

5. JUSTIFICATION OF SENSITIVE QUESTIONS

A privacy impact assessment (PIA) has been conducted for information collected under this request as part of the “Business Master file (BMF)” and “Individual Master File (IMF)” systems, and a Privacy Act System of Records notice (SORN) has been issued for these systems under IRS 22.062 – Electronic Filing Records; IRS 24.030 – Customer Account Data Engine (CADE) Individual Master File; IRS 24.046 - CADE Business Master File (BMF); IRS 34.037 - IRS Audit Trail and Security Records System. The Internal Revenue Service PIA’s can be found at https://www.irs.gov/uac/Privacy-Impact-Assessments-PIA .

Title 26 USC 6109 requires inclusion of identifying numbers in returns, statements, or other documents for securing proper identification of persons required to make such returns, statements, or documents and is the authority for social security numbers (SSNs) in IRS systems.

5. ESTIMATED BURDEN OF INFORMATION COLLECTION

Authority	Description	# of Respondents/Recordkeepers	# Responses per Respondent Recordkeeper	Annual Responses	Hours per Response	Total Burden
1.179-2(b)(7)(ii), 1.179-(b)(6), and1.179-3(e)	Section 179 expensing rules	4,025,000	1	4,025,000	.75 hour (varies from .50 to 1 hour)	3,015,000 hours.
Totals		4,025,000	1	4,025,000	.75 hour	3,015,000 hours

5. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

To ensure more accuracy and consistency across its information collections, IRS is currently in the process of revising the methodology it uses to estimate burden and costs. Once this methodology is complete, IRS will update this information collection to reflect a more precise estimate of burden and costs.

5. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

To ensure more accuracy and consistency across its information collections, IRS is currently in the process of revising the methodology it uses to estimate burden and costs. Once this methodology is complete, IRS will update this information collection to reflect a more precise estimate of burden and costs.

5. REASONS FOR CHANGE IN BURDEN

There is no change in the paperwork burden previously approved by OMB.

5. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

There are no plans for tabulation, statistical analysis, and publication.

5. 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.

5. 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.