2019-07-18_SS_1545-0192r.8.15

SUPPORTING STATEMENT

Internal Revenue Service

Tax on Accumulation Distribution of Trusts

Form 4970

OMB Control Number 1545-0192

1.CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Internal Revenue Code section 667 requires a tax to be paid by a beneficiary of a domestic or foreign trust on accumulation distributions. Form 4970, Tax on Accumulation Distribution of Trusts, reflects the computation of tax from section 667(b) and the interest charge on foreign trusts under section 668.

2.USE OF DATA

Form 4970 provides IRS with information to verify that the beneficiary’s part of the distribution from the trust that is considered distributed in earlier tax years is reported in income, and that the correct tax on this income is paid by the beneficiary.

3.USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Form 4970 is enabled for electronic filing.

4.EFFORTS TO IDENTIFY DUPLICATION

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

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

There is no burden on small businesses or entities by this collection due to the inapplicability of the authorizing statue to this type of entity.

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

Form 4970, Tax on Accumulation Distribution of Trusts, reflects the computation of tax from section 667(b) and the interest charge on foreign trusts under section 668. Less frequent collection would not allow IRS to verify that the beneficiary’s part of the distribution from the trust that is considered distributed in earlier tax years is reported in income, and that the correct tax on this income is paid by the beneficiary.

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 February 13, 2019 (84 FR 3852), we received no comments during the comment period regarding Form 4970.

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

A privacy impact assessment (PIA) has been conducted for information collected under this request as part of the “Information Returns Master File (IRMF)” system and Privacy Act System of Records notices (SORN) has been issued for these systems under Treas./IRS 24.030–Customer Account Data Engine Individual Master File; and Treas./IRS 34.037–IRS Audit Trail and Security Records System. The Internal Revenue Service PIAs 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.

12.ESTIMATED BURDEN OF INFORMATION COLLECTION

Form 4970, is used by a beneficiary of certain domestic trusts to figure the partial tax on accumulation distributions under section 667.

It is anticipated that there will be 30,000 respondents that respond once with a response time of 1 hour, .25 minutes totaling 42,900 burden hours.

The burden estimate is as follows:

Form	Number of Respondents	Responses per Respondent	Annual Responses	Hours per Response	Total Burden
Form 4970	30,000	1	30,000	1.43	42,900
Totals	30,000	1	30,000	1.43	42,900

13.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

14.ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

After consultation with various functions within the Service, we have determined that the cost of developing, printing, processing distribution, and overhead for Form 4970 is $42,649.

The Federal government cost estimate is based on a model that considers the following three cost factors for each information product: aggregate labor costs for development, including annualized startup expenses, operating and maintenance expenses, and distribution of the product that collects the information.

The government computes cost using a multi-step process. First, the government creates a weighted factor for the level of effort to create each information collection product based on variables such as; complexity, number of pages, type of product and frequency of revision. Second, the total costs associated with developing the product such as labor cost, and operating expenses associated with the downstream impact such as support functions, are added together to obtain the aggregated total cost. Then, the aggregated total cost and factor are multiplied together to obtain the aggregated cost per product. Lastly, the aggregated cost per product is added to the cost of shipping and printing each product to IRS offices, National Distribution Center, libraries and other outlets. The result is the Government cost estimate per product.

The government cost estimate for this collection is summarized in the table below.

Product	Aggregate Cost per Product (factor applied)		Printing and Distribution		Government Cost Estimate per Product
Form 4970	$42,649				$42,649
Total	$42,649				$42,649
Table costs are based on 2018 actuals obtained from IRS Chief Financial Office and Media and Publications
* New product costs will be included in the next collection update.

15.REASONS FOR CHANGE IN BURDEN

There is no change in the form previously approved by OMB. We are making this submission for renewal purposes only.

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 ON OMB FORM 83-I

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.

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