Treatment of Shareholders of Certain Passive Investment Companies

Forms and Documents

Document Name	Status
2019_1545-1507 draft supporting statement update.doc Supporting Statement A	2019-12-18

IC Document Collections

IC ID	Document Title	Status
238981	Deemed sale election	New
223250	Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC	Modified
18539	Deemed dividend election	Modified

ICR Details

OMB Control No: 1545-1507	ICR Reference No: 201912-1545-006
Status: Active	Previous ICR Reference No: 201608-1545-027
Agency/Subagency: TREAS/IRS	Agency Tracking No:
Title: Treatment of Shareholders of Certain Passive Investment Companies
Type of Information Collection: Extension without change of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Approved without change	Conclusion Date: 03/18/2020
	Date Received in OIRA: 01/31/2020
Terms of Clearance: OMB understands that the IRS is currently in the process of revising the methodology it uses to estimate burden and costs. OMB expects that future ICRs under this OMB control number will include dollar estimates of annual burden costs to taxpayers calculated using this revised methodology. In future submissions, response 5 should be updated to reflect how the IRS has considered methods to minimize burden on small businesses or other small entities.

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	03/31/2023	36 Months From Approved	03/31/2020
Responses	406,250	0	406,250
Time Burden (Hours)	212,500	0	212,500
Cost Burden (Dollars)	0	0	0

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Abstract: Sections 1291 thru 1297 of the Internal Revenue Code of 1986 provide special rules for the taxation of shareholders of passive foreign investment companies (PFICs). Section 1295 of the Code permits a shareholder to elect to treat a PFIC as a qualified electing fund (QEF) in order to include a pro rata share of the QEF’s annual earnings under section 1293. If the shareholder makes the QEF election after the first year as a PFIC in the shareholder’s holding period of the foreign corporation, the shareholder is subject to both sections 1291 and 1293. The final regulations provide rules for elections that may be made by shareholders of such QEFs. This collection covers final regulations added to the Income Tax Regulations (26 CFR part 1) under section 1291(d)(2) of the Internal Revenue Code. The final regulations provide rules for making a deemed sale or deemed dividend election to purge a shareholder’s holding period of stock of a PFIC of those taxable years during which the PFIC was not a QEF. The Tax Reform Act of 1986 added section 1291(d)(2)(A), relating to the deemed sale election, effective for taxable years of foreign corporations beginning after December 31, 1986. The Technical and Miscellaneous Revenue Act of 1988 amended section 1291(d)(2) to add new section 1291(d)(2)(B), relating to the deemed dividend election, effective for taxable years of foreign corporations beginning after December 31, 1986.

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Authorizing Statute(s): US Code: 26 USC 1291 Name of Law: Interest on tax deferral.
   US Code: 26 USC 1295 Name of Law: Qualified electing fund.
   US Code: 26 USC 1296 Name of Law: Election of mark to market for marketable stock.
   US Code: 26 USC 1297 Name of Law: Election of mark to market for marketable stock.
   US Code: 26 USC 1298 Name of Law: Special rules.
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
	Not associated with rulemaking

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Federal Register Notices & Comments
60-day Notice:	Federal Register Citation:	Citation Date:
	84 FR 55229	10/15/2019
30-day Notice:	Federal Register Citation:	Citation Date:
	85 FR 5776	01/31/2020
Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 3

IC Title	Form No.	Form Name
Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC
Deemed sale election
Deemed dividend election

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ICR Summary of Burden

	Total Approved	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	406,250	406,250	0	0	0	0
Annual Time Burden (Hours)	212,500	212,500	0	0	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Miscellaneous Actions

Burden decreases because of Program Change due to Agency Discretion: Yes

Burden Reduction Due to: Miscellaneous Actions

Short Statement: There is no change in the paperwork burden previously approved by OMB. We are making this submission to renew the OMB approval. We restructured the information collection to clearly outline the burden and reallocate the burden under the appropriate regulations. There was no increase or decrease in overall burden.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     No

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     Yes

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 01/31/2020

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