FR 2021-00316

The document from the Department of the Treasury communicates its intention to submit requests to the Office of Management and Budget (OMB) for approval related to U.S. Income Tax Return forms used by individuals, most notably Form 1040. The necessity of these forms arises from sections 6011 and 6012 of the Internal Revenue Code, which mandate individuals to prepare and file income tax returns annually. According to the document, the public has the opportunity to submit comments on these requests until February 10, 2021. This process is part of the Paperwork Reduction Act of 1995, aiming to manage the information collection burden on the public.

General Summary

The document primarily discusses a routine administrative process where the Treasury seeks feedback from the public and approval from the OMB for the forms related to individual income taxes. Such forms are essential for individuals to report their income and calculate their tax liability. The document notes that the burden - in terms of time and monetary costs - associated with these forms has been revised due to changes in regulatory guidance and the inclusion or exclusion of certain forms.

Significant Issues and Concerns

Despite the clarity in the process described, the document raises several issues. Terms like "monetized burden" are used without definition, which could lead to confusion. Additionally, while it alludes to changes in forms affecting the burden and costs, it does not outline what these changes entail. Estimates on time and costs are given, but without detailed information on how these figures were reached, especially the monetized burden per respondent. The document also mentions that most taxpayers experience a lower than average burden but does not specify who these taxpayers are or what defines a "typical" case. The reliance on national averages may not adequately reflect individual or household differences, leading to potential misinterpretations.

Impact on the General Public

The announcement highlights the magnitude of the task many individuals face annually: preparing and submitting tax forms. By inviting public comments, the document extends an opportunity for individuals to voice their concerns or suggestions, potentially influencing how burdensome these processes are. It also indicates transparency and a willingness to adapt by the Treasury Department, though the lack of detail could hinder meaningful public input.

Impact on Specific Stakeholders

Certain stakeholders, such as tax professionals, policymakers, and interested citizen groups, might have a more substantial interest in the finer details of the document. For tax professionals, changes in forms could directly affect their work and advice to clients. For policymakers, understanding the variation in taxpayer burdens might influence decisions on tax legislation or reform. However, without explicit details, stakeholders might find it challenging to assess the precise implications or prepare for any changes.

In summary, while the document sets a framework for public engagement and regulatory compliance, its lack of detail on form changes and burdens creates potential ambiguity for those it intends to inform and assist. A more explicit explanation could better serve the public and other stakeholders in understanding the real-world impacts of tax form modifications.

The Federal Register document details the estimated financial implications associated with the filing of the U.S. Income Tax Return Forms, specifically Form 1040 and its affiliated return forms. The financial information provided offers insights into both the individual and collective fiscal responsibilities of taxpayers preparing these forms.

The document includes several key financial estimates:

1. Total Estimated Out-of-Pocket Costs: The collective expenses incurred by individual taxpayers in terms of actual cash outlays amount to $37.960 billion. This figure represents costs such as tax preparation services, software, or any additional financial services that taxpayers might need to accurately prepare their returns.

2. Estimated Out-of-Pocket Cost per Respondent: On average, each taxpayer is expected to spend $231 out-of-pocket. This suggests that while some individuals might incur higher costs, the majority of taxpayers likely spend less than this average.

3. Total Monetized Burden: The monetized burden across all taxpayers is calculated at $71.943 billion. This figure encompasses both out-of-pocket costs and additional opportunity costs, such as the value of time spent on tax preparation.

4. Estimated Total Monetized Burden per Respondent: The financial burden, when averaged per taxpayer, is estimated at $437. This reflects broader expenses including time expenditure, hinting that the overall impact on taxpayers' resources is substantial.

Financial References and Related Issues

The financial references highlight several potential issues:

• Lack of Detailed Breakdown: The document outlines the changes in regulatory guidance that affect tax forms but fails to provide a detailed explanation of how these changes impact the burden and cost estimates. This lack of specificity could cause confusion and uncertainty among taxpayers, particularly as they try to understand their individual financial responsibilities related to out-of-pocket costs and broader monetary burdens.

• Uncertainty of Estimates: At the time of the document's publication, key estimates had not been finalized. This uncertainty might affect stakeholders' confidence in the $231 and $437 average estimates per taxpayer, as the circumstances might evolve.

• Understanding "Monetized Burden": The term "monetized burden" lacks a clear definition in the document, which could leave readers questioning what costs are included and thus how the $71.943 billion figure is derived. Transparency about what constitutes monetized burdens would assist taxpayers in grasping the full implications of filing their tax returns.

• Variability Across Taxpayers: The document suggests that the taxpayer burden varies by type, yet it does not elaborate on how this variability might manifest across different demographics or income brackets. Reliance on national averages—such as the $231 out-of-pocket cost and $437 total burden—may not accurately reflect the experiences of all individuals or households, potentially undermining the perceived reliability of these estimates.

In summary, while the document provides comprehensive financial estimates, the general lack of clarity and detail surrounding how these figures are reached and what they encompass might lead to confusion and misinformation among taxpayers. Providing further breakdown and transparency could help mitigate this uncertainty, offering taxpayers a clearer understanding of their fiscal obligations.