FR 2024-28578

The document under review is a Notice and request for public comments issued by the Internal Revenue Service (IRS). It is part of the IRS's effort to engage with the public regarding the paperwork burden associated with obtaining advance pricing agreements (APAs). These agreements are pivotal for controlling transactions and ensure that such dealings between related entities fairly reflect income and do not result in tax avoidance.

General Summary

The notice invites feedback on the necessity and utility of the information collected by the IRS in the context of advance pricing agreements. Specifically, it focuses on evaluating whether the current information collection is necessary, measuring the burden on respondents accurately, and identifying ways to minimize this burden. The IRS is open to suggestions that could improve their administrative processes through modern technology, including enabling electronic submissions.

Comments are requested by February 4, 2025, to be included in the decision-making process for the extension of the collection process under the Paperwork Reduction Act.

Significant Issues and Concerns

Several issues in the notice warrant attention:

1. Clarity on the Use of Comments: The notice lacks clear language about what concrete actions the IRS plans to undertake based on public comments. Detailed insight into how feedback will shape policy or process improvements will provide transparency and encourage meaningful public participation.

2. Justification for Time Estimates: The IRS has estimated that each respondent will spend roughly 28 hours on this process, leading to an overall annual burden of 10,900 hours. There is no justification provided for these figures. More detailed information on how these numbers were computed could help respondents understand the underlying assumptions and potentially identify areas for efficiency improvements.

3. Rationale for No Changes to Forms: The current notice states that no changes are being made to the forms associated with this collection. A justification or explanation for this decision is absent, leaving stakeholders unclear about whether improvements or simplifications could be implemented or why they are deemed unnecessary.

4. Privacy Concerns: The notice states that comments will become part of the public record but does not address how confidentiality and privacy of individual commenters will be respected. This omission may deter some organizations or individuals from participating fully.

5. Lack of Outcome Examples: Although the abstract mentions the prevention of tax avoidance, it does not give any examples or outcomes from past implementations that might serve as a rationale for the program. Including such information might help potential respondents understand the importance and impact of APAs.

Impact on the Public

For the general public, particularly businesses involved in international trade or operations, this notice signals an opportunity to influence the IRS's administrative processes, potentially reducing the administrative burden associated with fulfilling tax-related compliance requirements. Minimizing paperwork and facilitating easier compliance could lead to cost savings and improved efficiency.

Impact on Specific Stakeholders

Businesses, especially multinationals, stand to gain directly by participating in this process, as their feedback can shape a regulatory environment more conducive to fair taxation and efficient operation processes. The notice's focus on technological solutions also points towards a trend of modernizing tax compliance, which could particularly benefit tech-savvy organizations.

Additionally, tax professionals and consultants might have concerns regarding the justification of the time burden estimates, as such figures directly impact how they manage and bill their services. Conversely, they may see opportunities to influence the simplification of compliance paperwork.

Overall, while the notice opens the door for public participation, addressing the outlined concerns could ensure more impactful engagement and effective policy development.