[Federal Register Volume 88, Number 140 (Monday, July 24, 2023)]
[Notices]
[Pages 47555-47559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15598]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service


Proposed Collection; Comment Request for U.S. Employment Tax 
Returns and Related Forms; CT-1, CT-1X, CT-2, SS-8, SS-8 (PR), W-2, W-2 
AS, W-2 C, W-2 GU, W-2 VI, W-3, W-3 (PR), W-3 C, W-3 C (PR), W-3 SS, 
940, 940 (PR), 940 SCH A, 940 SCH A (PR), 940 SCH R, 941, 941 (PR), 941 
SCH B, 941 SCH B (PR), 941 SCH D, 941 SCH R, 941 SS, 941 X, 941 X (PR), 
943, 943 (PR), 943 A, 943 A (PR), 943 SCH R, 943 X, 943 X (PR), 944, 
944 X, 945, 945 A, 945 X, 2032, 2678, 8027, 8027 T, 8453 EMP, 8850, 
8879 EMP, 8922, 8952, and 8974

AGENCY: Internal Revenue Service (IRS), Treasury.

[[Page 47556]]


ACTION: Notice and request for comments.

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SUMMARY: The Internal Revenue Service, as part of its continuing effort 
to reduce paperwork and respondent burden, invites the general public 
and other Federal agencies to take this opportunity to comment on 
proposed and/or continuing information collections, as required by the 
Paperwork Reduction Act of 1995 (PRA). The IRS is soliciting comments 
on U.S. Employment Tax Returns and related Forms.

DATES: Written comments should be received on or before September 22, 
2023 to be assured of consideration.

ADDRESSES: Direct all written comments to Andres Garcia, Internal 
Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 
20224, or by email [email protected]. Include 1545-0029 or U.S. 
Employment Tax Returns and Related Forms.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the form and instructions should be directed to Kerry Dennis, 
at (202) 317-5751, Internal Revenue Service, Room 6526, 1111 
Constitution Avenue NW, Washington, DC 20224, or through the internet, 
at [email protected].

SUPPLEMENTARY INFORMATION: 

Change in PRA Approval of Forms Used by Employers

    Under the PRA, OMB assigns a control number to each ``collection of 
information'' that it reviews and approves for use by an agency. A 
single information collection may consist of one or more forms, 
recordkeeping requirements, and/or third-party disclosure requirements. 
Under the PRA and OMB regulations, agencies have the discretion to seek 
separate OMB approvals for forms, recordkeeping requirements, and 
third-party reporting requirements or to combine any number of forms, 
recordkeeping requirements, and/or third-party disclosure requirements 
(usually related in subject matter) under one OMB Control Number. 
Agency decisions on whether to group individual requirements under a 
single OMB Control Number or to disaggregate them and request separate 
OMB Control Numbers are based largely on considerations of 
administrative practicality.
    The PRA also requires agencies to estimate the burden for each 
collection of information. Accordingly, each OMB Control Number has an 
associated burden estimate. The burden estimates for each control 
number are displayed in (1) the PRA notices that accompany collections 
of information, (2) Federal Register notices such as this one, and (3) 
in OMB's database of approved information collections. If more than one 
form, recordkeeping requirement, and/or third-party disclosure 
requirement is approved under a single control number, then the burden 
estimate for that control number reflects the burden associated with 
all of the approved forms, recordkeeping requirements, and/or third-
party disclosure requirements.
    As described below under the heading ``Updated Burden Estimate 
Methodology,'' the IRS's currently accepted burden estimate methodology 
is based on taxpayers' tax reporting experience taking into account, 
among other things, the forms and schedules used by those taxpayers and 
the recordkeeping and other activities needed to complete those forms. 
The transition of the employer-related reporting burden represents the 
IRS's continued effort to improve the ability of IRS to measure the 
burden imposed on various groups of taxpayers by the Federal tax 
system. While the improved methodology provides a more accurate and 
comprehensive description of employer reporting burden, it will not 
provide burden estimates on a form-by-form basis, as has been done 
under the previous methodology. When the prior model was developed in 
the mid-1980s, almost all tax returns were prepared manually, either by 
the taxpayer or a paid provider. In this context, it was determined 
that estimating burden on a form-by-form, line-by-line basis was an 
appropriate methodology. Employer-related returns are increasingly 
being prepared using software or with preparer assistance. In this 
current reporting environment, in which many taxpayers' activities are 
no longer as directly associated with particular forms, estimating 
burden on a form-by-form basis is not an appropriate method of 
estimating taxpayer burden. The currently accepted methodology, which 
takes into account broader and more comprehensive taxpayer 
characteristics and activities, provides a much more accurate and 
useful estimate of taxpayer burden.
    Currently, there are 51 forms and 38 regulations used by employers 
pertaining to their employment-related reporting requirements. These 
include Forms CT-1, CT-1X, CT-2, SS-8, SS-8 (PR), W-2, W-2 AS, W-2 C, 
W-2 GU, W-2 VI, W-3, W-3 (PR), W-3 C, W-3 C (PR), W-3 SS, 940, 940 
(PR), 940 SCH A, 940 SCH A (PR), 940 SCH R, 941, 941 (PR), 941 SCH B, 
941 SCH B (PR), 941 SCH D, 941 SCH R, 941 SS, 941 X, 941 X (PR), 943, 
943 (PR), 943 A, 943 A (PR), 943 SCH R, 943 X, 943 X (PR), 944, 944 X, 
945, 945 A, 945 X, 2032, 2678, 8027, 8027 T, 8453 EMP, 8850, 8879 EMP, 
8922, 8952, and 8974, and their schedules, and all the forms employers 
attach to employment-related tax returns (see the Appendix to this 
notice). For most of these forms, IRS has in the past obtained separate 
OMB approvals under unique OMB Control Numbers and separate burden 
estimates.
    The currently accepted methodology estimates the aggregate burden 
imposed on employers, based upon their reporting-related 
characteristics and activities. IRS therefore will seek OMB approval of 
all 51 employer-related tax forms as a single ``collection of 
information.'' The aggregate burden of these tax forms will be 
accounted for under OMB Control Number 1545-0029, which is currently 
assigned to Form 941. OMB Control Number 1545-0029 will be displayed on 
all employer tax forms and related information collections. As a result 
of this change, burden estimates for employers will now be displayed 
differently in PRA Notices on tax forms and other information 
collections, and in Federal Register notices. This new way of 
displaying burden is presented below under the heading ``Proposed PRA 
Submission to OMB.''

Updated Burden Estimate Methodology

    The updated burden estimate methodology revises the estimates of 
the levels of burden experienced by employers when complying with their 
Federal reporting requirements pertaining to employment related taxes. 
It replaces the earlier burden estimate methodology developed in the 
mid-1980s. Since that time, improved technology and modeling 
sophistication have enabled the IRS to improve the burden estimates. 
The new methodology provides taxpayers and the IRS with a more 
comprehensive understanding of the current levels of taxpayer burden. 
It reflects major changes over the past two decades in the way 
taxpayers prepare and file their returns. The new burden estimate 
methodology also represents a substantial step forward in the IRS's 
ability to assess likely impacts of administrative and legislative 
changes on employers.
    The updated burden estimate methodology focuses on the 
characteristics and activities of employers rather than solely focusing 
on the forms they file. Key determinants of taxpayer burden in the 
model are the number of employees, employee turnover, level of 
compensation, economic activity associated with

[[Page 47557]]

employment related credits, and frequency of filing. Indicators of tax 
law and administrative complexity, as reflected in the tax forms and 
instructions, are incorporated into the model. Tax compliance burden 
does not include a taxpayer's tax liability, economic inefficiencies 
caused by sub-optimal choices related to tax deductions or credits, or 
psychological costs. The previous estimates primarily focused on the 
number of line items of each tax form. The changes between the old and 
new burden estimates are due to the improved ability of the new 
methodology to measure burden and the expanded scope of what is 
measured. These changes create a one-time shift in the estimate of 
imposed burden. It is important to note that the difference between the 
legacy and revised estimates do not reflect any change in the actual 
burden imposed by taxpayers.

Methodology

    Burden is defined as the time and out-of-pocket costs incurred by 
taxpayers to comply with their Federal tax reporting responsibilities. 
As has been done for individual taxpayer burden since 2005, business 
entity burden since 2014, and tax-exempt organization burden since 2018 
both the time expended and the out-of-pocket costs for employers are 
estimated. The burden estimation methodology relies on surveys that 
gather data about time and out-of-pocket costs that employers spend on 
pre-filing and filing activities. The methodology establishes 
econometric relationships between tax return characteristics and 
reported compliance costs. The methodology controls for the 
substitution of time and money by monetizing time and reporting total 
compliance costs in dollars. This methodology better reflects taxpayer 
compliance burden, because in a world of electronic tax preparation, 
time and out-of-pocket costs are governed by the information required 
rather than the form on which it is ultimately reported. Importantly, 
even where various employers complete the same tax form lines, the new 
methodology differentiates the cost incurred to complete those forms 
based on characteristics of those employers. Key employer 
characteristics that serve as coefficients in the employer reporting 
burden model are:

 Number of employees
 Employee turnover
 Level of compensation
 Economic activity associated with employment related credits 
and/or benefits
 Frequency of filing
 Type of primary form filed

    The new burden estimate methodology uses the following 
classifications of employers:

                                                     Strata
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                                                                  Percent of forms W-2
             Primary form                Number of W2s filed     with reported benefits       Reported tips
----------------------------------------------------------------------------------------------------------------
Form 941.............................  1 to 4.................  None...................  ANY.
                                       5 to 19................  None...................  ANY.
                                       20 to 99...............  None...................  NO.
                                       100 to 299.............  None...................  NO.
                                       300 to 999.............  None...................  NO.
                                       Over 1000..............  None...................  NO.
                                       1 to 19................  Less Than 10%..........  NO.
                                       20 to 99...............  Less Than 10%..........  NO.
                                       100 to 299.............  Less Than 10%..........  NO.
                                       300 to 999.............  Less Than 10%..........  NO.
                                       Over 1000..............  Less Than 10%..........  NO.
                                       1 to 19................  Greater Than 10%.......  NO.
                                       20 to 99...............  Greater Than 10%.......  NO.
                                       100 to 299.............  Greater Than 10%.......  NO.
                                       300 to 999.............  Greater Than 10%.......  NO.
                                       Over 1000..............  Greater Than 10%.......  NO.
                                       1 to 19................  ANY....................  YES.
                                       20 to 99...............  ANY....................  YES.
                                       100 to 299.............  ANY....................  YES.
                                       300 to 999.............  ANY....................  YES.
                                       Over 1000..............  ANY....................  YES.
Form 944.............................  ANY....................  ANY....................  ANY.
Form 943.............................  ANY....................  ANY....................  ANY
----------------------------------------------------------------------------------------------------------------

Proposed PRA Submission to OMB

    Title: U.S. Employment Tax Returns and related Forms.
    OMB Number: 1545-0029.
    Form Numbers: CT-1, CT-1X, CT-2, SS-8, SS-8 (PR), W-2, W-2 AS, W-2 
C, W-2 GU, W-2 VI, W-3, W-3 (PR), W-3 C, W-3 C (PR), W-3 SS, 940, 940 
(PR), 940 SCH A, 940 SCH A (PR), 940 SCH R, 941, 941 (PR), 941 SCH B, 
941 SCH B (PR), 941 SCH D, 941 SCH R, 941 SS, 941 X, 941 X (PR), 943, 
943 (PR), 943 A, 943 A (PR), 943 SCH R, 943 X, 943 X (PR), 944, 944 X, 
945, 945 A, 945 X, 2032, 2678, 8027, 8027 T, 8453 EMP, 8850, 8879 EMP, 
8922, 8952, and 8974.
    Abstract: These forms are used by employers to report their 
employment tax related activity. The data is used to verify that the 
items reported on the forms are correct.
    Current Actions: The burden estimation methodology for employment 
tax is being transitioned from the legacy ADL model to the Taxpayer 
Burden Model. The changes discussed above result in a burden hour 
estimate of 456,000,000 hours, a decrease in total estimated time 
burden of 492,967,465 hours. The newly reported total out-of-pocket 
costs is $18,910,000,000 and total monetized burden is $33,540,000,000. 
The change related to the transition of the burden estimate from the 
legacy Arthur D. Little Model methodology to the RAAS Taxpayer Burden 
Model, is a one-time change. In addition, changes are being made to the 
form to be current with enacted legislation.
    Type of Review: Revision of currently approved collections.
    Affected Public: Employers.

[[Page 47558]]

    Estimated Number of Respondents: 7,128,000.
    Total Estimated Time: 456,000,000 hours.
    Estimated Time per Respondent: approximately 64 hours.
    Total Estimated Out-of-Pocket Costs: $18,910,000,000.
    Estimated Out-of-Pocket Cost per FY2020 Respondent: $2,653.
    Total Estimated Monetized Burden: $33,540,000,000.
    Estimated Monetized Burden per FY2020. Respondent: $4,705.

        Fiscal Year (FY) 2023 Burden Total Estimates for Employment Tax Forms, Schedules, and Regulations
                                                    [FY2023]
----------------------------------------------------------------------------------------------------------------
                                                                       Program
                                                    Program change    change due    Program
                                       FY20       due to adjustment     to new     change due         FY23
                                                                     legislation   to agency
----------------------------------------------------------------------------------------------------------------
Responses per year..............   * 339,405,986      (332,277,986)            0            0       ** 7,128,000
Burden in Hours.................     948,967,465      (492,967,465)            0            0        456,000,000
Time Burden in Monetized Hours..              $0     $146,265,62000            0            0     $146,265,62000
Out-of-Pocket Costs.............              $0    $18,910,000,000            0            0    $18,910,000,000
Total Monetized Burden*.........              $0    $33,540,000,000            0            0    $33,540,000,000
----------------------------------------------------------------------------------------------------------------
Source: IRS:RAAS:KDA (04-15-23).
* FY20 responses per year is count of all forms and schedules filed under legacy A.D. Little burden estimate
  methodology.
** FY23 responses per year is count of all employers under taxpayer-centric RAAS burden estimate methodology.
  This approach is also used for OMB 1545-0074 individuals, 1545-0123 (business entities), and 1545-0047 (tax-
  exempt) organizations.
*** Total monetized burden = Monetized hours + Out-of-pocket costs.
Note: Reported time and cost burdens are national averages and do not necessarily reflect a ``typical'' case.
  Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer
  type. Detail may not add due to rounding.

Request for Comments

    Comments submitted in response to this notice will be summarized 
and/or included in the request for OMB approval. All comments will 
become a matter of public record. Comments are invited on: (a) Whether 
the collection of information is necessary for the proper performance 
of the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information to be collected; (d) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and (e) estimates 
of capital or start-up costs and costs of operation, maintenance, and 
purchase of services to provide information.

    Approved: July 18, 2023.
Kerry Dennis,
Tax Analyst.

Appendix A

------------------------------------------------------------------------
               Form                    Title/description       OMB No.
------------------------------------------------------------------------
CT-1.............................  Employer's Annual           1545-0001
                                    Railroad Retirement Tax
                                    Return.
CT-1X............................  Adjusted Employer's         1545-0001
                                    Annual Railroad
                                    Retirement Tax Return
                                    or Claim for Refund.
CT-2.............................  Employee                    1545-0002
                                    Representative's
                                    Quarterly Railroad Tax
                                    Return.
SS-8.............................  Determination of Worker     1545-0004
                                    Status for Purposes of
                                    Federal Employment
                                    Taxes and Income Tax
                                    Withholding.
SS-8 (PR)........................  Determination of            1545-0004
                                    Employee Work Status
                                    for Purposes of Federal
                                    Employment Taxes and
                                    Income Tax (Puerto
                                    Rican Version).
W-2..............................  Wage and Tax Statement..    1545-0008
W-2 AS...........................  American Samoa Wage and     1545-0008
                                    Tax Statement.
W-2 C............................  Corrected Wage and Tax      1545-0008
                                    Statement.
W-2 GU...........................  Guam Wage and Tax           1545-0008
                                    Statement.
W-2 VI...........................  U.S. Virgin Islands Wage    1545-0008
                                    and Tax Statement.
W-3..............................  Transmittal of Wage and     1545-0008
                                    Tax Statements.
W-3 (PR).........................  Transmittal of              1545-0008
                                    Withholding Statements
                                    (Puerto Rican Version).
W-3 C............................  Transmittal of Corrected    1545-0008
                                    Wage and Tax Statements.
W-3 C (PR).......................  Transmittal of Corrected    1545-0008
                                    Wage and Tax Statements
                                    (Puerto Rican Version).
W-3 SS...........................  Transmittal of Wage and     1545-0008
                                    Tax Statements.
940..............................  Employer's Annual           1545-0028
                                    Federal Unemployment
                                    (FUTA) Tax Return.
940 (PR).........................  Employer's Annual           1545-0028
                                    Federal Unemployment
                                    (FUTA) Tax Return
                                    (Puerto Rican Version).
940 SCH A........................  Multi-State Employer and    1545-0028
                                    Credit Reduction
                                    Information.
940 SCH A (PR)...................  Multi-State Employer and    1545-0028
                                    Credit Reduction
                                    Information (Puerto
                                    Rican Version).
940 SCH R........................  Allocation Schedule for     1545-0028
                                    Aggregate Form 940
                                    Filers.
941..............................  Employer's Quarterly      * 1545-0029
                                    Federal Tax Return.
941 (PR).........................  Employer's Quarterly      * 1545-0029
                                    Federal Tax Return.
941 SCH B........................  Report of Tax Liability   * 1545-0029
                                    for Semiweekly Schedule
                                    Depositors.
941 SCH B (PR)...................  Supplemental Record of    * 1545-0029
                                    Federal Tax Liability
                                    (Puerto Rican Version).
941 SCH D........................  Report of Discrepancies   * 1545-0029
                                    Caused by Acquisitions,
                                    Statutory Mergers, or
                                    Consolidations.
941 SCH R........................  Reconciliation for        * 1545-0029
                                    Aggregate Form 941
                                    Filers.
941 SS...........................  Employer's QUARTERLY      * 1545-0029
                                    Federal Tax Return
                                    (American Samoa, Guam,
                                    the Commonwealth of
                                    Northern Mariana
                                    Islands, and the U.S.
                                    Virgin Islands).
941 X............................  Adjusted Employer's       * 1545-0029
                                    QUARTERLY Federal Tax
                                    Return or Claim for
                                    Refund.
941 X (PR).......................  Adjusted Employer's       * 1545-0029
                                    QUARTERLY Federal Tax
                                    Return or Claim for
                                    Refund (Puerto Rico
                                    Version).
943..............................  Employer's Annual Tax       1545-0035
                                    Return for Agricultural
                                    Employees.

[[Page 47559]]

 
943 (PR).........................  Employer's Annual Tax       1545-0035
                                    Return for Agricultural
                                    Employees (Puerto Rican
                                    Version).
943 A............................  Agricultural Employer's     1545-0035
                                    Record of Federal Tax
                                    Liability.
943 A (PR).......................  Agricultural Employer's     1545-0035
                                    Record of Federal Tax
                                    Liability (Puerto Rican
                                    Version).
943 R............................  Allocation Schedule for     1545-0035
                                    Aggregate Form 943
                                    Filers.
943 X............................  Adjusted Employer's         1545-0035
                                    Annual Federal Tax
                                    Return for Agricultural
                                    Employees or Claim for
                                    Refund.
943 X (PR).......................  Adjusted Employer's         1545-0035
                                    Annual Federal Tax
                                    Return for Agricultural
                                    Employees or Claim for
                                    Refund.
944..............................  Employer's ANNUAL           1545-2007
                                    Federal Tax Return.
944 X............................  Adjusted Employer's         1545-2007
                                    ANNUAL Federal Tax
                                    Return or Claim for
                                    Refund.
945..............................  Annual Return of            1545-1430
                                    Withheld Federal Income
                                    Tax.
945 A............................  Annual Record of Federal    1545-1430
                                    Tax Liability.
945 X............................  Adjusted ANNUAL Return      1545-1430
                                    of Withheld Federal
                                    Income Tax or Claim for
                                    Refund.
2032.............................  Contract Coverage Under     1545-0137
                                    Title II of the Social
                                    Security Act.
2678.............................  Employer/Payer              1545-0748
                                    Appointment of Agent.
8027.............................  Employer's Annual           1545-0714
                                    Information Return of
                                    Tip Income and
                                    Allocated Tips.
8027 T...........................  Transmittal of              1545-0714
                                    Employer's Annual
                                    Information Return of
                                    Tip Income and
                                    Allocated Tips.
8453 EMP.........................  Employment Tax              1545-0967
                                    Declaration for an IRS
                                    e-file Return.
8850.............................  Pre-Screening Notice and    1545-1500
                                    Certification Request
                                    for the Work
                                    Opportunity Credit.
8879 EMP.........................  IRS e-file Signature        1545-0967
                                    Authorization for Forms
                                    940, 940-PR, 941, 941-
                                    PR, 941-SS, 943, 943-
                                    PR, 944, and 945.
8922.............................  Third-Party Sick Pay      * 1545-0123
                                    Recap.
8952.............................  Application for             1545-2215
                                    Voluntary
                                    Classification
                                    Settlement Program
                                    (VCSP).
8974.............................  Qualified Small Business    1545-0029
                                    Payroll Tax Credit for
                                    Increasing Research
                                    Activities.
------------------------------------------------------------------------
* 1545-0123 will not be discontinued. It is the Business collection and
  8922 will be included in both the Business collection and the
  Employment Tax collection.
* 1545-0029 will not be discontinued it will be the number assigned to
  all Forms within the employment tax collection.

Appendix B

------------------------------------------------------------------------
                 Guidance title/description                    OMB No.
------------------------------------------------------------------------
26 CFR 31.6001-1 Records in general; 26 CFR 31.6001-2          1545-0798
 Additional Records under FICA; 26 CFR 31.6001-3,
 Additional records under Railroad Retirement Tax Act; 26
 CFR 31.6001-5 Additional records..........................
Tip Reporting Alternative Commitment (TRAC) Agreement for      1545-1529
 Use in the Cosmetology and Barber Industry to Employment
 Tax.......................................................
Reg-111583-07 (TD 9405) (Final)--Employment Tax                1545-2097
 Adjustments; REG-130074-11--Rules Relating to Additional
 Medicare Tax..............................................
------------------------------------------------------------------------

[FR Doc. 2023-15598 Filed 7-21-23; 8:45 am]
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