Repost from JReg: The Paperwork Reduction Act and why you may be able to file your taxes on a napkin in 2021

by Sam Wice (Original source: Yale Journal on Regulation)

Given the Paperwork Reduction Act’s (PRA) importance, it often does not get much attention. If the Office of Information and Regulatory Affairs (OIRA) is the most important office you’ve never heard of, then the PRA may be the most important function of OIRA you’ve never heard of. In addition to creating OIRA, the PRA requires that agencies (including independent agencies) follow the PRA process for collections of information from at least ten people. The PRA generally serves to (1) report the burdens associated with collections of information and (2) create a process for minimizing the burdens associated with collections of information.

Despite this review process being an excellent avenue for the public to provide input on potential regulatory impacts, when agencies publish collections of information in the Federal Register, they rarely get comments. For instance, nobody commented on the most recent information collection request from the Internal Review Service (IRS) on its individual income-tax forms and only two people commented on the IRS’s business income-tax forms, even though the IRS estimated that the combined 582 tax forms in both requests would impact 171.3 million people/entities.

Through this post, I hope to give a short overview of the PRA review process and use the IRS’s income-tax forms as an illustrative example of the importance of the PRA process, including how it provides for the regular review of existing collections of information. Specifically, given the delay in the IRS initiating the PRA process for the 2021 income-tax season, the IRS will likely struggle to comply with the PRA’s requirements, which could allow taxpayers a much greater latitude in how they file their income-tax returns.[1]

Photo by Gerd Altmann on Pixabay

PRA Review Process

As part of the PRA review process, agencies must conduct a three-month comment period. Specifically, an agency must request comments on the proposed collection of information through a 60-day comment period in the Federal Register. After considering public comments, the agency must concurrently (I) submit the collection of information (including the agency’s supporting statement regarding the form) to OIRA for review and (II) publish a notice in the Federal Register that the agency sent the request to OIRA and the public has 30 days to send any comments to OIRA.

In reviewing the information collection request, OIRA will determine whether the collection of information (I) is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (II) minimizes the Federal information collection burden, with particular emphasis on those individuals and entities most adversely affected; (III) maximizes the practical utility of and public benefit from information collected by or for the Federal Government; and (IV) is consistent with applicable laws, regulations, and policies related to privacy, confidentiality, security, information quality, and statistical standards.

OIRA cannot approve the information collection request before the 30-day comment period expires unless the collection (I) is needed prior to the expiration of the comment period; (II) is essential to the mission of the agency; and (III) the agency could not reasonably comply with the PRA because (1) public harm is reasonably likely to result if normal clearance procedures are followed, (2) an unanticipated event has occurred, or (3) the use of normal clearance procedures is reasonably likely to prevent or disrupt the collection of information or is reasonably likely to cause a statutory or court ordered deadline to be missed. When requesting this emergency approval, an agency must demonstrate that it has taken all practicable steps to consult with members of the public.

Any approval must be renewed at least every three years, unless OIRA waives the comment periods through an emergency approval, which is only valid for six months. Agencies must also seek approval for any non-de minimis revisions to an existing collection of information, including going through the full three-month comment process for any substantive changes to a collection of information.

Part of the remedy for any violation of the PRA is that whenever an agency has imposed a collection of information as a means for requesting a benefit or the avoidance of a penalty, the agency may not treat a person’s failure to comply, in and of itself, as grounds for withholding the benefit or imposing the penalty. The agency shall instead permit respondents to prove or satisfy the legal conditions in any other reasonable manner.

Continue reading the original article on Yale Journal on Regulation.

[1] For a more detailed description of the PRA process, OIRA has a PRA website describing the PRA and all its requirements.