Taxpayers required to account for all or part of any long-term contract entered into after February 28, 1986, under the percentage of completion method must use Form 8697 to compute and report interest due or to be refunded under IRC section 460(b)(3). The IRS uses Form 8697 to determine if the interest has been figured correctly. Taxpayers may compute interest using the actual method (Part I) or the Simplified Marginal Impact Method (Part II).
An increase in the number of responses by 1,000, for a total of 4,300, is attributed to an adjustment in agency estimate. This adjustment reflects an increase in burden by 12,170 hours.
Numerous recommendations were adopted from a committee organized to review Form 8697.
1. We added a column on page 1 for the year the contract was completed. The income adjustments from the prior years are based on amounts computed when the contract is completed. (Reg. 1.460-6(c)(3));
2. For line 2, we removed the shading from the totals column. The adjustments should net to zero since look-back interest only allocates interest between the years;
3. We added an explanation to the headings in Parts I and II to explain to taxpayers the reason to complete each part;
4. In the signature block, we added a line in case a spouse has to sign the form. The processing of Form 8697 has been delayed in the past if the spouse's signature was missing, and
5. In the signature block for paid preparer's, we removed the reference to SSN since every preparer is required to have a PTIN.
These program changes increased the burden by 19,851 hours due to agency discretion.
A total of 72,578 burden hours are requested, an increase of 32,021 hours from the previously approved burden of 40,557 hours.
$5,572
No
No
No
No
No
Uncollected
Neal Dickman 2026225013
No
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:
(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;
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.
Form Form 8697 Internet Computation Under the Look-Back Method for Completed Long-Term Contracts
1545-1031_SS_Form8697_REV.doc
Summary of Changes.pdf
Expiration Explanation.rtf
Internet Computation Under the Look-Back Method for Completed Long-Term Contracts