GAO

United States General Accounting Office

A

Testimony

Before the Subcommittee on Energy Policy, Natural 

Resources and Regulatory Affairs, Committee on 

Government Reform, House of Representatives

For Release on Delivery 

Expected at 2:00 p.m. EDT

Tuesday, April 20, 2004

PAPERWORK 

REDUCTION ACT 

Agencies’ Paperwork 

Burden Estimates Due to 

Federal Actions Continue 

to Increase 

Statement of Patricia A. Dalton, Director

Strategic Issues 

GAO-04-676T
www.gao.gov/cgi-bin/getrpt?GAO-04-676T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Patricia A. 

Dalton at (202) 512-6806 or 

daltonp@gao.gov. 

Highlights of GAO-04-676T, a testimony 

before the Subcommittee on Energy 

Policy, Natural Resources and Regulatory 

Affairs, Committee on Government 

Reform, House of Representatives 

April 20, 2004

PAPERWORK REDUCTION ACT

Agencies’ Paperwork Burden Estimates 

Due to Federal Actions Continue to 

Increase 

As of September 30, 2003, federal agencies estimated that there was about 

8.1 billion “burden hours” of paperwork governmentwide. While it may 

appear that the paperwork burden decreased by about 116 million burden 

hours from last year, it is important to note that most of the reduction was 

achieved through adjustments—actions occurring outside of the agencies’ 

control or as a result of reestimates of current paperwork requirements—

and not through agency-initiated actions. In fact, the total paperwork 

burden, exclusive of adjustments, actually increased by about 72 million 

burden hours. IRS alone accounted for about 6.5 billion burden hours (81 

percent) of the governmentwide burden-hour estimate as well as for most of 

the burden-hour reduction attributable to adjustments. 

OMB and the federal agencies identified 223 violations of the PRA that 

occurred during fiscal year 2003—a slight reduction in the number of 

violations that were reported last year, but still progress from fiscal year 

1998, when there were over 850 violations. OMB continues to take several 

actions to address PRA violations since last year’s hearing. Still, 223 

violations of the law during a single year continue to be troubling and should 

not be tolerated. OMB and the agencies can do more to ensure that the PRA 

is not violated. 

IRS Accounted for Most of the Federal Paperwork Burden-Hour Estimate as of September 30,

2003

The Paperwork Reduction Act 

(PRA) requires federal agencies to 

minimize the paperwork burden 

they impose on the public. The act 

also requires agencies to obtain 

approval from the Office of 

Management and Budget (OMB) 

before collecting covered 

information. At the 

Subcommittee’s request, GAO 

examined changes during the past 

fiscal year in federal agencies’ 

paperwork burden estimates and 

their causes, focusing on the 

Internal Revenue Service (IRS). 

GAO also examined changes in the 

number of violations of the PRA. 

GAO is not making any 

recommendations. However, 

because IRS accounts for most of 

the federal paperwork and 

therefore has a determining impact 

on the governmentwide burdenhour estimate, OMB could focus 

more of its burden reduction 

efforts on that agency. Also, OMB 

and the agencies could do more to 

reduce violations. For example, 

OMB could promote the use of 

“best practices” used in agencies 

with good compliance records. 
Page 1 GAO-04-676T 

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of the 

Paperwork Reduction Act (PRA) of 1995, as amended. As you requested, I 

will discuss changes in the estimated federal paperwork burden during the 

past year, with a particular focus on the Internal Revenue Service (IRS). I 

will also revisit an issue that we have discussed during previous hearings 

before this Subcommittee—violations of the PRA in which either 

information collections were not authorized by the Office of Management 

and Budget (OMB) or those authorizations had expired.

In brief, federal agencies’ estimate of federal paperwork at the end of fiscal 

year 2003 stood at about 8.1 billion burden hours. While it may appear that 

the overall paperwork burden decreased by about 116 million burden hours 

from last year, the estimate does not tell the complete story. First, the 

agencies’ estimates are not precise and the changes from year to year may 

not be meaningful. It is equally important to understand how this reduction 

took place. Most of this reduction was achieved through adjustments—

caused by factors such as changes in the population responding to a 

requirement or agency reestimates of the burden associated with a 

collection of information compared to previous paperwork estimates—and 

not through agency actions. In fact, the total paperwork burden, exclusive 

of adjustments, actually increased by about 72 million burden hours to 

about 8.3 billion burden hours. Most of the burden-hour reduction due to 

adjustments could be attributed to IRS. IRS alone reduced its paperwork 

burden by 166.7 million burden hours due to adjustments. For example, 

one IRS information collection resulted in a reduction of 127 million 

burden hours, of which over 93 million burden hours were reduced as a 

result of adjustments to the agency’s burden-hour estimate for Form 1120 

which is for U.S. corporations reporting income taxes.

Also, our review of OMB’s and federal agencies’ information collection 

budgets (ICB) identified 223 violations of the PRA that occurred during 

fiscal year 2003—only a slight reduction in the number of violations that 

were reported last year, but still progress from the more than 850 violations 

reported during fiscal year 1998. OMB deserves credit for the reductions 

that have occurred in the past year. However, the existence of 223 

violations of the law during fiscal year 2003 continues to be troubling and 

should not be tolerated. We continue to believe that OMB and the agencies 

can do more to ensure that the PRA is not violated.
Page 2 GAO-04-676T 

Background Before discussing these issues in detail, it is important to recognize that a 

large portion of federal paperwork is necessary and most often serves a 

useful purpose. Information collection is one way that agencies carry out 

their missions. For example, IRS needs to collect information from 

taxpayers and their employers to know the correct amount of taxes owed. 

The U.S. Census Bureau collected information that was used to reapportion 

congressional representation and is being used for a myriad of other 

purposes. On several occasions, we have recommended that agencies 

collect certain data to improve operations and evaluate their effectiveness.1

However, under the PRA, federal agencies are required to minimize the 

paperwork burden they impose. The original PRA of 1980 established the 

Office of Information and Regulatory Affairs (OIRA) within OMB to provide 

central agency leadership and oversight of governmentwide efforts to 

reduce unnecessary paperwork and improve the management of 

information resources. In September 2003, the administration introduced 

its six-point plan for the economy that was labeled “a full agenda for the 

creation of jobs in America.” One of the six points is the streamlining of 

regulations and reporting requirements. This is seen by the administration 

as a critical part of creating jobs and is reiterated in the President’s 2005 

budget.

OIRA also has overall responsibility for determining whether agencies’ 

proposals for collecting information comply with the PRA.2 Agencies must 

receive OIRA approval for each information collection request before it is 

implemented. Section 3514(a) of the PRA requires OIRA to keep Congress 

“fully and currently informed” of the major activities under the act, and to 

submit a report to Congress at least annually on those activities. The 

report must include, among other things, a list of all PRA violations and a 

list of any increases in burden. To satisfy this reporting requirement, OIRA 

1

See U.S. General Accounting Office, Veterans’ Health Care: VA Needs Better Data on 

Extent and Causes of Waiting Times, GAO/HEHS-00-90 (Washington, D.C.: May 31, 2000); 

Public Housing: HUD Needs Better Information on Housing Agencies’ Management 

Performance, GAO-01-94 (Washington, D.C.: Nov. 9, 2000); and Environmental 

Information: EPA Needs Better Information to Manage Risks and Measure Results, GAO01-97T (Washington, D.C:, Oct. 3, 2000). 

2

The act requires the director of OMB to delegate the authority to administer all functions 

under the act to the administrator of OIRA, but does not relieve the OMB director of 

responsibility for the administration of those functions. Approvals are made on behalf of 

the OMB director. In this testimony, we generally refer to OIRA or the OIRA administrator 

wherever the act assigns responsibilities to OMB or the director. 
Page 3 GAO-04-676T 

develops a governmentwide ICB by gathering data from executive branch 

agencies. In December 2003, the OMB Director sent a bulletin to the heads 

of executive departments and agencies requesting information to be used 

in preparation for the fiscal year 2004 ICB (reporting on actions during 

fiscal year 2003). 

OIRA published its ICB for fiscal year 2003 (showing changes in agencies’ 

burden-hour estimates during fiscal year 2002) in April 2003. OIRA officials 

told us that they did not expect to publish the ICB for fiscal year 2004 until 

today’s hearing. Therefore, we obtained unpublished data from OIRA to 

identify changes in governmentwide and agency-specific burden-hour 

estimates and PRA violations during fiscal year 2003. We then compared 

the data to agencies’ burden-hour estimates and violations in previous ICBs 

to determine the changes in the data over time.

“Burden hours” has been the principal unit of paperwork burden for more 

than 50 years and has been accepted by agencies and the public because it 

is a clear, easy-to-understand concept. However, it is important to 

recognize that these estimates have limitations. Estimating the amount of 

time it will take for an individual to collect and provide the information or 

how many individuals an information collection will affect is not a simple 

matter.3

 Therefore, the degree to which agency burden-hour estimates 

reflect real burden is unclear. IRS—which accounts for about 80 percent of 

the governmentwide burden—is sufficiently concerned about the 

methodology it uses to develop burden estimates that it is in the process of 

developing and testing alternative means of measuring its paperwork 

burden. Nevertheless, these are the best indicators of paperwork burden 

available, and we believe they can be useful as long as their limitations are 

kept in mind.

Scope and 

Methodology

In conducting our review, we obtained from OIRA the individual agencies’ 

submissions to the ICB. These submissions contain the agency-reported 

changes to the individual paperwork inventories, as well as those violations 

of the PRA they identified as having occurred during fiscal year 2003. We 

assessed the data reliability of the individual agencies’ burden-hour 

estimates and violations by (1) performing electronic testing for obvious 

3

See U.S. General Accounting Office, EPA Paperwork: Burden Estimate Increasing Despite 

Reduction Claims, GAO/GGD-00-59 (Washington, D.C.: Mar. 16, 2000), for how one agency 

estimates paperwork burden. 
Page 4 GAO-04-676T 

errors in accuracy and completeness, (2) reviewing relevant documents 

such as OMB guidance in reporting burden-hour estimates and violations 

and the dockets for selected information collections, and (3) interviewing 

knowledgeable OMB officials. We determined that the data were 

sufficiently reliable for the purpose of this statement. We conducted our 

review from February through April 2004 in accordance with generally 

accepted government auditing standards.

Small Decrease in the 

Governmentwide 

Paperwork Burden 

Reported for 2003, but 

Burden Due to Federal 

Actions Increases

At the end of fiscal year 1995—just before the PRA of 1995 took effect—

federal agencies estimated that their information collections imposed 

about 7 billion burden hours on the public. The amendment and 

recodification of the PRA that year made several changes in federal 

paperwork reduction requirements. One such change required OIRA to set 

a goal of at least a 10 percent reduction in the governmentwide burdenhour estimate for each of fiscal years 1996 and 1997, a 5 percent 

governmentwide burden reduction goal in each of the next 4 fiscal years, 

and annual agency goals that reduce burden to the “maximum practicable 

opportunity.” Therefore, if federal agencies had been able to meet each of 

these goals, the 7 billion burden-hour estimate in 1995 would have 

decreased about 35 percent to about 4.6 billion hours by September 30, 

2001.

However, this reduction in paperwork burden did not occur. As of 

September 30, 2001, the target date in the act, the federal paperwork 

estimate had increased by about 9 percent to 7.6 billion burden hours. Last 

year we reported that the federal paperwork estimate stood at 8.2 billion 

hours as of September 30, 2002. The increase from the previous year 

(about 570 million burden hours) was the largest 1-year increase since the 

act was recodified in 1995.

This year, the story, while on the surface may appear encouraging, is not. 

The data we obtained from OIRA indicate that the governmentwide 

paperwork estimate as of September 30, 2003, stood at 8.1 billion burden 

hours. First, this is about 1.1 billion burden hours larger than it was when 

the PRA took effect in 1995. In addition, while it appears that there was a 

drop of about 116 million burden hours from the previous year, were it not 

for adjustments to the burden estimate, the federal government actually 

experienced an increase of about 72 million burden hours in paperwork 

burden. However, even at 8.1 billion burden hours, the governmentwide 

paperwork estimate is 3.5 billion burden hours higher than the act’s target 

estimate at the end of September 30, 2001.
Page 5 GAO-04-676T 

The overall burden-hour estimate does not tell the complete story however. 

First, the agencies’ estimates are not precise and the changes from year to 

year may not be meaningful. It is equally important to understand how the 

reduction took place. As table 1 shows, were it not for the burden-hour 

reduction of about 182 million due to adjustments, there was an increase in 

the paperwork burden of 72 million burden-hours. Table 1 also shows that 

only a few agencies’ paperwork estimates changed substantially during 

fiscal year 2003. The Department of Homeland Security (DHS) was created 

during fiscal year 2003 and by the end of the fiscal year had an estimated 

78.2 million burden hours of paperwork. Most of the DHS paperwork 

burden was the result of requirements associated with the paperwork 

inventories that were combined in establishing DHS.4

 Three 

departments—Defense, Labor, and the Treasury—exhibited substantial 

decreases in their estimated burdens, with Treasury’s decrease far 

outstripping the others. However, much of the Treasury’s burden-hour 

reduction was due to adjustments.

Table 1: Reported Changes in Federal Agencies’ Burden-Hour Estimates during Fiscal Year 2003

4

For example, 10 information collections were contained within the Immigration and 

Naturalization Service (INS) inventory. When the President signed the Homeland Security 

Act of 2002 that transferred INS into the newly established DHS, these information 

collections became part of the new department’s burden-hour estimate. These 10 

information collections accounted for almost 31 million burden hours—about 38 percent of 

the department’s paperwork burden. 

Burden hours in millions

Program changes

FY 2002

estimate

New 

statutes

Lapses in 

OMB approval

Agency 

action Total Adjustments

Total 

change

FY 2003 

estimate

Governmentwide 8,221.7 122.3 (53.8) 3.6 72.1 (181.7) (116.3) 8,105.4

Non-Treasury 1,471.8 44.8 1,516.6

Departments

 Agriculture 88.6 0.7 (0.1) 9.7 10.3 (1.5) 8.8 97.4

 Commerce 11.7 0.0 – 4.6 4.6 1.0 5.6 17.3

 Defense 92.4 – (54.7) 12.1 (42.6) 0.0 (42.6) 49.8

 Education 38.4 2.8 0.0 0.6 3.4 (1.3) 2.1 40.5

 Energy 3.8 0.1 (0.1) (0.4) (0.4) 0.0 (0.4) 3.4

 Health and Human Services 224.8 4.1 3.7 (5.3) 2.5 26.4 28.9 253.7
Page 6 GAO-04-676T 

Sources: OMB and agencies’ ICB submissions.

Note: The General Services Administration submitted data on the Federal Acquisition Regulatory 

Council. Data from the 27 departments and agencies may not equal the governmentwide figure 

because smaller agencies’ requirements are also included. Cells with “0.0” values were nonzero 

values rounded to zero. Cells with “–” entries were zero values. Addition of individual elements may 

not equal totals due to rounding.

 Homeland Security – (0.5) (2.0) 37.5 35.1 43.0 78.2 78.2

 Housing and Urban

 Development 21.9 0.0 1.0 (0.1) 0.9 2.9 3.8 25.7

 Interior 7.7 0.0 0.0 (0.1) (0.1) (0.1) (0.2) 7.5

 Justice 46.6 0.7 (0.1) 0.1 0.1 (32.0) (31.2) 15.3

 Labor 189.2 0.2 – (0.1) 0.1 (29.8) (29.7) 159.5

 State 29.2 – 0.0 0.3 0.3 (0.1) 0.2 29.4

 Transportation 244.7 2.9 (1.4) 4.9 6.4 (1.5) 4.9 249.6

 Treasury 6,750.4 105.4 – (70.0) 35.4 (197.0) (161.6) 6,588.8

 Veterans Affairs 7.4 0.1 – (0.1) 0.0 – 0.0 7.4

Agencies

 Environmental

 Protection Agency 140.5 2.7 – 7.4 10.1 (1.8) 8.3 148.3

 Federal Acquisition

 Regulations 24.5 – – (0.8) (0.8) 6.9 6.1 30.6

 Federal Communications

 Commission 26.8 0.1 (0.2) 1.1 1.0 (1.1) (0.1) 26.7

 Federal Deposit 

 Insurance Corporation 9.9 – – 0.0 0.0 0.1 0.1 10.0

 Federal Energy

 Regulatory Commission 4.4 – 0.0 0.0 – – – 4.4

 Federal Trade Commission 69.7 0.5 – 0.7 1.2 (4.0) (2.8) 66.9

 National Aeronautics and

 Space Administration 6.0 – – (0.2) (0.2) 0.0 (0.2) 5.8

 National Science Foundation 4.5 – – – – 0.0 0.0 4.5

 Nuclear Regulatory 

 Commission 8.3 – – 0.0 0.0 0.5 0.5 8.8

 Securities and Exchange

 Commission 136.6 0.7 – 0.9 1.6 7.1 8.7 145.3

 Small Business Administration 2.8 – 0.0 – 0.0 0.0 0.0 2.8

 Social Security Administration 24.9 2.0 – 0.8 2.8 0.6 3.4 28.3

(Continued From Previous Page)

Burden hours in millions

Program changes

FY 2002

estimate

New 

statutes

Lapses in 

OMB approval

Agency 

action Total Adjustments

Total 

change

FY 2003 

estimate
Page 7 GAO-04-676T 

It is important to understand how the agencies accomplish these results. 

OIRA classifies modifications—either increases or decreases—in agencies’ 

burden-hour estimates as either “program changes” or “adjustments.”

• Program changes are the result of deliberate federal government action 

(e.g., the addition or deletion of questions on a form) and can occur as a 

result of new statutory requirements or agency-initiated actions or 

through the expiration or reinstatement of OIRA-approved collections. 

• Adjustments are not the result of direct federal government action but 

rather are caused by factors such as changes in the population 

responding to a requirement or agency reestimates of the burden 

associated with a collection of information. For example, if the 

economy declines and more people complete applications for food 

stamps, the resulting increase in the Department of Agriculture’s 

paperwork estimate is considered an adjustment because it is not the 

result of deliberate federal action.

The agencies’ ICB submissions identified what drove the changes in the 

agencies’ bottom-line burden-hour estimates during fiscal year 2003. Some 

of the changes in the agencies’ burden-hour estimates are the results of 

legislative actions and are partially outside the agencies’ control. However, 

much of the burden-hour decrease experienced during fiscal year 2003 was 

driven by agencies’ adjustments to their inventories of paperwork 

requirements and not through agency-initiated actions. As table 2 shows, 

the number of burden hours attributable to program changes has increased 

every fiscal year from 1998 to 2002. During fiscal year 2003 the total 

paperwork burden, exclusive of adjustments, increased again by about 72 

million burden hours.

Table 2: Increases in Burden Hours due to Program Changes Between Fiscal Years 

1998 and 2003

In millions

Fiscal year

Total governmentwide 

burden-hour estimate

Number of burden hours 

due to program changes

2003 8,105.4 72.1

2002 8,223.2 294.1

2001 7,651.4 158.7

2000 7,361.0 188.0
Page 8 GAO-04-676T 

Sources: OMB and agencies’ ICBs.

IRS Burden-Hour Estimates 

Greatly Influence the 

Governmentwide 

Paperwork Estimate

We have previously reported that the increases in paperwork burden 

experienced by the federal government were largely attributable to the 

increases in IRS paperwork. For example, last year, when the government 

reported an increase of 570 million burden hours, IRS accounted for almost 

60 percent (about 330 million burden hours) of the reported increase. For 

fiscal year 2003, the decrease in the governmentwide paperwork burden is 

also attributable to changes in IRS paperwork that resulted in a decrease in 

burden. IRS reported a decrease of 131.4 million burden hours that was 

more than enough to offset the increases experienced by the other federal 

agencies. Therefore, although all agencies must ensure that their 

information collections impose the least amount of burden possible, it is 

clear that the key to controlling federal paperwork governmentwide lies in 

understanding the influence of increases and decreases at IRS.

As of September 30, 2003, IRS accounted for about 99 percent of the 

Department of the Treasury’s burden-hour estimate—nearly 6,539.7 billion 

burden hours. In fact, as figure 1 shows, IRS accounted for about 81 

percent of the governmentwide burden-hour estimate (up from about 75 

percent in September 1995). Other agencies with burden-hour estimates of 

100 million hours or more as of that date were the Departments of Health 

and Human Services (HHS), Labor (DOL), and Transportation (DOT), the 

Environmental Protection Agency (EPA); and the Securities and Exchange 

Commission. Still, because IRS constitutes such a significant portion of the 

governmentwide burden-hour estimate, changes in IRS’s estimate can have 

a significant—and even determinative—effect on the governmentwide 

estimate.

1999 7,183.9 189.0

1998 6,951.1 41.1

(Continued From Previous Page)

In millions

Fiscal year

Total governmentwide 

burden-hour estimate

Number of burden hours 

due to program changes
Page 9 GAO-04-676T 

Figure 1: IRS Accounted for Most of the Federal Paperwork Burden-Hour Estimate 

as of September 30, 2003

Note: The governmentwide burden-hour estimate as of September 30, 2003, was about 8.1 billion 

burden hours.

Treasury’s ICB submission indicated that the decrease in the department’s 

estimate during fiscal year 2003 (about 162 million burden hours) was 

largely achieved through adjustments. Decreases of 70 million burden 

hours due to agency actions and 190 million burden hours due to 

adjustments were reported, while there was an increase of 105 million 

burden hours due to statutory requirements. According to the ICB 

submission, this adjustment was largely driven by adjustments associated 

with the Forms 1040 and 1040A that are used by individual taxpayers to 

report their taxable incomes, and Form 1120, which is used by corporations 

to compute their taxable income and tax liability. 

During fiscal year 2003, IRS’s paperwork burden decreased by about 70 

million burden hours due to agency actions. As table 3 shows, five 

information collections resulted in a reduction of about 64 million burden 

hours as a result of implementing burden reduction initiatives developed in 

previous fiscal years. Another 17 million burden-hour reduction was 

achieved as a result of IRS changing paperwork requirements not directed 

by a burden reduction initiative. However, four of these information 

collections resulted in a burden-hour decrease of over 190 million hours 

due to adjustments to the collections. Since OMB does not require 

agencies to report on the reasons for changes in paperwork burden due to 

adjustments in their ICB submissions, we are unable to identify the 

IRS 80.7%

3.1% HHS

3.1% DOT

2.0% DOL

1.8% EPA

9.3% Other

19.3% Other

Sources: OMB and the Department of the Treasury.
Page 10 GAO-04-676T 

underlying factors that resulted in these decreases in IRS paperwork 

burden.

Table 3: IRS Information Collections with Burden-Hour Reductions of 500,000 or More Due to Agency Actions

OMB 

control 

number Title

Due to 

statutory 

changes

Due to 

agency 

actions

Due to 

adjustments Reason(s) for decrease

1545-0074 2003 Form 1040 and 

Schedules, U.S. 

Individual Income Tax 

Returns

+15,974,817 -9,875,098 -87,978,659 IRS made changes—deletions of lines--to the 

Form 1040 and its instructions and schedules. 

(9,664,549)

The number of new filers for Form 1040-V 

should have been an adjustment instead of a 

program change. (210,549)

2003 Form 1040, U.S. 

Individual Income Tax 

Returns

+2,840,101 -15,616,147 As part of the Burden Reduction Initiatives, the 

Department of the Treasury decided to increase 

the threshold for filing Schedule B (Form 1040) 

to $1,500. As a result, this changed the 

number of filers. (15,616,147)

1545-0085 2002 Form 1040A and 

Schedules, U.S. 

Individual Income 

Returns

+4,219,190 -992,751 IRS removed two check boxes on the Social 

Benefits Worksheet for clarification purposes to 

reduce burden and provide consistency with 

various products. (992,721)

2002 Form 1040 A and 

Schedules, U.S. 

Individual Income Tax 

Returns

-1,612,553 As part of the Burden Reduction Initiatives, the 

Department of the Treasury decided to increase 

the threshold for filing Schedule 1 (Form 

1040A) from $400 to $1,500. As a result, this 

changed the number of filers. (1,612,553)

1545-0092 U.S. Income Tax Return 

for Estates and Trusts

2,272,477 -1,492,190 IRS deleted lines from the Schedule D 

worksheet and from Schedule I that offset an 

increase from added lines to Schedule D. 

(1,492,190) 

1545-0123 Form 1120 and 

Schedules, U.S. 

Corporation Income Tax 

Return

-4,439,447 -29,316,584 -93,263,395 As part of the Burden Reduction Initiatives, the 

Department of the Treasury decided that 

corporations with total receipts and assets of 

less than $250,000 are not required to 

complete Schedules L, M-1, and M-2. 

(26,211,719)

IRS also made changes throughout Form 1120, 

schedules, and instructions. (3,104,865)

1545-0130 2002 Form 1120S and 

Schedules, U.S. Income 

Tax Returns for an S 

Corporation

-14,262,930 As part of the Burden Reduction Initiatives, the 

Department of the Treasury decided that 

corporations with total receipts and assets of 

less than $250,000 are not required to 

complete Schedules L and M-1. (14,262,930)
Page 11 GAO-04-676T 

Sources: OMB and the Department of the Treasury.

While IRS achieved paperwork burden decreases through agency actions 

and adjustments, it experienced a paperwork burden increase of about 105 

million burden hours due to statutory requirements. According to 

Treasury’s ICB, the implementation of the Jobs and Growth Tax Relief 

Reconciliation Act of 2003 resulted in an increase in IRS’s paperwork 

burden of about 55 million burden hours—about 51 percent of the IRS’s 

total increase due to statutory requirements.5

 The ICB indicates another 24 

million burden-hour increase was due to changes to sections of the Internal

1545-0130 2002 Form 1120S and 

Schedules, U.S. Income 

Tax Returns for an S 

Corporation

+5,035,690 -585,430 IRS deleted Schedule D (Part III-Capital Gains 

Tax) because it was no longer relevant and 

added one line to Schedule B. (585,430)

1545-0890 2002 Form 1120-A, U.S. 

Corporation Short-Form 

Income Tax Return

-427,645 -2,950,743 -11,045,000 As part of the Burden Reduction Initiatives, the 

Department of the Treasury decided that 

corporations with total receipts and assets of 

less than $250,000 are not required to 

complete Parts III and IV. (2,576,794)

IRS also deleted lines from the form and 

deleted a form attachment. (373,949)

1545-0975 2002 Form 1120-W and 

Schedules, Estimated 

Tax for Corporations

-549,735 IRS deleted 3 code references to Form 1120-

W. (549,000)

IRS deleted a line to Schedule A. (735)

1545-1696 Political Organization 

Report of Contributions 

and Expenditures

37,600 -408,400 In its ICB submission, the Department of the 

Treasury originally reported this as a net 

reduction of 370,800 burden hours due to 

agency action. Our review of the information 

collection request submission to OMB indicates 

that the majority of the reduction should have 

been classified as an adjustment since IRS 

said it was correcting a previous burden 

computation.

1545-1722 Extraterritorial Income 

Inclusion, Form 8873

-520,000 IRS deleted 3 lines from the form. (520,000)

(Continued From Previous Page)

OMB 

control 

number Title

Due to 

statutory 

changes

Due to 

agency 

actions

Due to 

adjustments Reason(s) for decrease

5

Pub. L. No. 108-27.
Page 12 GAO-04-676T 

Revenue Code.6 Another 17 million burden-hour increase resulted from 

implementation of the Community Renewal Tax Relief Act of 2000.

Furthermore, IRS is responsible for over 80 percent of the governmentwide 

information collection burden; therefore, its paperwork estimate is often 

the driver of increases or decreases in the governmentwide burden 

estimate. Without the 166.7 million burden-hour reduction due to 

adjustments reported by IRS, governmentwide paperwork would have 

increased during fiscal year 2003.

IRS Continues to Develop 

Program Initiatives to 

Reduce Its Burden Estimate

In our previous testimony, we reported that Treasury had indicated in its 

ICB that it had taken a number of initiatives to reduce paperwork burden. 

In fiscal year 2002, IRS decided to increase the threshold for taxpayers 

having to file Schedule B (Form 1040) from $400 to $1,500. Treasury 

estimated that more than 10 million fewer taxpayers would have to file the 

schedule, about one-third of those who previously had to file. In its recent 

ICB submission, Treasury reported that this initiative resulted in a 

reduction of about 17.2 million burden hours.

Treasury also indicated in its ICB submission that it had taken additional 

initiatives to reduce paperwork burden. For example, it has decided to 

require certain employers to submit Form 941 annually, instead of 

quarterly, in order to

• reduce taxpayer burden,

• maintain current payment compliance levels, and

• encourage the use of paperless filing.7

Once Treasury, in consultation with other stakeholders (e.g., the Social 

Security Administration, the U.S. Census Bureau, and the Small Business 

Administration) has identified a group of taxpayers who would be allowed 

to provide the required information annually, rather than quarterly, it would 

6

According to Treasury’s ICB, changes were made to its paperwork inventory as a result of 

requirements under sections 403(b), 457(b), 501(c), 679, and 3406 of the Internal Revenue 

Code.

7

Form 941 is used by employers to report to IRS how much they paid in employment taxes 

for their employees.
Page 13 GAO-04-676T 

experience a further reduction in its paperwork burden. However, 

Treasury does not expect to implement this annual reporting option until 

January 2006, and it could not estimate how many burden hours would be 

reduced as a result of this action.

More Needs to Be Done to 

Reduce Paperwork Burden

In summary, the agencies’ information collection estimates for the 

governmentwide ICB indicate that federal paperwork experienced its first 

reduction since 1996, and that IRS continues to be a determining factor in 

whether the federal government experiences a decrease or an increase in 

its paperwork burden. While there is a small decrease in the reported 

paperwork burden for fiscal year 2003, it is important to note that most of 

the reduction was achieved through adjustments to information collections 

and not through program changes, including agency actions. Therefore, 

this reduction appears to be achieved as a result of external factors, or as a 

result of reestimations of current paperwork requirements. These 

adjustments are not actual reductions experienced by the affected parties, 

rather, they are reestimations of the number of people or businesses 

required to provide the information or the time it takes to complete the 

form(s) used to collect the information. In some cases these adjustments 

may be corrections of mathematical errors. Exclusive of these 

adjustments, the paperwork burden actually increased during fiscal year 

2003.

Clearly, there is much that needs to be done to reduce the governmentwide 

paperwork burden. Currently, the government’s paperwork burden 

estimate is nearly double the PRA target estimate for fiscal year 2001 of 4.6 

billion burden hours. In addition, one component of the President’s 

initiative to promote job growth focuses on reducing regulatory and 

reporting requirements. However, paperwork burden reduction goals and 

the means of achieving these goals were not articulated in the President’s 

2005 budget.

Because IRS constitutes such a significant portion of the federal burden, 

one strategy to address agency-initiated decreases is to focus more of 

OIRA’s burden-reduction efforts on IRS. As we reported last year, five IRS 

information collections represented nearly half of the governmentwide 

paperwork burden estimate. A small reduction in the burden associated 

with those five collections could have a major effect on reducing the 

paperwork burden governmentwide.
Page 14 GAO-04-676T 

Agencies Report a 

Slight Reduction in 

PRA Violations

I would now like to turn another topic that you asked us to address—PRA 

violations. The PRA prohibits an agency from conducting or sponsoring 

the collection of information unless (1) the agency has submitted the 

proposed collection and other documents to OIRA, (2) OIRA has approved 

the proposed collection, and (3) the agency displays an OMB control 

number on the collection. The act also requires each agency to establish a 

process to ensure that each information collection is in compliance with 

these clearance requirements. OIRA is required to submit an annual report 

to Congress that includes a list of all violations. Under the PRA, no one can 

be penalized for failing to comply with a collection of information subject 

to the act if the collection does not display a valid OMB control number. 

OIRA may not approve a collection of information for more than 3 years, 

and there are currently over 8,100 approved collections.

As table 4 shows, the agencies indicated in their ICB submissions that 223 

PRA violations occurred during fiscal year 2003 (i.e., were either carried 

over from the previous year or were new violations). As in previous years, 

most of these violations were collections for which OIRA approvals had 

expired and had not been reauthorized. Five cabinet departments were 

responsible for 57 percent of the violations—the Departments of 

Agriculture, Commerce, Defense, Health and Human Services, and Housing 

and Urban Development.

Table 4: Reported Violations of the PRA during Fiscal Year 2003

Department/agency

Expired

information

collections

Other

violations

Total

violations

Departments

Agriculture 25 7 32

Commerce 10 4 14

Defense 27 0 27

Education 2 3 5

Energy 3 0 3

Health and Human Services 21 2 23

Homeland Security 18 0 18

Housing and Urban Development 26 0 26

Interior 1 4 5

Justice 16 0 16
Page 15 GAO-04-676T 

 Sources: OMB and agencies’ ICB submissions.

Number of Violations 

Continues to Decline

As figure 2 shows, the number of PRA violations that the agencies 

identified has continued to fall over the past 6 fiscal years—from 872 

violations during fiscal year 1998 to 223 during fiscal year 2003. The 223 

violations reported for fiscal year 2003 is slightly less than the number of 

violations reported in the previous fiscal year (244), but still progress from 

the more than 850 violations reported during fiscal year 1998. However, the 

agencies’ ICBs showed that there were an additional 24 information 

collections in fiscal year 2003 that appear to be violations but were 

reported by the agencies as nonviolations. According to OMB, these 

nonviolations were instances in which the agencies allowed information 

collections to expire, and then determined that they still needed to collect 

the information, and therefore requested reinstatements for the 

information collections. OMB states that in these instances, the agencies 

did not collect information during the time lapse between the expiration 

Labor 0 0 0

State 7 1 8

Transportation 5 1 6

Treasury 0 0 0

Veterans Affairs 3 0 3

Agencies

Environmental Protection Agency 0 0 0

Federal Acquisition Regulation 0 0 0

Federal Communications Commission 4 0 4

Federal Deposit Insurance Corporation 0 0 0

Federal Energy Regulatory Commission 4 0 4

Federal Trade Commission 0 0 0

National Aeronautics and Space 

Administration 1 1 2

National Science Foundation 0 0 0

Nuclear Regulatory Commission 0 0 0

Securities and Exchange Commission 2 0 2

Small Business Administration 17 2 19

Social Security Administration 0 7 7

Total 192 31 223

(Continued From Previous Page)

Department/agency

Expired

information

collections

Other 

violations

Total

violations
Page 16 GAO-04-676T 

date and reinstatement date, and therefore the agencies did not commit any 

violations.

Figure 2: PRA Violations during the Past 6 Fiscal Years

Note: In fiscal year 2001, OMB reported the violations only for the cabinet-level departments and EPA. 

Therefore, the data for that year do not include information for 12 independent agencies included in the 

other years.

However, as figure 3 shows, our review of the violations reported by the 

agencies indicates that while violations based on collections where OIRA 

authorization had expired continue to decline, there was an increase in the 

number of violations where the agencies had not received OIRA approval 

prior to collecting the information. While OIRA is able to track those 

violations where the authorization has expired, it is unable to track, and 

control, those information collections that had not received its approval.

223

244

402a

487

710

872

0

250

500

750

1000

1998 1999 2000 2001 2002 2003

Number of violations

Fiscal year

Sources: OMB and agencies’ ICB submissions.
Page 17 GAO-04-676T 

Figure 3: Changes in Violations from Fiscal Years 2001 through 2003

OIRA Continues to 

Emphasize Zero Tolerance 

for Violations

In May 2003, the OIRA Administrator sent a memorandum to agency chief 

information officers emphasizing the importance of “full compliance” with 

the PRA. The Administrator said that “the recurring high level of PRA 

violations, although decreasing over time, was unacceptable,” and that 

OIRA, together with the agencies, “can and must meet a goal of full 

compliance.” He continued to encourage agencies to review their 

procedures for preventing future violations and the status of the collections 

of the agencies’ PRA inventories.

When OIRA issued its bulletin requesting data from the agencies for the 

fiscal year 2004 ICB, it provided the agencies with three lists for tracking 

violations in fiscal year 2003. The first list consisted of all information 

collections in OIRA’s inventory that expired and had not been reinstated 

during fiscal year 2003. The second list consisted of all information 

collections in its inventory that expired and were reinstated during fiscal 

year 2003. For these lists, the agencies were asked to verify the 

374

28

217

27

192

31

0

100

200

300

400

500

Expired information 

collections

Other violations

 2001

2002

2003

Number of violations

Sources: OMB and agencies’ ICBs. 

Fiscal year
Page 18 GAO-04-676T 

information and correct any missing or incorrect information. In addition, 

for the list of expired and reinstated collections, the agencies were asked to 

indicate if expirations were intentional lapses (where the agencies did not 

collect information) or violations. Thus, agencies were reminded of OIRA’s 

efforts to reduce the number of PRA violations.

OIRA Can Do More to 

Address Violations

Although OIRA and the agencies have clearly made progress in reducing 

the overall number of PRA violations in recent years, more progress is 

needed. As I am sure that the Administrator would agree, 223 violations of 

the law in 1 year is not acceptable. Agencies can and should achieve OIRA’s 

goal of zero violations. 

As I noted earlier, OIRA has taken a number of steps during the past year to 

try to address this problem. As we recommended last year, OIRA has used 

its database to identify information collections that have recently expired 

and attempted to determine whether the agencies are continuing to collect 

the information. OIRA also continues to ask the agencies to describe the 

procedures that they have in place to prevent future violations. We believe 

that these actions resulted in the improvements that occurred during fiscal 

year 2003 and will have positive benefits for years to come. 

However, OIRA still has not taken some of the actions that we previously 

recommended to improve compliance with the PRA. For example, OIRA 

could notify the budget side of OMB that an agency is collecting 

information in violation of the PRA and encourage the appropriate 

resource management office to use its influence to bring the agency into 

compliance. OIRA could also encourage the use of “best practices” in 

agencies with good records of PRA compliance. Agencies that have 

recently eliminated their violations altogether (e.g., the DOL, DOT, and 

Treasury) may have much to teach agencies that continue to violate the act. 

Although OIRA's current workload is clearly substantial, we do not believe 

the kinds of actions that we suggest would require significant additional 

resources. Primarily, the actions require a continued commitment by OIRA 

leadership to improve the operation of the current paperwork clearance 

process. However, we also recognize that OIRA cannot eliminate PRA 

violations by itself. Federal agencies committing these violations need to 

demonstrate a similar level of resolve.
Page 19 GAO-04-676T 

Mr. Chairman, this completes my prepared statement. I would be pleased 

to answer any questions. 

Contacts and 

Acknowledgments

For future information regarding this testimony, please contact Patricia A. 

Dalton, Director, Strategic Issues, at (202) 512-6806, or daltonp@gao.gov. 

Other individuals who made key contributions to this testimony were Leah 

Nash and Joseph Santiago.

(450298)
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