Comments requested on proposed net investment income tax form

BY SALLY P. SCHREIBER, J.D.

On Monday, the IRS published a notice and request for comments from taxpayers on a new dual-purpose form that will be used by individuals (using Form 1040, U.S. Individual Income Tax Return) and trusts and estates (using Form 1041, U.S. Income Tax Return for Estates and Trusts) to compute the new 3.8% tax and then to report the tax on Forms 1040 and 1041 (78 Federal Register 45616 (July 29, 2013)). However, a draft of the new form, which will be called Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, has not been posted to the IRS website yet.

Starting this year, Sec. 1411(a)(1) imposes a tax equal to 3.8% of the lesser of an individual’s net investment income for the tax year or the excess (if any) of the individual’s modified adjusted gross income for the tax year over a threshold amount. The threshold amounts are $250,000 for married taxpayers filing jointly and surviving spouses, $125,000 for married taxpayers filing separately, and $200,000 for other taxpayers. The tax also applies to estates and trusts, with different threshold amounts.

Comments, which must be received by Sept. 27, are requested on the following topics:

  • Whether the information collected on Form 8960 is necessary for the IRS to perform its functions properly, including whether it has practical utility;
  • How accurate the IRS’s estimate is of the burden on taxpayers to comply with the information requested on the form (36 minutes per respondent);
  • How to improve the quality, utility, and clarity of the information to be collected;
  • Ways to minimize the burden on respondents, including using automated collection methods and other forms of information technology; and
  • Estimates of how much it will cost to start up and operate systems or services to provide information required by the form.  


Sally P. Schreiber ( sschreiber@aicpa.org ) is a JofA senior editor.

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