IRS Federal Register Notices: Contracts, Dividends, and Wagering

IRS Opens Comment Period on Tax Forms

...The IRS has published three notices in the Federal Register seeking public comment on information collection activities. While two of these notices concern routine extensions related to dividends and wagering, a third involves a revision to the rules for Long-Term Contracts under Section 460 of the Internal Revenue Code. This section is particularly relevant for construction companies and other businesses engaged in multi-year projects. Section 460 dictates how income and expenses are recognized over the life of these contracts, often requiring the use of the percentage of completion method. The public comment period allows stakeholders to provide input on the IRS's information collection related to these rules.

Revision: Long-Term Construction Contracts

The IRS also announced a revision to the information collection requirements for "Special Rules for Long-Term Contracts Under Section 460." This section of the tax code is particularly relevant for construction companies and other businesses engaged in multi-year projects. Section 460 dictates how income and expenses are recognized over the life of these contracts, often requiring the use of the percentage of completion method. The public comment period allows stakeholders to provide input on the IRS's information collection related to these rules.

The key change involves OMB Control Number 1545–1732, which covers the information collection burden related to Section 460. The IRS has revised this control number to remove the estimated burden for trusts and estates filing Form 8697, "Interest Computation Under the Look-Back Method for Completed Long-Term Contracts." This burden has been shifted to OMB control number 1545–0092, which covers a broader range of tax forms and filings for trusts and estates.

To understand the implications, it's important to understand the context of Section 460. Section 460 generally requires taxpayers to determine taxable income from a long-term contract using the percentage-of-completion (PCM) method. This method recognizes income and expenses proportionally as the project progresses, based on the ratio of costs incurred to estimated total costs. Because PCM relies on estimates, a "look-back method," described in § 460(b)(2), is applied at the contract's completion. This requires taxpayers to recalculate their tax liability retroactively using the actual, final costs and contract price. If the taxpayer underestimated their profit in prior years, they will owe interest to the IRS. Conversely, if they overestimated profits, the IRS owes interest to the taxpayer.

Routine Extensions: Dividends and Wagering

Continuing from the discussion of long-term contracts and the complexities of the look-back method under Section 460, the IRS is also announcing routine extensions related to information returns for dividends and occupational taxes on wagering.

• Form 1099-DIV (Dividends and Distributions): The IRS is extending its information collection related to Form 1099-DIV. This form is used to report dividends and distributions paid to shareholders of a corporation. This impacts an estimated 110 million respondents, highlighting the form's critical role in enforcing tax compliance, particularly with respect to Sections 6402 and 6403, which govern the offset of tax refunds against certain debts and the application of overpayments of tax. The data collected through Form 1099-DIV allows the IRS to verify that individuals are accurately reporting dividend income, ensuring proper tax payments and facilitating accurate processing of refund offsets.

• Form 11-C (Occupational Tax and Registration Return for Wagering): The IRS is also extending its information collection related to Form 11-C. This form is used to register persons accepting wagers as required by Section 4412 of the Internal Revenue Code. Section 4411 imposes an annual occupational tax on those in the business of accepting wagers. The tax rate is $50 for wagers authorized under state law and $500 for unauthorized wagering operations. Form 11-C serves to register these individuals, collect the annual stamp tax under Section 4411, and verify that the tax on wagers is accurately reported on Form 730, Tax on Wagering. The IRS estimates that 3,900 respondents are affected by this collection.

It's important to note that these extensions do not involve any changes to the existing information collections themselves. However, the estimated number of responses for Form 11-C has been updated based on current filing data.

Public Comment Details

As the IRS continues its efforts to refine and improve tax administration, it is now soliciting public comments on the information collections discussed in this notice. This includes Form 8697 related to the look-back method under Section 460 for long-term construction contracts, Form 1099-DIV for dividends and distributions, and Form 11-C pertaining to wagering taxes under Sections 4411 and 4412.

Practitioners and other interested parties are encouraged to provide their insights to ensure these forms are clear, efficient, and accurately reflect the burden imposed on taxpayers.

Call to Action: All written comments should be submitted by March 30, 2026, to be assured of consideration. Please direct your comments to Andrés Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or via email to pra.comments@irs.gov. When submitting comments, please include ‘‘OMB Number: 1545–0110" in the subject line of your message.

The IRS is particularly interested in comments addressing the following points:

• Accuracy of the burden estimates associated with each form.
• Ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology.
• Suggestions for enhancing the clarity and utility of the forms.

Please be aware that all comments submitted will become a matter of public record.