Good morning. Every time it renews a form package, the IRS has to publish its own estimate of what those forms cost the people filling them in. The latest one landed this week, and there is a number in it worth two minutes of your time.
Top story — The bigger half of the cost isn’t the hours
The IRS has published its preliminary burden estimate for the whole employment-tax package — the W-2s, the 941s, the 940, the 945 and about forty related forms. The headline figures, all of them the agency’s own:
7,730,000 employers covered
475,200,000 hours a year between them
61 hours 28 minutes per employer
$17,082,000,000 — the value the IRS puts on that time
$21,499,000,000 — out-of-pocket costs
$38,581,000,000 — total
This is compliance cost only: the IRS states plainly that it “does not include a taxpayer’s tax liability.” It is what the forms cost, not what the tax costs.
Now look at the last three lines again. Out-of-pocket is the bigger number. The IRS says those costs include “purchasing tax software, paying a third-party preparer, and printing and postage” — so on the government’s own accounting, employers spend more actual money on software, preparers, printing and postage than the value the IRS puts on all the hours they spend on it themselves. In both fiscal years the agency has put in a table — 2025 and 2026 — cash was about 56 percent of the total burden, and it is about 56 percent again in the new preliminary set.
Now the comparison. The last set of figures put to OMB for this collection, in Treasury’s January notice and labeled fiscal year 2026, was $34.79 billion. The new preliminary total is $38.581 billion — up $3.79 billion, or about 11 percent. The time each employer spends barely moved: 61 hours 21 minutes to 61 hours 28 minutes. Seven minutes.
So the cost is not rising because the paperwork got longer. On our arithmetic against the agency’s own figures, the number of employers is up about 6.6 percent and the rate the IRS values an hour at has gone from roughly $34.20 to roughly $35.95. That accounts for the time half. The cash half — just over half of the whole increase — went up about 9.9 percent, and the notice does not say why. More filers, costlier hours. The forms barely moved.
One thing to hold on to: the IRS labels every burden figure in the new notice preliminary, and says plainly that this year’s changes are not in them yet — “these estimates were not finalized at the time of release of this notice.” The $38.6 billion can move.
Quick hits
The agency says most taxpayers are below the average. Its words, printed under the same burden table in January: “Reported time and cost burdens are national averages and do not necessarily reflect a ‘typical’ case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.” Worth knowing before anyone quotes 61 hours at you as a typical figure. That note appears in the January notice. The new September one does not carry it.
The last fall was a measuring change, not a tax change. The January table splits the movement into three columns — technical adjustment, legislative adjustment, agency adjustment. The entire $500 million drop from fiscal 2025 to fiscal 2026 sits in the technical column. Legislative and agency are both zero. Nothing Congress did and nothing the agency did shows up as a cause. The whole movement sits in the column the IRS calls a technical adjustment — a label the notice never explains.
What the IRS’s numbers imply an hour of this is worth: about $35.95. That is our division of the agency’s monetized time by the agency’s hours, not a figure it prints. Set it against what you actually pay per hour for the person who does your payroll. It won’t tell you your own burden — but it tells you what assumption the national figure is built on.
The Tip — Get your own number, then go and argue with theirs
Two jobs, one sitting. First, pull twelve months of what you actually paid for payroll compliance: the bookkeeper, the payroll service, the software subscription, your accountant’s time on the 941s. One figure. The national average out-of-pocket works out at about $2,781 per employer on our arithmetic — across every employer in the country, whatever its size, because the notice gives no breakdown at all. It is a yardstick and nothing more. If you are a long way either side of it, that is worth a conversation with whoever sends the invoice.
Second, and this is the part almost nobody uses: the IRS is formally asking whether its estimate is any good. The notice invites comment on, in its words, “the accuracy of the agency’s estimate of the burden of the collection of information”. Comments should be in by 13 November 2026 to be assured of consideration. Written comments go to Andres Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224; the notice also gives an email address, and if you email, it tells you to put “OMB Control No. 1545-0029” in the subject line of the message. If 61 hours 28 minutes is nowhere near the time payroll actually takes in your shop, this is the one place a number like yours gets counted.
Tool watch — [Not sponsored]
Both notices are free at federalregister.gov and neither is long. One navigation note, because it matters: the new September notice has no year-over-year table in it — it prints six preliminary figures and two appendices of form titles, and no comparison at all. The table with fiscal 2025 beside fiscal 2026, and the three adjustment columns that show where the movement came from, is in the January notice at 91 FR 3630. If you want the trend rather than the snapshot, that is the document to open. We name no payroll provider here, deliberately.
That’s the callout. See you next time.
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Sources: IRS — “Agency Information Collection Activities; Comment Request on U.S. Employment Tax Returns and Related Forms, Schedules, Attachments, and Published Guidance,” 91 FR 58254 (14 September 2026), FR Doc. 2026-18730 · Treasury — “Agency Information Collection Activities; Submission for OMB Review; Comment Request; U.S. Employment Tax Returns and Related Forms,” 91 FR 3630 (27 January 2026), FR Doc. 2026-01592. Both at federalregister.gov.