1.32.7  Estimating Trust Fund Costs.

Manual Transmittal

February 22, 2012

Purpose

(1) This transmits new IRM 1.32.7, Servicewide Financial Policies and Procedures, Estimating Trust Fund Costs.

Material Changes

(1) Removed "Unemployment" from the title and expanded the IRM to include Black Lung Disability and Old-Age, Survivors, and Disability Insurance and Health Insurance (OASDHI) Trust Funds.

(2) Section 1.32.7.1, Overview, added overview information for the Black Lung Disability and OASDHI Trust Fund Costs.

(3) Section 1.32.7.2, Background, added background information for the Black Lung Disability and OASDHI Trust Fund Costs.

(4) Section 1.32.7.3, Authorities, added authorities related to the Black Lung Disability and OASDHI Trust Fund Costs.

(5) Section 1.32.7.6, Acronyms, added acronyms related to the Black Lung Disability and OASDHI Trust Fund Costs.

(6) Section 1.32.7.7, Responsibilities, made minor edits to include all trust funds.

(7) Section 1.32.7.8, Methodology, made minor edits to include all trust funds.

(8) Section 1.32.7.9, Report of Quarter Costs, made minor edits to include all trust funds.

(9) Section 1.32.7.9.1, Quarterly Cost Worksheet Procedures, made minor edits to include all trust funds.

(10) Section 1.32.7.9.1.1, Small Business/Self Employed (SB/SE), added procedures for estimating Black Lung Disability and OASDHI Trust Fund Costs.

(11) Section 1.32.7.9.1.2, Wage and Investment (W&I), added procedures for estimating Black Lung Disability and OASDHI Trust Fund Costs.

(12) Section 1.32.7.9.1.3, Appeals, added procedures for estimating OASDHI Trust Fund Costs.

(13) Section 1.32.7.9.1.4, Large Business and International (LB&I), added procedures for estimating Black Lung Disability and OASDHI Trust Fund Costs.

(14) Section 1.32.7.9.1.5, Tax Exempt and Government Entities (TE/GE), added procedures for estimating OASDHI Trust Fund Costs.

(15) Added new section 1.32.7.9.1.6, Chief Counsel.

(16) Added new section 1.32.7.9.1.7, Criminal Investigation.

(17) Section 1.32.7.10, Annual and Ten-Year Unemployment Trust Fund (UTF) Forecast Report, moved to section 1.32.7.11 and generalized title and information to encompass all trust funds.

(18) Added new section 1.32.7.10, Cost Analysis Percent of Change Report.

(19) Section 1.32.7.11, Fiscal Year-End UTF Report, moved to section 1.32.7.12 and generalized title and information to encompass all trust funds.

(20) Section 1.32.7.12, Supporting Documentation and Periodic Review, moved to section 1.32.7.13 and generalized information to encompass all trust funds.

Effect on Other Documents


This IRM Supersedes IRM 1.32.7, dated August 20, 2010 and replaces the existing procedures for estimating Black Lung Disability and OASDHI Trust Fund Costs.

Audience


Business unit Finance Offices responsible for estimating Unemployment, OASDHI, and Black Lung Disability Trust Fund Costs.

Effective Date

(02-22-2012)


Pamela J. LaRue
Chief Financial Officer

1.32.7.1  (02-22-2012)
Overview

  1. This Internal Revenue Manual (IRM) provides policies and procedures for estimating costs associated with providing services to the Unemployment, OASDHI, and Black Lung Disability Trust Funds.

  2. Chief Financial Officer (CFO), Financial Management (FM) Unit, Office of Financial Management Policy (FMP) develops and maintains this IRM.

1.32.7.2  (02-22-2012)
Background

  1. The IRS provides tax administration and support for the following trust fund programs:

    1. The Old-Age, Survivors, Disability and Health Insurance (OASDHI) programs. The Social Security Act (SSA) in 1935 established the Old Age Survivors Insurance (OASI) program; subsequent amendments to the SSA in 1956 and 1965 established the Disability Insurance and Health Insurance programs, respectively. To fund these programs, the Federal Insurance Contribution Act (FICA) authorized the levying of payroll taxes to be paid by both employees and employers. The Social Security Administration and the Department of the Treasury (Treasury) share the responsibility for administering the FICA tax system.

    2. The Federal/State Unemployment Compensation (UC) Program. Titles III, IX, and XII of the SSA of 1935 and the Federal Unemployment Tax Act (FUTA) of 1939 provide the program's framework. The UC program is funded through FUTA taxes paid by employers, the proceeds of which are to compensate persons who are unemployed. The Departments of Labor and Treasury share responsibility for administering the FUTA tax system.

    3. The Black Lung Program. The Black Lung Benefits Revenue Act of 1977 established the Black Lung Disability Trust Fund within the Treasury. It imposed an excise tax on operators of coal mines to fund monthly payments and medical benefits to coal miners disabled as the result of black lung disease. The Departments of Labor and Treasury share the responsibility for administering the Black Lung Disability Trust Fund.

  2. Within Treasury, the Bureau of Public Debt (BPD) is responsible for the administration, maintenance, and investment of trust fund monies. The IRS is responsible for the following activities related to FICA, FUTA, and Black Lung taxes:

    1. Processing returns.

    2. Processing payments.

    3. Providing accounts management.

    4. Collecting unpaid assessments.

    5. Examining returns.

    6. Performing document matching.

    7. Providing appeal services.

    8. Conducting criminal investigations.

  3. On a quarterly basis, Treasury requires IRS provide a report on the costs incurred for FICA, FUTA, and Black Lung related services. On an annual basis, IRS provides a ten-year forecast of its costs to support the OASDHI, UC, and Black Lung programs.

  4. On either a monthly (for UC) or quarterly (for OASDHI) basis, the Secretary of the Treasury pays the Treasury General Fund for the estimated costs of supporting these programs. For the Black Lung Program, the Secretary pays the Treasury General Fund for the estimated expenses for examining returns up to a limit of $356,000 per year.

1.32.7.4  (02-22-2012)
Related Resources

1.32.7.5  (02-22-2012)
Definitions

  1. Business Unit Benefit Rate - The rate calculated by dividing the total benefit costs of the organization by the total salary costs (permanent and temporary salaries) of the organization. The rate is applied to estimated salary costs for a particular program to determine the benefit costs for that program.

  2. Direct Costs - Costs incurred by the IRS that can be specifically identified with a single cost object (program, activity, or output). Such costs include salaries, other benefits, materials, and supplies used in the workplace.

  3. Direct Hours - Labor hours incurred by IRS employees that can be specifically identified with a single program, activity, or output.

  4. Federal Insurance Contribution Act (FICA) - A U.S. payroll tax or employment tax imposed by the Federal Government on both employees and employers to fund Social Security and Medicare.

  5. Full Cost - All costs used in generating the outputs, including all direct and indirect costs.

  6. Full Time Equivalent - The total number of regular straight-time hours worked and approved leave taken by employees, divided by the number of compensable hours applicable to each fiscal year. One FTE is equal to eight hours, multiplied by the compensable days in the fiscal year; therefore, one FTE can be equal to 2080, 2088, or 2096 hours depending on the fiscal year.

  7. Federal Unemployment Tax Act (FUTA) - A U.S. payroll tax or employment tax imposed by the Federal Government on employers to fund Unemployment Compensation.

  8. Indirect Hours - Total available hours for an organization less the direct hours spent on various programs.

  9. Overhead Rate - The rate annually calculated by Office of Cost Accounting and applied to total labor and benefits costs to determine the full cost of providing services.

  10. Trust Fund - An account established to record receipts and cost estimates used to finance specific purposes or program under a trust agreement or statute.

1.32.7.6  (02-22-2012)
Acronyms

  1. The following chart contains acronyms that are used throughout this IRM.

    Acronym Description
    ACDS Appeals Centralized Database System
    ACS Automated Call Sites
    BMF Business Master File
    BPD Bureau of Public Debt
    CAS Customer Account Services
    CAWR Combined Annual Wage Reporting
    CI Criminal Investigation
    CIMIS Criminal Investigation Management Information System
    DET Direct Exam Time
    EO Exempt Organizations
    FICA Federal Insurance Contributions Act
    FTD Federal Tax Deposit
    FTE Full Time Equivalent
    FUTA Federal Unemployment Tax Act
    HI Health Insurance
    IFS Integrated Financial System
    LB&I Large Business and International
    MITS Modernization and Information Technology Services
    OASDHI Old-Age, Survivors, and Disability and Health Insurance
    SAT System Acceptance Testing
    SB/SE Small Business/Self Employed
    SETR Single Entry Time Reporting
    SETTS Summary Examination Time Transmission System
    SSA Social Security Act
    TE/GE Tax Exempt and Government Entities
    TDA Tax Delinquent Account
    TDI Tax Delinquency Investigation
    TTS Time Tracking System
    UC Unemployment Compensation
    UTF Unemployment Trust Fund
    W&I Wage and Investment
    WP&C Work Planning and Control

1.32.7.7  (02-22-2012)
Responsibilities

  1. This section provides responsibilities for:

    1. Chief Financial Officer.

    2. Associate Chief Financial Officer for Financial Management.

    3. Director, Office of Financial Management Policy.

    4. Director, Office of Cost Accounting.

    5. Director, Beckley Finance Center.

    6. Business Unit Finance Offices Responsible for Estimating Trust Fund Costs.

1.32.7.7.1  (02-22-2012)
Chief Financial Officer (CFO)

  1. The CFO is responsible for:

    1. Overseeing the process for compiling and reporting trust fund costs.

    2. Establishing policies, procedures, standards, and controls for estimating trust fund costs.

1.32.7.7.2  (02-22-2012)
Associate Chief Financial Officer (ACFO) for Financial Management (FM)

  1. The ACFO for FM is responsible for:

    1. Ensuring compliance with policies and procedures for estimating trust fund costs.

    2. Approving the Report on Quarterly Costs and Annual Ten-Year Trust Funds Forecast Report.

    3. Reporting trust fund costs to the BPD.

1.32.7.7.3  (02-22-2012)
Director, Office of Financial Management Policy (FMP)

  1. The Director, Office of FMP is responsible for maintaining and publishing this IRM.

1.32.7.7.4  (02-22-2012)
Director, Office of Cost Accounting (OCA)

  1. The Director, OCA is responsible for:

    1. Reviewing, validating, and approving the methodology for estimating trust fund costs.

    2. Calculating overhead rates to be applied to labor and benefits costs to determine the full cost to support the trust funds.

    3. Reviewing and providing oversight for the Report on Quarterly Trust Fund Costs, Cost Analysis Percent of Change Report, Annual Ten-Year Trust Funds Forecast Report.

    4. Providing oversight for the reviews of business unit supporting documentation and calculations.

1.32.7.7.5  (02-22-2012)
Director, Beckley Finance Center (BFC)

  1. The Director, BFC is responsible for:

    1. Consolidating cost estimations to support the trust funds.

    2. Developing the quarterly costs templates and providing them to the business units.

    3. Preparing the Report on Quarterly Trust Fund Costs and the Annual Ten-Year Trust Funds Forecast Report, based on business unit submissions.

    4. Preparing and briefing management on the Cost Analysis Percent of Change Report.

    5. Communicating with business units to obtain justifications for variances of ten percent or more on the Cost Analysis Percent of Change Report.

    6. Briefing the ACFO for FM and obtaining his approval on the Report on Quarterly Trust Fund Costs and Annual Ten-Year Trust Funds Forecast Report.

    7. Submitting the approved Report on Quarterly Trust Fund Costs to the BPD.

    8. Conducting reviews of the supporting documents and calculations provided by the business units on a revolving schedule and briefing management on the results of the review.

    9. Providing feedback to the business units based on the results of reviews.

    10. Maintaining a detailed audit file that includes original source documents received from the business units and calculations used to compile reports, for a minimum of three years.

1.32.7.7.6  (02-22-2012)
Business Unit Finance Offices Responsible for Estimating Trust Fund Costs

  1. The business unit Finance Offices are responsible for:

    1. Capturing the cost associated with supporting the trust funds.

    2. Completing Quarterly Cost Templates which detail the labor and benefits costs expended by each organization providing services to the trust funds for processing returns, enforcing taxpayer compliance, and providing customer service, within 25 days of the end of each quarter.

    3. Developing new and appropriate measurements of costs.

    4. Providing BFC with justifications for variances in cost of ten percent or more presented in the Cost Analysis Percent to Change Report.

    5. Reviewing supporting documentation to ensure trust fund costs are accurately estimated.

    6. Maintaining a detailed audit file that includes the original source documents and electronic files used to prepare the Quarterly Cost Templates, for a minimum of three years.

    7. Providing information annually for the preparation of the Annual Ten-Year Trust Funds Forecast Report for the next fiscal year and subsequent ten budget years, to BFC.

1.32.7.8  (02-22-2012)
General Methodology

  1. The business units estimate the labor and benefits costs for providing support to the trust funds.

  2. BFC applies overhead unit rate to the business units' costs to determine the full cost of providing services to the trust funds.

1.32.7.9  (02-22-2012)
Report on Quarterly Trust Fund Costs

  1. The following table summarizes the tasks performed sequentially:

    Responsible Organization Tasks
    OCA Reviews methodology for estimating trust fund costs, annually.
    Calculates overhead rate, annually.
    BFC Develops and distributes Quarterly Cost Template to business units.
    Business Unit Finance Office Prepares, reviews, and submits Quarterly Cost Templates and justifications for significant variances in the Cost Analysis Percent to Change Report to BFC.
    BFC Compiles the business units' Quarterly Cost Templates into the Report on Quarterly Trust Funds.
    Analyzes the data for significant variances between the reporting quarter and the same quarter of the prior year.
    OCA Reviews compilation of the Report of Quarterly Trust Fund Costs and Cost Analysis Percent to Change Report.
    ACFO for FM Approves the Report on Quarterly Trust Fund Costs and reviews the Cost Analysis Percent to Change Report.
    BFC Submits Report on Quarterly Trust Fund Costs to BPD.

1.32.7.9.1  (02-22-2012)
Quarterly Cost Worksheet Procedures

  1. The business units' Finance Offices develop quarterly cost estimates for labor and benefits costs to support the Trust Funds and complete the Quarterly Cost Template by:

    1. Determining hours needed to perform trust fund work.

    2. Increasing hours for indirect time.

    3. Applying salary and benefit rates to those hours.

  2. Specific procedures to develop quarterly cost estimates for each business unit are provided in this section.

1.32.7.9.1.1  (02-22-2012)
Small Business/Self Employed (SB/SE)

  1. SB/SE develops the labor and benefits costs for Field Collection for Balance Due FICA and FUTA Returns by:

    1. Obtaining the direct labor hours for revenue officers from the Collection Activity Report (CAR) for total direct hours worked on Tax Delinquency Investigations (TDI)s and Tax Delinquent Accounts (TDA)s and Federal Tax Deposit (FTD) Alerts during the quarter. Determining the rate TDA, TDI, and FTD Alert dispositions per direct hour.

    2. Multiplying the TDA and TDI disposition per hour rate by a ratio determined by Subject Matter Experts (SME)s for time devoted to FICA and FUTA when working employment tax cases to arrive at estimated FICA and FUTA, TDA and TDI direct time rates.

    3. Multiplying the FICA, TDA, and TDI dispositions by the estimated FICA direct time rate and multiplying the FUTA TDA and TDI dispositions by the estimated FUTA direct time rate to arrive at estimated FICA and FUTA direct TDA and TDI hours.

    4. Increasing the direct hours to include supervision and support time.

    5. Converting the direct hours to FTEs using an appropriate indirect ratio.

    6. Multiplying the FTEs by the quarterly rate for revenue officers.

    7. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  2. SB/SE develops the labor and benefits costs for Automated Call Sites (ACS) collection of balance due FICA and FUTA returns by:

    1. Obtaining the direct labor hours for ACS employees for the employment-related BMF ACS cases.

    2. Multiplying the hours by a ratio determined by SMEs for time devoted to FICA and FUTA when working employment tax cases.

    3. Increasing the hours to include supervision and support time.

    4. Converting the direct hours to FTEs using an appropriate indirect ratio.

    5. Multiplying the FTEs by the quarterly labor rate for ACS personnel.

    6. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  3. SB/SE develops the labor and benefits costs for Field and Campus Examinations of FICA, FUTA, and Black Lung Disability returns by:

    1. Obtaining the revenue agent technical hours devoted to FICA, FUTA, and Black Lung Disability issues on cases worked during the quarter from the Summary Examination Time Transmission System (SETTS) and Work Planning and Control (WP&C) System.

    2. Increasing the hours to include supervision and support time.

    3. Converting technical exam hours to standard exam hours using an appropriate indirect ratio.

    4. Multiplying the standard exam hours by the quarterly labor rate for revenue agents.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  4. SB/SE develops the labor and benefits costs for the Campus FUTA units by:

    1. Obtaining the direct labor hours for the campus FUTA units from the WP&C System for FUTA programs (170X0 through 175X0).

    2. Increasing the direct labor hours to include supervision and support time.

    3. Converting the direct hours to FTEs by using an appropriate indirect ratio.

    4. Multiplying the FTEs by the quarterly rate for campus FUTA employees.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  5. SB/SE develops the labor and benefits costs for Headquarters FICA and FUTA program oversight by:

    1. Obtaining the labor and benefit costs for the Headquarters FICA and FUTA analysts. SB/SE ensures supervision and support hours are included in the labor and benefits costs.

  6. SB/SE develops the labor and benefits costs for Combined Annual Wage Reporting (CAWR) Units in the SB/SE campuses related to FICA by:

    1. Obtaining the direct labor hours for the campus CAWR units from the Work Planning and Control (WP&C) System for the appropriate programs.

    2. Increasing the direct labor hours to include supervision and support time.

    3. Converting the direct hours to FTEs using an appropriate indirect ratio.

    4. Multiplying the FTEs by the quarterly rate for CAWR employees.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  7. SB/SE develops the labor and benefits costs for Communications, Liaison, and Disclosure (CLD) costs related to FICA by:

    1. Obtaining the direct labor hours for CLD employees related to practitioner liaison, stakeholder (Industry) engagements, and support of strategic compliance programs from the Single Entry Time Reporting (SETR) and/or WP&C System and multiplying the hours of each activity by the appropriate percentage of time devoted to FICA.

    2. Converting the direct hours to FTEs using an appropriate indirect ratio for field personnel.

    3. Multiplying the FTEs by the quarterly rate for CLD personnel.

    4. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

1.32.7.9.1.2  (02-22-2012)
Wage and Investment (W&I)

  1. W&I develops the labor and benefits costs for Campus processing of paper and electronic forms related to FICA and FUTA (including Forms 940, 940 PR, 940 XML, 940 SCRIPS, 941, 941 PR, 943, 940, 940 XML, and Schedule SE) by:

    1. Confirming all WP&C codes for all FICA and FUTA returns.

    2. Obtaining the volume of the forms processed during the quarter from the WP&C System identified by the codes for FICA and FUTA returns.

    3. Multiplying the volume by the rate per thousand as described in IRM 3.30.10, Work Cost Estimate Reference, to determine total staff hours. These hours should include specific non-pipeline hours, quality assurance, and overhead with management and supervision.

    4. Multiplying staff hours by the quarterly rate for submission processing personnel.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  2. W&I develops the labor and benefits costs for FUTA customer account calls and correspondence by:

    1. Determining the total percentage of FUTA original forms (Forms 940, 940 EZ, 940 ELF, 940 ONLN, 940 PR, 940 XML, and all 940 SCRIPS) to total original forms processed that could produce BMF adjustment and/or Taxpayer Relations workload at the BMF Campus locations for the most recent planning period or quarter.

    2. Multiplying the total Accounts Management hours by the percentage of original returns processed due to FUTA.

    3. Multiplying the AM BMF remote call site total hours by the combined campus percentage.

    4. Adding these hours together to determine the total hours related to FUTA returns.

    5. Converting the direct hours to FTEs using the most recent conversion ratio established during the strategic planning process.

    6. Multiplying the FTEs by the average labor rate for customer service representatives as of the latest pay period.

    7. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  3. W&I develops the labor and benefits costs for Campus FICA customer account calls and correspondence by:

    1. Determining the total percentage of FICA original forms (all Forms 941, 943, 944, and 945) to total original forms processed that could produce BMF adjustment and/or Taxpayer Relations workload at the BMF Campus locations for the most recent planning period or quarter.

    2. Multiplying the total Accounts Management direct hours by the percentage of original returns processed due to FICA.

    3. Multiplying the AM BMF remote call site total hours by the combined campus percentage.

    4. Adding these hours together to determine the total hours related to FUTA returns.

    5. Converting the direct hours to FTEs using the most recent conversion ratio established during the strategic planning process.

    6. Multiplying the FTEs by the average labor rate for customer service representatives as of the latest pay period.

    7. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  4. W&I develops the labor and benefits costs for Headquarters FICA and FUTA program oversight by:

    1. Obtaining the labor and benefits costs for the Headquarters Submission Processing analysts.

    2. Obtaining the labor and benefits costs for the Headquarters Accounts Management analysts.

    3. Ensuring supervision and support hours are included in the labor and benefits costs.

1.32.7.9.1.3  (02-22-2012)
Appeals

  1. Appeals develops the labor and benefits costs for technical employees to work on all cases involving FICA and FUTA taxes by:

    1. Obtaining the total direct hours applied to FICA and FUTA cases by technical employees from the Appeals Centralized Database System (ACDS), segmented by employee grade.

    2. Converting the technical employees’ direct hours to FTEs by dividing the direct hours by the total hours available for the year, and adding indirect FTEs based on the ACDS national indirect time percentage applied to direct hours.

    3. Calculating the technical employees' labor costs by multiplying the FTEs by grade by the applicable Office of Personnel Management (OPM) Washington-Baltimore salary tables for the current year.

    4. Adding the cost of personnel benefits by applying the Appeals benefit rate to the technical employees labor cost.

  2. Appeals develops the labor and benefits costs for supervision and support time by:

    1. Applying a predetermined percentage to the technical employees’ direct hours to determine supervision and support hours.

    2. Converting the supervision and support direct hours to FTEs by dividing the direct hours by the total hours available for the year, and adding the indirect FTEs based on the ACDS national indirect time percentage applied to direct hours

    3. Multiplying the FTEs by the applicable OPM Washington-Baltimore salary tables for the current year.

    4. Adding the cost of personnel benefits by applying the Appeals benefit rate to the supervision and support labor cost.

1.32.7.9.1.4  (02-22-2012)
Large Business and International (LB&I)

  1. LB&I develops the labor and benefits costs for examination of FICA, FUTA, and Black Lung Disability returns by:

    1. Obtaining the number of technical hours applied to FICA, FUTA, and Black Lung Disability tax returns on cases worked during the quarter from SETTS.

    2. Converting technical exam hours to Direct Examination Staff Years (DESYs) by dividing by the total direct hours in the current fiscal year.

    3. Converting from DESYs to FTEs by dividing by the direct exam time percentage calculated for the current quarter.

    4. Multiplying the FTEs by the average rate for a revenue agent for the current fiscal year.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

  2. LB&I develops the labor and benefits costs supervision and support of FICA, FUTA, and Black Lung examinations by:

    1. Determining a ratio for supervision, case processing, and support time by calculating the ratio of total exam hours to technical exam hours.

    2. Multiplying the ratio by the standard hours devoted to FICA, FUTA, and Black Lung Disability.

    3. Multiplying the FTEs by the average rate for a non-revenue agent as of the latest pay period.

    4. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

1.32.7.9.1.5  (02-22-2012)
Tax Exempt and Governmental Entities (TE/GE)

  1. TE/GE develops the labor and benefits costs for examination of FICA and FUTA returns by:

    1. Obtaining the number of technical hours applied to FICA and FUTA tax returns on cases worked during the quarter from webETS.

    2. Converting direct exam time (DET) hours to standard exam hours using the most recent DET ratio established in the strategic planning process.

    3. Multiplying the total standard exam hours by the average rate for a revenue agent as of the latest pay period by division.

    4. Adding the cost of personnel benefits by applying the division's benefits rate to the labor costs.

  2. TE/GE develops the labor and benefits costs for supervision and support costs for examination of FICA and FUTA by:

    1. Calculating the ratio of total exam FTEs to revenue agent exam FTEs by division.

    2. Multiplying the ratio by the revenue agent FTEs for the quarter to calculate the supervision and support FTEs.

    3. Multiplying the supervision and support FTEs by the average rate for a non-revenue agent as of the latest pay period by division.

    4. Adding the cost of personnel benefits by applying the division's benefits rate to the labor costs.

  3. TE/GE uses the Integrated Financial System (IFS) to determine the labor and benefits costs of the Federal, State, and Local Government Division, which is 100% devoted to employment tax issues.

1.32.7.9.1.6  (02-22-2012)
Chief Counsel

  1. Chief Counsel develops the labor and benefits costs for case work that include FICA and FUTA return issues worked by Counsel's LB&I, SB/SE, and Procedure and Administration offices by:

    1. Obtaining the direct hours devoted to employment tax issues on cases worked through the quarter from the Counsel Case System by employment category.

    2. Multiplying the direct hours devoted to employment tax issues by a ratio predetermined by a subject matter expert to determine the direct hours for FICA and FUTA tax issues.

    3. Converting the direct hours for FICA and FUTA tax issues to standard hours using predetermined indirect ratios by employment category.

    4. Multiplying the total standard hours by the current average salary rate for each of the respective employment categories.

    5. Adding support costs using Counsel's general support rates.

    6. Applying the most recent benefit rate.

  2. Chief Counsel develops the labor and benefits costs for cases that include FICA and FUTA return issues worked by Counsel's TE/GE offices by:

    1. Obtaining the salary and benefit costs for Counsel's TE/GE Employment Branches from IFS.

    2. Multiplying the salary and benefit costs by a percentage predetermined by a SME to obtain the estimated portion of the Employment Branches' work involving FICA and FUTA issues.

    3. Obtaining salary and benefit costs for TE/GE Counsel Field employees working FICA and FUTA related issues from IFS.

    4. Calculating the indirect costs by applying the indirect TE/GE rate to the costs.

    5. Adding support and benefits costs by applying Counsel's general support rate and most recent benefit rates.

1.32.7.9.1.7  (02-22-2012)
Criminal Investigation (CI)

  1. CI develops the labor and benefits costs for CI time that relates to FICA return issues in employment tax investigations by:

    1. Obtaining the percentage of direct investigative time spent on employment tax cases during the quarter from the National Summary by Program Area Report.

    2. Multiplying the percentage of direct investigative time by the appropriate percentage, and applying the percentage to the FTEs realized for the quarter.

    3. Converting direct investigative time to standard investigative time using an appropriate indirect ratio.

    4. Calculating the labor costs by multiplying the FTE by the dollars per FTE as of the latest period.

    5. Adding the cost of personnel benefits by applying the business unit benefits rate to the labor costs.

1.32.7.10  (02-22-2012)
Cost Analysis Percent of Change Report

  1. Quarterly, BFC prepares the Cost Analysis Percent of Change Report which compares the current quarter's cost without CFO overhead to the same quarter in the prior year.

  2. Business units review and provide specific details to justify cost variances of ten percent or more for each quarter.

  3. BFC reviews and substantiates business unit justifications and briefs final Cost Analysis Percent of Change Report to the OCA and ACFO for FM.

1.32.7.11  (02-22-2012)
Annual and Ten-Year Trust Funds Forecast Report

  1. BFC prepares the Annual and Ten-Year Forecast OASDHI, Unemployment and Black Lung Trust Funds Report which details the forecasted trust fund expenses for the following ten years.

  2. To prepare the forecast, BFC:

    1. Calculates a two-year average of costs from each program to determine baseline costs.

    2. Increases the projections by using the Federal pay raise assumptions rate.

    3. Adjusts data as necessary to accommodate prior period adjustments.

    4. Obtains information from business units related to expected workload or methodology changes over the period of the forecasts.

  3. OCA reviews the Annual and Ten-Year Forecast Trust Fund Report.

  4. ACFO for FM approves the Annual and Ten-Year Forecast Trust Fund Report.

  5. BFC submits the Annual and Ten-Year Forecast Trust Fund Report to BPD by December 1 each year.

1.32.7.12  (02-22-2012)
Fiscal Year-End Trust Fund Report

  1. BFC compiles a Fiscal Year-End Trust Fund Report which summarizes the costs reported in the Report on Quarterly Trust Funds Costs.

  2. BFC submits the Fiscal Year-End Trust Fund Report to the BPD by January 1 of the following fiscal year.

1.32.7.13  (02-22-2012)
Supporting Documentation and Periodic Reviews

  1. The business units' Finance Offices and BFC maintain detailed audit files for a minimum of three years. Both files contain the source documents used for providing cost information to the trust fund reports. Data from IFS obtained to support average salary rates, average benefit rates, and other aspects of the methodology should be downloaded into Excel files and maintained with the methodology.

  2. OCA and BFC conduct reviews of the supporting documents and the calculations provided by the business units on a revolving schedule to ensure each business unit has been reviewed at least once every three years.

  3. The BFC identifies adjustments to the Quarterly Cost Worksheets submitted by the business unit and if necessary adjusts the following quarter's Report on Quarterly Trust Fund Costs to the BPD.

  4. The BFC briefs the business unit Finance Office with the results and recommendations of the review.

  5. BFC maintains the documents supporting reviews in its audit files.


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