1.33.3  Reimbursable Operating Guidelines  (02-11-2011)

  1. The Antideficiency Act requires all government agencies to prescribe, by regulation, a system of administrative control of funds or funds control system. The funds control system is to intended to 1) restrict both obligations and expenditures from each appropriation or fund account to the lower of the amount apportioned by the Office of Management and Budget (OMB) or the amount available in the appropriation or fund account, and 2) enable the agency head to identify the person(s) responsible for exceeding appropriations, apportionments, allotments, statutory limitations, or other administrative subdivisions of funds.

  2. OMB Circular A-11, Part 4, Section 150 - Administrative Control of Funds also requires all federal agencies to develop guidelines on the administrative control of appropriated funds. See http://www.whitehouse.gov/omb/circulars_index-budget/, Part 4, Section 150, Administrative Control of Funds

  3. The Reimbursable Operating Guidelines (ROG) are internal funds control regulations developed to assist Financial Plan Managers and their respective Budget Office Reimbursables Coordinator and Reimbursable Project Coordinator in fulfilling their responsibility to effectively manage reimbursable resources.

  4. The guidelines apply to all Financial Plan Managers, their Budget Office Reimbursables Coordinators and Reimbursable Project Coordinators, and Chief Financial Officer (CFO) offices and staff involved in administering and processing reimbursable agreements.

  5. This IRM addresses funds-in reimbursable activity where the IRS functions as the Seller of reimbursable goods and/or services. These guidelines do not apply to funds-out procurements where IRS serves as the Buyer procuring services from other governmental and nongovernmental entities.

  6. The ROG provides useful contact information and addresses that are important to Financial Plan Managers and their administrative staff. The ROG promotes the use of standardized forms to ensure the proper billing and collection of funds from federal, state, local, and foreign governments, as well as from commercial buyers.

  7. The ROG provides accounting guidance for recording and transferring expenses between the Integrated Financial System's Direct and Reimbursable Fund accounts.

  8. The CFO's Corporate Budget Office (OS:CFO:CB) is responsible for developing and publishing the ROG. This includes incorporating new policy, updates, and comments from the IRS reimbursable business community. Business units should direct comments, change requests, and questions to the *CFO Reimbursables mailbox.

  9. Amendments or revisions to this guidance will be posted on the Corporate Budget website at: http://cfo.fin.irs.gov/SPB/CB_home.htm. See "Policy & Guidance" .

  10. In the event of a Continuing Resolution (CR), specific CR operating guidance will be posted on the Corporate Budget Policy website at: http://cfo.fin.irs.gov/SPB/CB_home.htm During the CR period, the CR guidance takes precedence over this IRM should differences in policy occur. Once Congress passes an appropriations act or substitute omnibus appropriations act, the IRM prevails.  (10-09-2009)

  1. With proper authority in place, federal agencies may perform reimbursable work for other organizations. Laws allowing the Federal Government to use reimbursements in return for providing others with goods and/or services include:

    1. Economy Act of 1932 (31 USC 1535-1536).

    2. Laws establishing revolving funds such as the Treasury Working Capital Fund.

    3. Stafford Act (42 USC 5147).

    4. Intergovernmental Cooperation Act (31 USC 6505).

    5. Intergovernmental Personnel Act of 1970 (PL 91-648).

  2. Reimbursements between agencies/parties are a form of transfer. Transfers require statutory authority, as codified in 31 USC 1532. Appropriations may be used only for their intended purpose as codified in 31 USC 1301(a).

  3. Before a reimbursable agreement can be established, the following four criteria must be met:

    1. Specific statutory authority must exist under one or more of the following statutes:

      Statutory Authority
      Economy Act, 31 USC 1535-1536 The Economy Act authorizes the intragovernmental and intergovernmental furnishing of goods and/or services on a reimbursable basis. The Act encourages cooperative business relationships between federal agencies to minimize duplicate or overlapping activities. For example, government agencies can obtain lower cost goods and/or services by using the contracting expertise developed in another agency or receive quantity discounts through consolidated purchases. Stimulating cooperative arrangements may be more convenient and reduce dependence on higher cost commercial vendors. Note: If a more specific authority exists, use that authority instead of the Economy Act.
      Stafford Disaster Relief and Emergency Assistance Act, 42 USC 5121 The Stafford Act established the Federal Emergency Management Agency (FEMA) and authorizes FEMA to enter into reimbursable agreements with other federal agencies to provide emergency assistance. It also allows FEMA, if requested by the President, to accept unreimbursed assistance from other federal agencies.
      Other Legal Authorities • Presidential Protection Assistance Act of 1976 (PL 94-524)
      • Governmental Employees Training Act (5 USC 4104)
      • Intergovernmental Personnel Act of 1970 (PL 91-648)
      Authority to Collect Receipts from Non-Federal Sources Since reimbursements are offsetting collections credited to the appropriation account, the business unit must have specific statutory authority in the appropriation act or enabling legislation to authorize these collections.

    2. The goods and/or services to be provided are in the best interest of the Federal Government. The Economy Act authorizes agencies to place orders with any other agency for supplies or services that the performing agency may be able to supply, render, or contract for as long as the head of an agency determines that it is in the best interest of the government.

    3. The action does not conflict with any other agency’s authority or responsibility.

    4. Reimbursable budget authority is apportioned. The Seller requests reimbursable authority through the apportionment process. Obligations are limited to the lesser of the approved apportionment or the budgetary resources available.


      Documentation on statutory authorities, apportionments, contracts, legal opinions, and other substantiating materials should be maintained by the agency/party in addition to reimbursable agreements.  (02-11-2011)
Related Guidelines and Resources

  1. Financial Plan Managers and their respective reimbursable project counterparts must follow financial management guidelines and policies that are promulgated within the IRS and Treasury, as well as applicable governmentwide requirements and guidelines. Government agencies, such as OMB, have oversight of governmentwide financial controls and accounting policies applicable to the proper handling of reimbursables. The Government Accountability Office (GAO), through the issuance of Comptroller General decisions, provides guidance on the appropriate use, accounting, and legal treatment of reimbursable funds. Refer to the following websites for these guidelines, and accounting code requirements.

    1. OMB Circular A-11, Preparation, Submission, and Execution of the Budget, found on http://www.whitehouse.gov/omb/circulars_index-budget/, Part 4, Section 150, Administrative Control of Funds.

    2. GAO's Principles of Federal Appropriations Laws (otherwise known as the Red Book) found on http://www.gao.gov/legal.htm.

    3. The Treasury Department Reimbursables Handbook, found on http://intranet.treas.gov/mgt-budget/smm/ch5-6/6_27.pdf.

    4. Treasury Financial Manual, Volume 1, Bulletin No. 2011-04, Intragovernmental Business Rules, dated November 8, 2010, can be found on http://fms.treas.gov/tfm/vol1/11-04.pdf .

    5. Treasury Financial Manual, Volume 1, Bulletin No. 2007-06 Intragovernmental Payment and Collection (IPAC) System - TAS/BETC Reporting found on http://fms.treas.gov/tfm/vol1/07-06.pdf.

    6. IRM 1.33.4, Financial Operating Guidelines provides comprehensive internal budget execution guidance.

    7. IRM 1.35.15, Administrative Accounting, Annual Close Guidelines provides annual fiscal year-end close guidelines for reimbursable accounting and collections.

    8. IRS Financial Management Codes Handbook http://cfo.fin.irs.gov/CPPD/HTML/BudgetPolicy.htm. This handbook provides a comprehensive listing of financial codes, coding schemes, and code combinations valid for use by the IRS.

    9. Federal Account System and Titles (FAST) Book I and FAST Book II. This is a Department of the Treasury, Financial Management Service publication of the official Treasury Account Symbols for the U.S. Government. See 2-digit Department Regular Codes for the IRS starting on p. A-78 at the following website:http://www.fms.treas.gov/fastbook/fastbook_sept2010.pdf

    10. IPAC TAS, BETC, and TAS Component. This is the Department of the Treasury, Financial Management Service reference tool for locating IRS's current codes, including a crosswalk to the new TAS Component codes. See https://www.fms.treas.gov/gwa/IPAC_TAS_BETC_20100831.xls, rows 24991, 24994, 24996 for the IRS codes.

    11. Federal Accounting Standards Advisory Board (FASAB), Statement of Federal Financial Accounting Standards (SFFAS) No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, issued July 1995.

    12. IRM 1.32.3, Servicewide Financial Policies and Procedures, Managerial Cost Accounting (MCA). This IRM provides guidance on federal MCA concepts and requirements for MCA within IRS.  (02-11-2011)

  1. In this IRM, the terms below have the following meanings:

    1. Advance Payment – a pre-payment by the Buyer for the later receipt of reimbursable goods and/or services to be provided by the IRS. Advance payments are required for non-federal buyers.

    2. Agency Location Code (ALC) – also referred to as the accounting station symbol, is used to identify each federal agency that prepares a Financial Management Service (FMS) 224, Statement of Transactions. Treasury uses the ALC to reconcile by account symbol its monthly deposits and disbursements by appropriation, fund, and receipts. Budget Office Reimbursables Coordinators must include the ALC on all correspondence, forms, and other documentation forwarded to financial institutions, FMS, and other federal agencies. The IRS ALC requested under the Agreement Covering Reimbursable Services (Form 5181) is 20090003. The eight-digit ALC is based on the following numbering scheme:

      Agency Location Code
      1. Digits 1 & 2 identify the Treasury Department.
      2. Digits 3 & 4 identify the Internal Revenue Service.
      3. Digits 5 & 6 identify the accounting station or processing center within the bureau.

    3. Business Event Type Code (BETC) – a four to eight -character code used in the Governmentwide Accounting (GWA) System to indicate the type of activity being reported, such as payments, collections, disbursements, adjustments, among others. This code must accompany the TAS and the dollar amounts in order to classify the transaction against the Fund Balance With Treasury. The BETC replaces the transaction codes and standard subclasses that are currently used on the central accounting reports, such as those used on the Statements of Transactions (FMS 224). The IRS BETC requested under the Agreement Covering Reimbursable Services (Form 5181), is always COLL.

    4. Business Partner Network (BPN) – the single source for vendor data for the U.S. Federal Government. The network is used by the government to identify trading partners at a level in an agency where reimbursable business is being conducted. The BPN number indicates the specific unit within an agency that is requesting the goods and services. The BPN number is the standard name for this data element, which may be the trading partner's Data Universal Numbering System number (DUNS) or the Department of Defense Activity Address Code (DoDAAC). In most cases, the IRS BPN number requested under the Agreement Covering Reimbursable Services (Form 5181) is 040539587 but there may be exceptions. To access the Business Partner Network, see http://www.bpn.gov.

    5. Buyer – a trading partner that is purchasing goods and/or services for all types of intragovernmental activity. The Buyer is the requesting agency (also known as the customer).

    6. Collection – the money collected by the Federal Government and recorded as a receipt, an offsetting collection, or an offsetting receipt.

    7. Federal Program Agency (FPA) – a permanent or semi-permanent organization of government that is responsible for the oversight and administration of specific functions. http://www.fms.treas.gov/asap/fpa_handbooks.html.

    8. Funds Reservation – a reservation or commitment of budgetary resources for anticipated but undefined expenses for an internal order, used to enter future costs that are expected to occur at an unknown time. IFS Funds Reservation (FMX1) transaction codes are sequentially numbered 10-digit codes beginning with "92" .

    9. Governmentwide Accounting – provides the central/financial accounting and reporting infrastructure for federal payments, claims, collections, central accounts and other financial transactions.

    10. Government On-line Accounting Link Information Access System (GOALS) II –the system that allows the Financial Management Service (FMS) to receive agency accounting data and forward the data to various systems within FMS for final processing and distribution to be used under agency accounting reports. http://www.fms.treas.gov/goals/index.html

    11. Interagency Agreement (Recommended Standard IAA)– the recommended trading partner agreement for reimbursable agreements. It is the standard template and communication tool between the Buyer and Seller enabling the two to agree on data elements and terms of the reimbursable transaction before business begins. The recommended standard IAA has two sections, the General Terms and Conditions (GT&C) Section and the Order Requirements and Funding Information (Order) Section. Each recommended standard IAA must always have one GT&C and at least one Order. An IPAC is required for agreements between federal agencies.

    12. Internal Order Code – the specialized accounting code assigned to each reimbursable project (e.g., RA2010B399). This is a required field when entering data in IFS.

    13. Intragovernmental Transaction – the transaction created when a federal agency provides/receives goods and/or services to/from another federal agency. Intragovernmental transactions include interagency agreements, reimbursable agreements, and non-procurement actions between agencies.

    14. Intragovernmental Payment and Collection System (IPAC) – an internet-based GOALS II application that allows for the intragovernmental transfer of funds, with descriptive data, from one FPA to another. The Beckley Finance Center records the IPAC disbursements and collections into GOALS II, where funds are automatically transferred from one agency's disbursement account to another agency's collection account. To view the FMS IPAC website, visit http://www.fms.treas.gov/ipac/index.html.

    15. Miscellaneous Receipts – any excess income or reimbursements related to reimbursable activities that must be returned to the Buyer or deposited in the General Fund as miscellaneous receipts (unless there is legislation to the contrary).

    16. Parked Document – the transaction used by the Budget Office Reimbursables Coordinator to "park" an initial Direct Fund cost transfer to the Reimbursable Fund (FV50-BZ) for later posting by the Beckley Finance Center. This type of "tandem" transaction requires each of two separate offices to complete its respective side of the transaction. The Budget Office Reimbursables Coordinator "parks" or saves the transaction making it available for the second office to act on. The second office, the Beckley Finance Center, accesses the transaction, reviews for accuracy, and approves the transaction by "posting" or saving the document. This two-step process ensures appropriate financial controls are in place during earnings reconciliation.

    17. Posting Parked Documents – the transaction used by the Beckley Finance Center to "post" or approving expenditure transfers from the Direct Fund to the Reimbursable Fund.

    18. Reimbursable Agreement – the signed agreement between the IRS and an outside Buyer that sets out the terms and conditions under which reimbursable work will be performed. Reimbursable agreements are typically expenditure transfer payments. The paying account reports the obligations and outlays. The receiving account reports the offsetting collections. For purposes of this IRM, the term reimbursable means that the IRS is the Seller or performing agency (not the Buyer of services or the requesting agency). In most cases, the Agreement Covering Reimbursable Services (Form 5181) is used to execute an agreement. For a pdf version of Form 5181, see: http://core.publish.no.irs.gov/forms/public/pdf/42330e09.pdf.

    19. Reimbursable Budget Authority – the budgetary resource category on an apportionment submitted to OMB for approval. Standard Form (SF)-132, Apportionment and Reapportionment Schedule is used to set and or adjust reimbursable budget authority.

    20. Reimbursable Forecast of Revenue and Budget Allocation – the accounting transaction process under which Corporate Budget establishes a Forecast of Revenue (FMV1) to be earned and then sub-allocates budget authority to a business unit under a Transfer Budget (FR58) transaction to allow reimbursable costs to be incurred for work performed under the terms of the reimbursable agreement.

    21. Reimbursables Earned – a category that appears on the SF-132, Apportionment and Reapportionment Schedule and the SF-133, Report on Budget Execution and Budgetary Resources.

    22. Seller – the general term used for a trading partner that is providing goods and/or services for all types of intragovernmental activity. The Seller is also the servicing agency.

    23. Taxpayer Identification Number (TIN) – an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS. The IRS TIN number requested under the Agreement Covering Reimbursable Services (Form 5181) is 52-1782822.

    24. Trading Partners – the Buyer and Seller are collectively known as the "trading partners." For a current listing of vendors and trading partners, see: http://cfo.fin.irs.gov/IntFinMgmt/BFC/Forms/IPAC-Trading-Partners.xls

    25. Trading Partner Agreement (TPA) – a requirement for all intragovernmental transactions that includes both trading partner's accounting information, including but not limited to the Agency Location Code (ALC), BPN, TAS/BETC, U.S. Government Standard General Ledger (USSGL), and terms and conditions of the agreement. There are many types of intragovernmental transactions, including, but not limited to reimbursable agreements. Trading partners must mutually agree on what TPA format to use for their intragovernmental transactions. For example, the recommended standard IAA is the TPA format for FPAs engaged in intragovernmental reimbursable agreements.

    26. Treasury Account Symbol (TAS) – a two-character agency code denoting Treasury, and a four-character account code denoting the appropriation. An additional three-character sub-account code can be added. The Department of the Treasury's Financial Management Service assigns TAS numbers, which are a requirement of the IPAC System. See IRM , Related Guidelines and Resources. For purposes of Form 5181, the IRS TAS number begins with 20 for Treasury, and a space, followed by the four-digit appropriation funding the reimbursable. For example, 20 0912, 20 0913, 20 0919. For a complete listing of the IRS TAS codes and updates to the TAS numbering system, refer to the following website, http://www.fms.treas.gov/fastbook/fastbook_sept2010.pdf.  (02-11-2011)

  1. The following table contains acronyms used in this IRM:

    ALC Agency Location Code
    BAC Budget Activity Code
    BETC Business Event Type Code
    BPN Business Partner Network
    CFO Chief Financial Officer
    CR Continuing Resolution
    DUNS (Predecessor of BPN) Dun and Bradstreet's Data Universal Numbering System
    EIN Employer Identification Number
    FMS Financial Management Service
    FOG Financial Operating Guidelines
    FTE Full-Time Equivalent
    FY Fiscal Year
    GAAP Generally Accepted Accounting Principles
    GAO Government Accountability Office
    GWA Governmentwide Accounting System
    IFS Integrated Financial System
    IPAC Intragovernmental Payment and Collection System
    MOU Memorandum of Understanding
    OCA Office of Cost Accounting
    OMB Office of Management and Budget
    RA Reimbursable Agreement
    ROG Reimbursable Operating Guidelines
    SFFAS Statement of Federal Financial Accounting Standards
    TAS Treasury Account Symbol
    TIN Taxpayer Identification Number
    USC United States Code
    USSGL U.S. Standard General Ledger  (02-11-2011)

  1. The CFO and business units have financial management responsibilities for properly executing, negotiating, billing, accounting, reporting, reconciling, and closing out reimbursable accounts at year-end. This section provides responsibilities for the:

    1. Chief Financial Officer.

    2. Associate CFO for Corporate Budget.

    3. Associate CFO for Internal Financial Management.

    4. Director, Office of Financial Management Systems.

    5. Director, Office of Financial Reports.

    6. Director, Beckley Finance Center.

    7. Business Units.  (10-09-2009)
Chief Financial Officer (CFO)

  1. The CFO has responsibility for budgetary oversight and accountability for the IRS reimbursable program. While the CFO does not own any of the reimbursable projects managed by business units, it responds to Treasury and OMB on IRS reimbursable budget issues, and to business units on reimbursable budget allotments, billings, collections reconciliation, and closeout.

  2. The CFO approves and issues the IRS financial management guidance governing the reimbursable program.  (10-09-2009)
Associate CFO for Corporate Budget (CB)

  1. Corporate Budget:

    1. Coordinates national level administrative policies and procedures governing the reimbursable program.

    2. Develops and implements IRS administrative policies and procedures governing the reimbursable program, such as the ROG IRM, call memos for projected spend plans, and year-end procedures.

    3. Prepares budgetary reports intended for Treasury, OMB, and other stakeholders, such as reimbursable budget estimates and expenditures (MAX system).

    4. Prepares, submits, and monitors apportionments for all reimbursable projects.

    5. Creates and coordinates IFS financial codes for new reimbursable projects (RA numbers).

    6. Enters forecast of revenue, and distributes budget and FTE to authority level.

    7. Responds to financial control issues.

    8. Provides oversight support to business units on reimbursable matters.

    9. Monitors and analyzes IRS reimbursable projects for system errors and earnings progress.

    10. Resolves system inconsistencies for forecast of revenue, funds reservation, and budget.

    11. Monitors and supports year-end close activities.  (10-09-2009)
Associate CFO for Internal Financial Management (IFM)

  1. The Associate CFO for IFM is responsible for ensuring that reimbursable agreements are recorded properly in the administrative financial statements and accounting systems.  (02-11-2011)
Director, Office of Cost Accounting (OCA)

  1. The Director of OCA under the ACFO for IFM is responsible for:

    1. Establishing and maintaining the IRS cost accounting policies and procedures.

    2. Providing advice and assistance to Financial Plan Managers, Reimbursable Project Coordinators, and Budget Office Reimbursables Coordinators on the costing of respective reimbursable projects.  (10-09-2009)
Director, Office of Financial Management Systems (OFMS)

  1. The Director of the OFMS under the ACFO for IFM is responsible for:

    1. Establishing and maintaining the IRS internal financial management system policies and procedures.

    2. Issuing financial reports for reimbursable activity, such as the Reimbursable Funds Analysis Report.  (10-09-2009)
Director, Beckley Finance Center (BFC)

  1. The Director of the Beckley Finance Center under the ACFO for IFM is responsible for:

    1. Maintaining appropriate documentation to support billing, such as agreement documentation.

    2. Coordinating billing requirements between IRS and its reimbursable buyers.

    3. Collecting, posting, and monitoring reimbursable earnings and payments in IFS.

    4. Notifying the Corporate Budget business unit analyst when an advance payment has been received from a Buyer. The analyst, in turn, notifies his/her business unit reimbursables contact. Once funding is received, then IFS transactions can be completed and reimbursable work can begin.

    5. Obtaining a copy of the reimbursable agreement and determining whether the Buyer has a valid IFS master data record established for billing purposes. If a master data record does not exist, then the agreement and a Customer Code Request Form are submitted to the Beckley Finance Center Obligations Office to establish a new code.  (02-11-2011)
Director, Office of Financial Reports (OFR)

  1. The Director of OFR under the ACFO for IFM is responsible for:

    1. Monitoring, reviewing, and analyzing reimbursable activity for IRS Financial Statement Reports and General Ledger (GL) Accounts.

    2. Instituting adjustments, as appropriate, through its Corporate Budget and Beckley Finance Center counterparts.  (10-09-2009)
Business Units

  1. Business units are responsible for the financial management and funds control of their respective reimbursable agreements and project accounting requirements. It is recommended that each business unit establish three administrative levels to carry out the proper execution and financial control of reimbursable agreements. These levels are as follows:

    1. The Reimbursable Project Coordinator.

    2. The Budget Office Reimbursables Coordinator.

    3. The Financial Plan Manager/Funding Official.

  2. The Reimbursable Project Coordinator is responsible for:

    1. Ensuring agreement terms and conditions comply with appropriations law principles, and are negotiated, finalized, and signed by both parties.

    2. Coordinating with the Budget Office Reimbursables Coordinator in developing accurate project cost estimates and ensuring cost rates are accurate and up-to-date.

    3. Coordinating with the Budget Office Reimbursables Coordinator on accounting for reimbursable costs, billing amounts and reimbursable earnings.

    4. Ensuring a binding agreement is authorized between the IRS, as the Seller, and the customer as the Buyer, before reimbursable work begins.

    5. Providing a copy of the signed agreement to the Budget Office Reimbursables Coordinator.

  3. The Budget Office Reimbursables Coordinator is responsible for:

    1. Coordinating with the Reimbursable Project Coordinator in reviewing and evaluating project cost estimates for accuracy, implements adjustments, as necessary, and resolves accounting issues.

    2. Requesting internal order numbers for new reimbursable projects by completing the required form and forwarding it to Corporate Budget.

    3. Providing a copy of the final, signed reimbursable agreement to Corporate Budget and Beckley Finance Center.

    4. Developing and providing a Funds Reservation (FMX1) Worksheet to Corporate Budget.

    5. Entering funds reservation in IFS based on forecast of revenue and transferred budget.

    6. Parking earnings in IFS according to the method of billing.

    7. Maintaining appropriate financial oversight of reimbursable earnings and ensures collections are received according to the billing and payment frequency set in the agreement.

    8. Notifying the Corporate Budget Reimbursable Coordinator of changes to the agreement amount via the Funds Reservation (FMX1) Worksheet and also provides a copy of the updated agreement.

    9. Coordinates and provides support to CFO on the year-end closeout of reimbursable projects.

  4. The Financial Plan Manager/Funding Official:

    1. Ensures proper financial oversight of business units' reimbursable agreements.


    The Reimbursable Project Coordinator and the Budget Office Reimbursables Coordinator responsibilities may be managed by one office or position. The Financial Plan Manager may delegate his/her funds control and financial management responsibilities to the Budget Office Reimbursables Coordinator.  (02-11-2011)

  1. The Reimbursable Project Coordinator's responsibility is to bring together experts on the reimbursable project, to develop appropriate cost estimates and to provide effective financial management oversight of the development, negotiation, accounting and closeout of their respective reimbursable agreements.

  2. The type of Buyer, kind of agreement, and funding arrangements affect the level of detail in the agreement terms and conditions, the billing and payment method, and the accounting system transactions that come into play. See IRM , Funding Arrangements, and IRM , Types of Agreements. These sections provide additional guidance on determining what type of agreement to execute and completing agreement forms.  (10-09-2009)
Funding Arrangements

  1. There are several types of funding arrangements depending on statutory authority influencing the need to provide goods and/or services. Agreements may be for procurement, non-procurement, or other funding arrangements that fall into these categories:

    1. Funds-In Agreement is an agreement in which another agency/party reimburses the IRS for goods and/or services to be provided by the IRS. Use Form 5181 (Agreement Covering Reimbursable Services) and include additional agreement terms and conditions, as needed.

    2. Memorandum of Understanding (MOU) is an agreement between agencies or organizations that may be used in conjunction with Form 5181. The terms and conditions of the MOU must comply with the authorizing language. In past years, IRS waived the requirement to process Form 5181 if the MOU with the outside agency already included statutory authority to purchase goods and/or services. The requirement to complete and process Form 5181 at the same time as the MOU is now reinstated for all MOUs. This reinstatement is intended to reinforce consistent and accurate accounting that is most often derived from Form 5181. The MOU/Form 5181 combination may also be used for no-funds agreements.

    3. No-Funds Interagency Agreement is an agreement between federal agencies for the mutual benefit of the participating agencies. Each agency absorbs its own costs on a non-reimbursable basis.  (10-09-2009)
Types of Agreements

  1. Reimbursable agreements fall into three main categories: Federal Government; non-government and state, local, and foreign governments; and intradepartmental (U.S. Treasury Bureaus). Each type of agreement is accounted for separately in IFS under one of three distinct USSGL Accounts.  (02-11-2011)
Federal Government (Non-Treasury)

  1. Government agreements are normally processed as interagency agreements and must be in conformance with Treasury Financial Manual Bulletin No. 2011-04, Intragovernmental Business Rules.

  2. Each agency provides its respective accounting codes under Form 5181 to facilitate an IPAC electronic exchange of funds between agencies.  (10-09-2009)
Non-Government and State, Local, and Foreign Governments

  1. These agreements require the same critical elements contained in Form 5181, including the terms and conditions of work to be performed, a comprehensive cost estimating methodology, period of performance, dispute resolution process, and final signatures.

  2. Advance payments are required for agreements with state, local, and foreign governments, commercial organizations, and private businesses because their accounting systems are not interfaced with the Federal Government’s accounting systems.  (10-09-2009)
Intradepartmental (Treasury/Bureau)

  1. Intradepartmental agreements require the same critical elements contained in Form 5181, including the terms and conditions of work to be performed, cost estimate, period of performance, and final signatures.

  2. Beckley Finance Center serves as an intermediary between Treasury and the business unit(s) to complete reimbursable resource exchanges within Treasury.  (10-09-2009)
Agreement Covering Reimbursable Services (Form 5181)

  1. The reimbursable agreement must be acceptable to both agencies/parties and properly documented. At a minimum, the agreement must contain the following specific information:

    1. Citation of the legal authority for entering into the agreement.

    2. Description of the scope of work, services and products that must be provided, and the period of performance.

    3. Dollar amount, including appropriate ceilings when the amount is based on estimates.

    4. Payment method and schedule. (The agreement should address the frequency of billings/payments; whether payments will be in advance or monthly/quarterly/annual reimbursements.) For advance payments, the IRS must receive payment before the work begins.

    5. Proper accounting code citation to facilitate processing of billings and receipt of payment. In addition, accounting information must be consistent with the Financial Management Codes Handbook http://cfo.fin.irs.gov/SPB/CB_home.htm, IRM 1.33.4, Financial Operating Guidelines, and this IRM.

    6. All buyers must complete the following four mandatory data elements:

      Mandatory Accounting Data for Form 5181
      1) Buyer/Customer Name, telephone number and billing address
      2) Brief, description of the specific services to be provided
      3) Account billing frequency (monthly, quarterly, advance lump-sum)
      4) Taxpayer Identification Number (TIN) or Employee Identification Number (EIN)


      It is especially important that all non-federal buyers provide the Taxpayer Identification Number (TIN). This code is required before the Buyer's master data record can be established in IFS for account billing purposes. The TIN is also used to track and verify other related accounting data for non-federal buyers. Foreign buyers are excluded from providing TIN numbers.

    7. Federal buyers must include four additional accounting data elements:

      Federal Buyer Accounting Data for Form 5181
      Agency Location Code (ALC)
      Business Partner Network (BPN) number or Dun and Bradstreet's Data Universal Numbering System (DUNS) number
      Treasury Account Symbol (TAS)
      Business Event Type Code (BETC)

    8. Agency Seller, Buyer, and respective finance contacts, including phone numbers and e-mail addresses to resolve accounting questions and requests for additional information.

    9. Directions on special requirements such as delivery requirements and compliance procedures.

    10. Approval (signature and date) of the Buyer's financial management/budget office that funds are available.

    11. Statement that the IRS and its respective business units shall resolve intragovernmental disputes and major agreement differences through the process delineated in Treasury Financial Manual, Volume 1, Bulletin No. 2011-04, Intragovernmental Business Rules found on http://fms.treas.gov/tfm/vol1/11-04.pdf.

    12. Approval (signature and date) of the agreement by authorized IRS officials of the participating program organizational units.

  2. Form 5181 (Agreement Covering Reimbursable Services) includes detailed instructions on completing the form.  (10-09-2009)
Authorizing Officials and Delegation Orders

  1. All business units executing reimbursable agreements or MOUs with federal agencies, states, and other external stakeholders must comply with the delegation and re-delegation authorities contained in IRS Delegation Order 1-47.

    IRS Delegation Authorities For Agreement Signatures
    Agreement Scope Authorizing Official
    1. MOUs, implementing agreements, and other agreements with federal agencies, states, and other external stakeholders. Deputy Commissioners
    2. MOUs, implementing agreements, and other agreements that do not require the obligation or use of Modernization and Information Technology Service′s (MITS) resources, and require the obligation or use of resources of fewer than three IRS Operating or Functional Divisions. Deputy Division Commissioners and Deputy Chiefs for MOUs and agreements requiring the obligation or use of their Division′s resources. ***
    3. MOUs, implementing agreements, and other agreements that do not require or allow for 1) the exchange of return or return information, 2) the obligation or use of MITS resources, and 3) the obligation or use of more than one IRS Operating or Functional Division. Directors for MOUs and agreements requiring the obligation or use of resources within their jurisdiction.


    ***If the MOU, implementing agreement, or other agreement allows for the exchange of return or return information, the document must be coordinated with the Director, Government Liaison and Disclosure before the delegated authority may execute the agreement.  (10-09-2009)
Reporting and Record-keeping

  1. For audit and record-keeping purposes, the Reimbursable Project Coordinator must maintain a final copy of the signed reimbursable agreement, including cost calculations, and supporting documentation or basis for amendments to the agreement.

  2. Before transactions can be processed, the Reimbursable Project Coordinator must forward an electronic copy of the final agreement to these offices:

    1. Corporate Budget Reimbursable Coordinator.

    2. Business Unit Budget Office Reimbursable Project Coordinator.

    3. Beckley Finance Center.  (10-09-2009)

  1. The Economy Act requires that both direct and indirect costs of fulfilling a reimbursable agreement be recovered from the agency receiving the services. However there are exceptions to this provision in certain circumstances such as:

    1. Agreements where the sole purpose is to detail a service employee to another federal agency, or to a state or local government agency.

    2. Agreements involving emergency appropriations.

    3. An overriding provision or legal authority under the reimbursable agreement.  (10-09-2009)

  1. Comptroller General decisions interpret the Economy Act provisions as requiring the recovery of direct and indirect costs that:

    1. Represent significant costs to the Seller in providing goods and/or services.

    2. Are funded from currently available appropriations.

    3. Benefit the Buyer.

    4. Result from efforts to provide goods and/or services.  (02-11-2011)
Cost Assignment

  1. The Federal Accounting Standards Advisory Board (FASAB), Statement of Federal Financial Accounting Standards (SFFAS) No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, issued July 1995, mandates and establishes internal costing standards to accurately measure and manage the cost of federal programs. SFFAS No. 4 provides an order of preference framework for cost assignment. The cost assignment process links accumulated costs with cost objects in specific reporting periods. There are three methods of cost assignment as follows:

    1. Directly trace costs wherever feasible and economically practicable.

    2. Assign costs on a cause-and-effect basis.

    3. Allocate costs on a reasonable and consistent basis.

    These methods should be used by all Reimbursable Project Coordinators to develop full cost projections for the cost of the products and/or services provided during the course of the reimbursable project(s). This includes labor, services, and overhead or facility usage costs, among other costs, required to produce the Buyer's product.

  2. The cost assignment methods are consistent with the Generally Accepted Accounting Principles (GAAP).

  3. One of the five standards for federal managerial cost accounting, as stated in SFFAS No. 4, is "determining the full costs of government goods and/or services." The full cost of an output is the total amount of resources used to produce the output. This includes direct and indirect costs that contribute to the output, regardless of funding sources. The full cost of an output produced by a business unit is the sum of:

    1. The cost of resources consumed by the business unit that directly or indirectly contribute to the output.

    2. The cost of identifiable support services provided by support business units and sustaining business units within the IRS.

  4. When reimbursable projects use the same types of goods and/or services as direct-funded projects, the reimbursable project costs will use the same rates and basis of consumption as the direct-funded projects.

  5. Recognition of Earned Reimbursements: In accordance with the SFFAS No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, "earned" or "exchanged" revenues are earned once the Seller provides goods and/or services to the Buyer for the amount negotiated in the agreement. In short, the payment or revenue should not be recognized until costs are incurred from providing goods and services.

  6. Agreement cost estimates will contain direct and indirect or overhead costs.  (10-09-2009)
Direct Costs

  1. Direct costs are costs that can be specifically identified with a single program area, activity, product, or service. Typical direct costs for the IRS include the following:

    1. Salaries, benefits, and other employee compensation.

    2. Accrued annual leave, compensatory time, etc.

    3. Materials and supplies.

    4. Travel and relocation costs.

    5. Contractual services.

    6. Various costs associated with equipment and facilities.  (10-09-2009)
Indirect/Overhead Costs

  1. The Economy Act allows for the recovery of certain indirect costs, to protect the provider of services from financing costs already funded under the Buyer’s appropriation.

  2. Indirect costs are the costs of resources that are jointly or commonly consumed by two or more business units' activities but are not specifically identifiable to a single product or service. The IRS has two categories of indirect costs:

    1. Sustaining business unit costs or costs that are centrally funded by business units, such as Agency-wide Shared Services (AWSS), Stewardship (STWD), and MITS. These business units provide support to the IRS as a whole.

    2. Support business unit costs or costs funded by business units, such as General Counsel and Appeals, that support the delivery of Business Operating Division products and services.

  3. Examples of services for which there may be indirect costs include:

    1. General management and administrative services.

    2. Facilities management and ground maintenance services (security, rent, utilities, and building maintenance).

    3. Procurement and contracting services.

    4. Financial management and accounting services.

    5. Information technology services.

    6. Services to acquire and operate property, plant and equipment.

    7. Publication, reproduction, graphics and video services.

    8. Research, analytical, and statistical services.

    9. Human resources/personnel services.

    10. Library and legal services.

  4. Indirect costs can be incurred within a business unit as a result of its own activities, or when the business unit receives products or services generated by other business units. The business unit’s indirect costs are assigned internally in accordance with cost allocation methodologies outlined in IRM, Cost Allocation Methodologies.

  5. The majority of indirect costs accumulate within identifiable business units. However, some costs such as depreciation and facilities costs cannot be linked to an identifiable business unit. In those instances, such costs are allocated based on cost allocation methodologies.  (10-09-2009)
Cost Estimates

  1. Determining the cost estimate of a reimbursable agreement requires the identification of the projected costs of the work, services, and facilities usage that are to be provided to the Buyer. Each reimbursable project is unique and determining the cost estimate can vary based on the requirements of the project. Two of the many examples available for developing cost estimates are shown in the next two sections.

  2. When the provider of services (IRS) is able to identify the reimbursable program by cost center:

    1. Obtain cost reports from the Integrated Financial System (IFS) Cost Module for the area(s) providing the service. These reports will identify all direct, indirect, and overhead costs.

    2. Work with the Office of Cost Accounting (OCA) to identify a method of projecting the future costs of providing the product or services, if multiple services are provided by the area under analysis.

  3. When labor data is available:

    1. Determine the estimated direct labor and/or benefit costs for providing the service.

    2. Apply an appropriate OCA-approved overhead rate factor to approximate full costs, if necessary.

  4. It is not always possible to estimate all direct and indirect/overhead costs associated with a reimbursable agreement. To prepare a cost estimate for the project, the provider of the services should compile all identified direct costs and apply an overhead rate factor to estimate the full costs of the agreement, if applicable.

  5. The overhead rate to be applied should be obtained from the OCA. OCA has developed standard overhead rates for labor only, and labor and benefits calculations, and can assist business units.

  6. Cost increases that occur during the performance of the agreement are also recoverable. Failure to account for cost increases may penalize the provider of the services by using its authorized funds to perform another agency’s work and may augment the Buyer's appropriation. Cost estimates for reimbursable projects recurring from one fiscal year to another should include inflation factors to account for cost increases.  (02-11-2011)
Actual and Estimated Costs

  1. The Economy Act authorizes the performing agency to incur obligations or expenditures for another agency after a reimbursable agreement is executed and before full payment is received. The Seller collects regular payments from the Buyer during the fiscal year once goods and/or services are delivered. These payments are adjusted against actual costs as determined by the agency filling the order.

  2. The Economy Act allows reimbursable payments to be made in advance or when the goods and/or services are delivered. These payments may be for any part of the estimated or actual costs as determined by the agency filling the order. Advanced payments will be adjusted based on the actual costs incurred.

  3. Comptroller General decisions provide for actual and estimated cost definitions. Under these decisions, the actual cost method of charging is based on using pertinent, realistic costs and allows that estimated costs are acceptable for some expenses. If capturing certain actual costs is infeasible, then a reasonable cost estimate is appropriate. This applies to costs that are extremely time consuming or when actual costs are not yet available.  (10-09-2009)
Performance/Cash Awards

  1. When an employee is detailed to another government agency, the responsibility for recommending, approving, and managing the accounting of the award rests with the Seller, regardless of the type of award. This policy is intended to prevent the duplication of employee awards by both the Seller and Buyer sides of the reimbursable agreement.

  2. The best time to discuss the award budget and method of conveying the performance evaluation results and award is during the agreement negotiation process.  (10-09-2009)
Reimbursable Authority

  1. Reimbursements are budgetary resources that are subject to apportionment, and are bound by the requirements and restrictions placed on appropriated funds. To properly administer and ensure effective funds control of the reimbursable program, certain safeguards are incorporated in the IRS administrative funds control procedures and inter/intragovernmental agreements for goods and/or services. If funding and reimbursement requirements are prescribed by law and are inconsistent with IRS guidance, legal requirements take precedence.  (10-09-2009)
Funds Control

  1. Like basic operating appropriations, expenditures against reimbursable budget authority or availability are limited at all times to the lesser of the approved apportionment or the budgetary resources available.

  2. The business units should institute procedures for administering the agreement and include the following requirements:

    1. Ensure that the estimated cost of goods and/or services and delivery date are not exceeded.

    2. Coordinate and administer the agreement within approved terms and conditions when more than one business unit is involved.

    3. Ensure prompt billing according to agreement terms.  (10-09-2009)

  1. In August, Corporate Budget submits a Standard Form 132 to OMB to request an initial apportionment for the reimbursable budget for the following fiscal year.

  2. After OMB approval, Corporate Budget apportions and authorizes the reimbursable budget in IFS.

  3. If business units increase or modify their reimbursable needs via a revised Form 5181, Corporate Budget requests a reapportionment from OMB, as needed.  (10-09-2009)
Financial Spend Plans

  1. Business unit financial spend plans should provide adequate reimbursable funding to support reimbursable operations during the fiscal year.

  2. The purpose of a reimbursable spend plan is to establish an estimate for each reimbursable project by appropriation, Functional Area, Commitment Item, GL Account, and FTE level.

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