1.33.3 Reimbursable Operating Guidelines

Manual Transmittal

April 02, 2020

Purpose

(1) This transmits revised IRM 1.33.3, Strategic Planning, Budgeting and Performance Management Process; Reimbursable Operating Guidelines.

Material Changes

(1) IRM 1.33.1, Program Scope and Objectives, added to conform to the new internal control requirements described in IRM 1.11.2, Internal Revenue Manual (IRM) Process. Also, rearranged and updated existing IRM content to place information involving internal controls for the IRM under this subsection. All other subsequent subsections were renumbered accordingly

(2) IRM 1.33.3, Reimbursable Operating Guidelines, was revised to remove all references to transactions and forms no longer supported by the updated version of the Integrated Financial System (IFS) and to include updated reimbursable processes.

(3) IRM 1.33.3.1.6, Terms/Definitions, updated

(4) IRM 1.33.3.1.7, Acronyms, updated

(5) IRM 1.33.3.4, Agreements, revised to include the updated reimbursable approval process.

(6) IRM 1.33.3.6, Budget and Accounting Procedures, revised to remove transactions and accounting codes no longer in use under IFS and to update the change in budget versions and the reimbursable processes.

(7) Included numerous editorial changes and updates throughout, including organizational name change from Agency-Wide Shared Services (AWSS) to Facilities Management and Security Services (FMSS), terminology changes and title updates to division finance officers and financial plan managers.

(8) Included numerous editorial changes and updates throughout, including organizational name change from Beckley Finance Center (BFC) to Government Payables (GP) and Funds Management (FM) Sections.

Effect on Other Documents

IRM 1.33.3, dated April 27, 2015, is superseded.

Audience

The IRS budget community in all finance offices, especially employees responsible for the administrative control of funds related to reimbursable business with federal and non-federal entities. This includes, but is not limited to, division finance officers (DFOs), financial plan managers (FPMs) and their staff involved in establishing, costing, and approving agreements, and accounting, billing, and collecting reimbursable funds owed to the IRS.

Effective Date

(04-02-2020)


Ursula S. Gillis
Chief Financial Officer

Program Scope and Objectives

  1. Purpose: The Reimbursable Operating Guidelines (ROG) are internal funds control guidance developed to assist division finance officers (DFOs), financial plan managers (FPMs) and related staffs with establishing, costing, and approving agreements and with accounting, billing and collecting reimbursable funds owed to the IRS.

  2. Audience: The IRS budget community in all finance offices, especially employees responsible for the administrative control of funds related to reimbursable business with federal and non-federal entities.

  3. Policy Owner: The CFO’s Corporate Budget (CB) office is responsible for policy decisions reflected in the ROG.

  4. Program Owner: The ROG is published by Corporate Budget. Comments and change requests may be submitted to the director, Budget Execution Office. Future revisions, including interim guidance, will be posted to the Corporate Budget website.

  5. Primary Stakeholders: All IRS management, especially the IRS budget community in all divisions.

  6. Program Goals: To assist all FPMs and other budget and finance professionals involved in establishing, costing, and approving agreements and accounting, billing and collecting reimbursable funds owed to the IRS. The IRM is not specific to fiscal year (FY) and is in effect until superseded. These guidelines take precedence over any previous reimbursable operating instructions.

    Note:

    In the event of a Continuing Resolution (CR), any guidance specific to the CR will be posted on the

    Corporate Budget website and will supersede this IRM, where applicable.

Background

  1. The Antideficiency Act requires all government agencies to prescribe, by regulation, a funds control system. The funds control system is 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 to 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. This guidance provides funds control regulations, as required by OMB Circular A-11, Preparation, Submission and Execution of the Budget, Part 4, Section 150, Administrative control of funds PDF.

  3. 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 agreements where the IRS serves as the buyer procuring services from other governmental and nongovernmental entities.

  4. This IRM provides useful contact information and addresses that are important to DFOs, budget directors, FPMs, and related staffs. The ROG standardizes agreements, billing, and collections.

  5. This IRM provides accounting guidance for recording and transferring expenses between the Integrated Financial System (IFS) direct and reimbursable fund accounts.

Authorities

  1. The authorities for this IRM include:

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

    2. Laws establishing revolving funds such as the Treasury Franchise Fund (formerly Treasury Working Capital Fund)

    3. Stafford Disaster Relief and Emergency Assistance Act Pub L. 100-707 (Title 42, U.S.C. 5147)

    4. Intergovernmental Cooperation Act (31 U.S.C. 6505)

    5. Intergovernmental Personnel Act Pub. L. 91-648 (Title 31 U.S.C. 6505)

    6. Code of Federal Regulations (CFR) Pub. L. 91-448 (Title 5)

Responsibilities

  1. This section provides responsibilities for:

    1. CFO and deputy CFO

    2. Director, Budget Execution

    3. Associate CFO for Financial Management

    4. Director, Cost Accounting and User Fees

    5. Director, Financial Management Systems

    6. Director, Financial Reporting

    7. Director, Government Payables and Funds Management

    8. Business Units

CFO and Deputy CFO
  1. The CFO and deputy CFO are responsible for:

    1. Providing oversight and accountability for the IRS reimbursable program.

    2. Approving and issuing the IRS financial management guidance governing the reimbursable program.

Director, Budget Execution
  1. The director, Budget Execution, is responsible for:

    1. Providing budgetary oversight, accountability, legal and overall management responsibility for the IRS reimbursable program.

    2. Approving and issuing IRS financial management guidance governing the reimbursable program.

    3. Ensuring the IRS does not violate the Antideficiency Act at the agency level. To meet the IRS’s collective financial management responsibilities, the director, Budget Execution relies on the DFOs for compliance with the law and guidelines.

    4. Responding to Treasury, OMB and audit organizations on IRS reimbursable budget and agreement structure issues.

    5. Serving as the Servicewide reimbursables coordinator by developing and implementing IRS administrative policies and procedures governing the reimbursable program, such as this IRM, call memos for projected spend plans and year-end procedures.

    6. Preparing budget estimates, inputs and reports intended for external audiences.

    7. Preparing, submitting and monitoring apportionments for all reimbursable projects.

    8. Creating and coordinating IFS funded program codes for new reimbursable projects.

    9. Ensuring the reimbursable appropriation is distributed from the appropriation level to the authority level.

    10. Entering forecasts of revenue and distributing budget and full-time equivalents (FTE) to the authority level.

    11. Responding to financial control issues.

    12. Providing reimbursable oversight of business units.

    13. Monitoring and analyzing IRS reimbursable projects for system errors and earnings progress.

    14. Monitoring and supporting year-end close activities.

    15. Coordinating with the Cost Accounting and User Fees office on developing overhead cost policy and methodology.

    16. Reviewing and approving (by signing and dating) business unit reimbursable agreements, cost estimates and overhead cost estimates.

    17. Maintaining a copy of the final agreement with all appropriate signatures once a forecast of revenue is input.

    18. Determining whether a reimbursable agreement needs to be reviewed by the Financial Reporting office and ensuring the agreement is made to them.

Associate CFO for Financial Management
  1. The Associate CFO for Financial Management is responsible for overseeing proper recording of reimbursable agreements in the administrative financial statements and accounting systems.

Director, Cost Accounting and User Fees
  1. The director, Cost Accounting and User Fees, is responsible for:

    1. Developing a reimbursable overhead rate and methodology.

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

    3. Providing advice and assistance to FPMs, reimbursable project coordinators (RPCs), and budget office reimbursable coordinators (BORCs) on the costing of respective reimbursable projects.

Director, Financial Management Systems
  1. The director, Financial Management Systems, 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.

Director, Financial Reporting
  1. The director, Financial Reporting, is responsible for:

    1. Monitoring, reviewing and analyzing reimbursable activity for IRS financial statement reports and general ledger accounts.

    2. Providing guidance on reimbursable financial reporting matters, as appropriate, through its Corporate Budget and Governments Payable and Funds Management counterparts.

    3. Reviewing and approving any agreements identified by Corporate Budget that require other than monthly billing arrangements.

Director, Government Payables and Funds Management
  1. The director, Government Payables and Funds Management, is responsible for:

    1. Ensuring that reimbursable agreements are recorded properly in the administrative financial statements and accounting systems.

    2. Verifying that all required parties have signed a ratified reimbursable agreement and are maintaining appropriate documentation to support billing, such as agreement documentation.

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

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

    5. Informing the Servicewide reimbursables team and the budget office reimbursable coordinator (BORC) when advance payments are received.

    6. Ensuring each agreement contains a valid master data customer number. The Government Payables Section will complete a customer code request form for business units and submit it to the Obligations Office when new customer codes are required.

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 and associated responsibilities are:

    1. RPC

    2. BORC

    3. FPM/funding official

  2. The RPC is responsible for:

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

    2. Coordinating with the BORC in developing accurate project cost estimates (including both direct and indirect costs) and ensuring cost rates are accurate and up-to-date.

    3. Coordinating with the BORC on securing all necessary approvals and signatures for the reimbursable agreement, including from Corporate Budget.

    4. Coordinating with the BORC on accounting for reimbursable costs, billing amounts, and reimbursable earnings.

    5. Negotiating the agreement with the buyer. If the buyer does not agree to the cost estimates, the RPC should contact the IRS reimbursables team for support.

    6. Ensuring a binding agreement is authorized between the IRS, as the seller, and the customer, as the buyer before reimbursable work begins.

    7. Providing a copy of the signed agreement to the BORC.

    8. Maintaining documentation on statutory authorities, apportionments, contracts, legal opinions and other substantiating materials.

    9. Maintaining a final copy of the signed reimbursable agreement, including cost calculations and supporting documentation or basis for amendments to the agreement.

    10. Processing earnings transactions promptly.

    11. Using IFS reports and analysis tools to identify and promptly address accounting errors and misalignments during the fiscal year.

    12. Alerting the BORC to instances when more budget authority may be needed.

    13. Establishing advance plans and closing out reimbursable projects in a timely manner.

  3. The BORC is responsible for:

    1. Coordinating with the RPC in reviewing and evaluating project cost estimates for accuracy, implementing adjustments, as necessary, and resolving accounting issues.

    2. Sending reimbursable direct, indirect and overhead cost estimates to Corporate Budget for approval.

    3. Requesting funded program numbers for new reimbursable projects by email.

    4. Providing a copy of the final, signed reimbursable agreement to Corporate Budget and Government Payables Section.

    5. Developing and providing forecast of revenue and budget estimate documents to Corporate Budget in the requested format.

    6. Promptly parking accurate earnings in IFS according to the method of billing.

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

    8. Monitoring earnings to assess whether intervention is needed to address earnings postings that fall below projections.

    9. Monitoring FTE alignment.

    10. Notifying the RPC of changes to the agreement amount and providing a copy of the updated reimbursable agreement for increases.

    11. Obtaining signatures from all parties, including Corporate Budget, for agreements with estimates that have increased. For agreements where projections need to be reduced, agreements do not need to be signed again.

    12. Alerting Corporate Budget to the need for more budget authority and providing accurate estimates and explanations for the additional budget authority needed.

    13. Coordinating with and providing support to CFO on the year-end closeout of reimbursable projects.

  4. The FPM/funding official is responsible for:

    1. Ensuring proper financial oversight of business unit’s reimbursable agreements.

    2. In situations where it is not feasible to have three different people perform these three jobs, one person may be both the RPC and the BORC. The FPM role must always be carried out by someone who is neither the RPC nor the BORC.

Program Management and Review

  1. Program reports: Corporate Budget monitors financial plans monthly and through more comprehensive reviews of reports using IFS reports and queries, including the status of available funds report and weekly reimbursables report. FPM responsibilities include using IFS to identify surpluses or deficits early, so that the IRS can optimize resource use.

  2. Program effectiveness: To monitor and manage IRS resources, business units participate in several Corporate Budget financial reviews throughout the year, including the midyear/spend plan review and other formal reviews described in IRM 1.35.15, Financial Accounting Annual Close Guidelines.

Program Controls

  1. IFS reports, such as the status of available funds and status of availability control reports, are available for DFOs and FPMs to monitor funds. DFOs and their staffs should be familiar with the features of these reports and run them regularly to monitor the funds for which they are responsible.

    Note:

    Servicewide availability controls keep the IRS from over-obligating at the fund level. Each business unit also has customized availability controls for its financial plan at a chosen master data element or combination of master data elements, including fund, fund center, functional area, commitment item and funded program.

  2. IFS is the system of record that Corporate Budget, DFOs and FPMs must use to manage budgetary resources effectively. IFS includes availability controls to help prevent the IRS from exceeding its budget authority. Therefore, the DFOs and FPMs must review overall funds availability before the posting of expenses to ensure obligated balances will not result in negative availability.

  3. IFS security measures, such as control of user roles, are described in IRM 1.35.23, Financial Accounting, Integrated Financial System Security.

Terms/Definitions

  1. The following terms and definitions apply to this program:

    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. Agreement period (period of performance) – The time when the IRS is incurring costs and/or providing services. This agreement period can be up to one year but may not extend past September 30 of the fiscal year of the agreement unless multi-year funds are available from the buyer or the service involves direct charge reimbursable funds, which can be initiated in the funding year and extend past September 30.

    3. Agency Location Code (ALC) – Also referred to as the accounting station symbol, is used to identify each federal agency that prepares a FMS 224, Statement of Transactions. Treasury uses the ALC to reconcile by account symbol its monthly deposits and disbursements by appropriation, fund and receipts. BORCs must include the ALC on all correspondence, forms and other documentation forwarded to financial institutions, the Bureau of Fiscal Service (BFS), and other federal agencies. The IRS ALC requested on Form 7600A, IAA General Terms and Conditions (GT&C) Section; Form 7600B, IAA Order Requirements and Funding Information (Order) Section; and Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities is 20090003.

    4. Apportionment – A distribution made by OMB of amounts available for obligation in an appropriation or fund account into amounts available for specified periods, programs, activities, projects, objects or any combinations of these. The apportioned amount limits the obligations that may be incurred. An apportionment may be further subdivided by an agency into allotments, sub-allotments and allocations.

    5. Bona fide needs rule – The principle that appropriations made for a definite period of time may be used only for expenses properly incurred during that time. Title 31 USC Section 1502(a) (the bona fide needs statute) provides: "The balance of an appropriation or fund limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability or to complete contracts properly made within that period of availability and obligated consistent with Section 1501 of this title. However, the appropriation or fund is not available for expenditure for a period beyond the period otherwise authorized by law."

    6. 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, or adjustments. This code must accompany the Treasury Account Symbol (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 were previously 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 on Form 7600A, IAA General Terms and Conditions (GT&C) Section; Form 7600B, IAA Order Requirements and Funding Information (Order) Section; and Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities, is always COLL.

    7. 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 or the Department of Defense Activity Address Code (DoDAAC). In most cases, the IRS BPN number requested on Form 7600A, IAA General Terms and Conditions (GT&C) Section Form 7600B, IAA Order Requirements and Funding Information (Order) Section and Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities) is 040539587, but there may be exceptions.

    8. Buyer – A trading partner that is purchasing goods and/or services. The buyer, which is also known as the customer, requests services from the IRS.

    9. Collection – Money collected by the federal government and recorded as a receipt, an offsetting collection or an offsetting receipt.

    10. Commitment – An administrative reservation of funds prior to obligation of funds. Typically, commitments are created by a purchase requisition or shopping cart.

    11. Commitment item – A subdivision of expense used to classify the organization's consumption of resources. The first two digits of the four-digit code represent the higher-level object class.

    12. Continuing resolution (CR) – A provision of law that authorizes ongoing agency programs to function at previous fiscal year funding levels (or other levels specifically stipulated by Congress), under the same terms and conditions, for a specific period. The duration of a CR can vary from a few days to a full fiscal year. When the IRS is under a CR, Corporate Budget publishes special CR operating procedures on the Corporate Budget website

    13. Cost center – A data element in IFS that represents a clearly-defined location where costs incur and represents the lowest level in the organizational hierarchy, below the fund center. Cost center captures costs only, not revenue. Cost centers are usually linked to specific managers and their employees but can also be established for non-labor areas, such as buildings.

    14. Direct-Charge Reimbursable Fund Agreements – An agreement where amounts are obligated, expenditures incurred, amounts paid, and revenue is recognized directly in the associated direct-charge reimbursable fund. Expenditures initially recorded and paid in a direct fund or direct-charge reimbursable fund may be transferred to or from each other based upon the individual program’s procedures. As of the date of publication, this type of agreement only applies to the Treasury Executive Office of Asset Forfeiture (TEOAF) Mandatory Program.

    15. Disbursement – An outlay, including the issuance of cash, a check or an electronic funds transfer (EFT).

    16. Division finance officer – The person who has been delegated by their division commissioner or chief with full responsibility of its financial plan, including overseeing funds control and managing all phases of the budget cycle. See also financial plan manager.

    17. Expenditure – A receipt of goods or services, usually accompanied by the issuance of cash, a check or an electronic funds transfer to liquidate a valid obligation.

    18. Financial plan manager – The person responsible for day-to-day operations of monitoring and controlling a financial plan’s funds in the execution phase of the budget cycle.

    19. Fiscal year – The federal government’s accounting period, which begins on October 1 and ends on September 30, and is designated by the calendar year in which it ends.

    20. Forecast of revenue – The accounting transaction process under which Corporate Budget establishes funding in IFS based on the full cost of a signed reimbursable agreement and then sub-allocates budget authority to a business unit under by transferring funds via a budget transaction to allow reimbursable costs to be incurred for work performed under the terms of the reimbursable agreement.

    21. Fixed-fee Agreement – An agreement wherein the products and/or services may be provided once or multiple times; however, the full amount of earnings is recognized the first time a product is delivered and/or a service is rendered. Fixed fees are also known as lump-sum or one-time payments.

    22. Full-time equivalent (FTE) – The basic measure of the employment levels used in the budget. It is the total number of regular, straight-time hours (that is, not including overtime or holiday hours) worked by employees divided by the number of compensable hours applicable to each fiscal year. Annual leave, sick leave, compensatory time off and other approved leave categories are considered hours worked for purposes of defining full-time equivalent employment.

    23. Functional area – A data element in IFS that represents an activity, such as Submission Processing.

    24. Fund – A source of financing for federal agencies. Types of funds include revolving funds, custodial funds and direct or reimbursable appropriations. In IFS, the fund field indicates the appropriation.

    25. Fund center – A subdivision of a financial plan in IFS representing an organization’s areas of funds management responsibility.

    26. Funded program – The specialized accounting code assigned to each reimbursable project (e.g., RA2020339). This is a required field when entering data in IFS. "Funded Program" was previously called "Internal Order Code" .

    27. FEMA Form 010-0-8Mission Assignment – The standard form used by Federal Emergency Management Agency (FEMA) for the pre-declaration, emergency or major disaster number assigned for funding the event.

    28. Form 14417, Reimbursable Agreement – Non-Federal Entities – Non-Federal entities include state, local, and foreign governments and non-governmental entities. This form is the standard template and communication tool between the buyer and seller and enables the two to agree on data elements and terms of the reimbursable transaction before business begins.

    29. Form 7600A and Form 7600B Interagency Agreement (IAA) - Form 7600A, IAA General Terms and Conditions (GT&C) Section, and Form 7600B, IAA Order Requirements and Funding Information (Order) Section, are the required trading partner agreements for federal reimbursable agreements. Federal agreements include all agreements with other Treasury bureaus or other federal agencies. This form is the standard template and communication tool between the buyer and seller and enables the two to agree on data elements and terms of the reimbursable transaction before business begins. The standard IAA has two sections: General Terms and Conditions (GT&C) Section (Form 7600A) and Order Requirements and Funding Information (Order) Section (Form 7600B). Each standard IAA with a federal customer, must have exactly one 7600A and at least one 7600B, unless otherwise specified by the servicewide reimbursables team.

    30. Integrated Financial System (IFS) – The administrative accounting system used by the IRS. All reimbursable transactions, such as forecast of revenue and reimbursable earnings must be recorded in IFS.

    31. Interagency agreement (IAA) – An interagency arrangement in which the IRS pays another agency for work performed or goods or services provided.

    32. Internal order code (IOC) – A data element in IFS that collects expenditure data for funded programs, formerly called internal orders. IOCs are used to monitor costs and, in some instances, revenues of internal jobs and/or tasks. Specialized accounting codes are assigned to each reimbursable project. This is a required field when entering data in IFS.

      Example:

      RA2020339, RA2020066VA, RA2020808

      "Internal Order Code" is now called "Funded Program."

    33. Intragovernmental Payment and Collection System (IPAC)IPAC is an internet-based application that allows for the intragovernmental transfer of funds with descriptive data from one agency to another. The Government Payables Section records IPAC disbursements and collections into the IPAC system, where funds are automatically transferred from one agency's disbursement account to another agency's collection account.

    34. Object class (OC) – Classification of expense according to type as prescribed by OMB Circular A-11, Preparation, Submission and Execution of the Budget; such as personal services, travel and equipment. Historically, this was a two-digit code (for example, OC 11 and OC 25); however, the OMBOC is now a more detailed three-digit code (for example, OCs 11.1, 11.3, 25.1, 25.2). See also, commitment item.

    35. Obligation – A binding agreement that will result in outlays, immediately or in the future. Budgetary resources must be available before obligations can legally be incurred.

    36. Order – Identifies the specific requesting agency requirements for delivery of goods and/or services by the servicing agency.

    37. Parked document – The transaction used by the BORC to park an initial direct fund cost transfer to the reimbursable fund (FV50-BZ) for later posting by Government Payables and Funds Management. This type of tandem transaction requires each of two separate offices to complete its respective side of the transaction. The BORC parks the transaction making it available for Government Payables and Funds Management to act upon. Government Payables Section accesses the transaction, reviews it for accuracy, and approves the transaction by posting the document.

    38. Recurring agreement – An agreement that will be renewed on an annual or other basis, unless a notice to discontinue is received. These agreements still require certain documents to be signed annually.

    39. Reimbursable agreement – The signed agreement between the IRS and 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).

    40. Reimbursable authority – The amount of reimbursable resources approved and available to the lRS to spend. Standard Form (SF)-132, Apportionment and Reapportionment Schedule, is used to set and/or adjust reimbursable budget authority.

    41. Reimbursable earnings – A category that appears on the SF-132, Apportionment and Reapportionment Schedule, and the SF-133, Report on Budget Execution and Budgetary Resources. Reimbursable earnings are recorded in IFS after reimbursable work has been performed and based on the actual cost of the work performed using an FV50-BZ transaction.

    42. Reimbursable obligation – An obligation financed by offsetting collections credited to an expenditure account in payment for goods and services provided by that account.

    43. Seller – The general term used for a trading partner that is providing goods and/or services. The seller is also the servicing agency. For all reimbursable agreements discussed in this policy, the IRS is the seller.

    44. Servicewide reimbursables team – The individual or individuals designated by the director, Budget Execution, to ensure at the staff level that the reimbursable responsibilities of the ACFO, Corporate Budget, are carried out.

    45. Taxpayer identification number (TIN) – An identification number used by the IRS in the administration of tax laws. It is either a Social Security Number (SSN) or a unique nine-digit number issued by the IRS. The TIN number for the IRS on Form 7600A, IAA General Terms and Conditions (GT&C) Section; and Form 7600B, IAA Order Requirements and Funding Information (Order) Section; and Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities, is 52-1782822.

    46. Trading partners – The buyer and seller (federal agreements) are collectively known as the "trading partners." For a current listing of vendors and trading partners, see the Financial Management website XLS.

    47. Trading partner code – The Treasury Department attribute code used to identify the federal trading partner agency.

    48. Treasury Account Symbol (TAS) – An identification code assigned by the Department of the Treasury, in collaboration with the Office of Management and Budget and the owner agency, to an individual appropriation, receipt, or other fund account. These accounts are defined in TFM Volume I, Part 2, Chapter 1500, Description of Accounts Relating to Financial Operations. "Treasury Account Symbol" is a generic term used to describe any one of the account identification codes assigned by the Department of the Treasury. All financial transactions of the federal government are classified by TAS for reporting to the Department of the Treasury and the Office of Management and Budget. For a complete listing of the IRS TAS codes and updates to the TAS numbering system, see the Financial Management website XLS.

Acronyms

  1. A select list of acronyms and abbreviations are referenced for budget execution. To search a comprehensive list of IRS acronyms, see ReferenceNet Acronym Database

    Acronyms
    ALC Agency Location Code
    BETC Business Event Type Code
    BFS Bureau of the Fiscal Service
    BORC Budget Office Reimbursables Coordinator
    CA/UF Cost Accounting and User Fees Office
    DFO Division Finance Officer
    EIN Employer Identification Number
    FM Financial Management
    FPM Financial Plan Manager
    FTE Full-Time Equivalent
    IAA Interagency Agreement
    IFS Integrated Financial System
    IPAC Intragovernmental Payment and Collection System
    MOU Memorandum of Understanding
    OMB Office of Management and Budget
    RPC Reimbursable Project Coordinator
    ROG Reimbursable Operating Guidelines
    SF Standard Form
    SFFAS Statement of Federal Financial Accounting Standards
    TAS Treasury Account Symbol
    TIN Taxpayer Identification Number
    USC United States Code

Related Resources

  1. Related resources for this IRM include:

Policies

  1. Financial plan managers must follow these policies that include both internal and external guidance.

Reimbursable Authority

  1. Reimbursable work should not be performed unless or until there is a reimbursable agreement signed by both the IRS and the entity buying the IRS’s services.

  2. Reimbursements are budgetary resources that are subject to apportionment and are bound by the requirements and restrictions placed on appropriated funds. To administer properly 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.

Funds Control

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

  2. Business units should institute procedures for administering the agreements, including 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.

Apportionments/Reapportionments

  1. Before the start of the fiscal year, Corporate Budget submits a SF-132, Apportionment and Reapportionment Schedule, to OMB to request an initial apportionment for the reimbursable budget for the following fiscal year.

  2. After OMB approval, Corporate Budget assigns the reimbursable budget in IFS from the appropriations level to the apportionment level and then to the authorization level for earnings to be posted against.

  3. If business units indicate via revised Form 7600A, IAA General Terms and Conditions (GT&C) Section and Form 7600B, IAA Order Requirements and Funding Information (Order) Section; or Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities; or FEMA Form 010-0-8, Mission Assignments, or that more funds are needed than are available in the apportionment, Corporate Budget will request an increased apportionment from OMB. This process can take weeks to complete, so business units are advised to notify Corporate Budget promptly of any significant increases to their reimbursable funding needs.

Estimated Reimbursable Budget

  1. Corporate Budget will request reimbursable estimates from business units before the start of the fiscal year. These estimates must provide adequate reimbursable funding to support reimbursable operations during the upcoming fiscal year.

Reimbursable Authority Alignment
  1. Monitoring and analyzing reimbursable earnings against reimbursable authority is critical to knowing whether payments are occurring accurately and timely. BORCs must monitor individual projects based on the billing frequency set up in the agreement. Consistently monitoring progress toward a 100% earnings collection ensures proper oversight of reimbursable expenditures for each project.

  2. BORCs should also perform quarterly tracking of all project earnings to assess whether intervention is needed to address earnings postings that fall below projections.

  3. RPCs should renegotiate any projects that are expected to exceed agreement projections. If earnings are significantly lower than originally projected, IFS projections must be reduced but it is not necessary to renegotiate the agreement.

  4. Any administrative modification, such as accounting code changes or deobligations, should be addressed promptly to ensure accurate earnings are posted in IFS.

  5. Government Payables Section issues standard billings according to the agreement billing frequency and may contact business units if earnings fall behind schedule.

  6. Year-end earnings must reach 100% by the date established in the year-end close guidelines. See IRM 1.35.15, Administrative Accounting, Annual Close Guidelines.

Agreements

  1. 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. See IRM 1.33.3.9.1, Funding Arrangements, and IRM 1.33.3.9.2, Types of Agreements. These sections provide additional guidance on determining what type of agreement to execute and completing agreement forms.

  2. Reimbursable agreements must cover only a single fiscal year unless multi-year funds are available from the buyer. When multi-year funds are available from the buyer, a single Form 7600A, IAA General Terms and Conditions (GT&C) Section, may be signed to match the term of the multi-year fund, but a new Form 7600B, IAA Order Requirements and Funding Information (Order) Section, must be signed every year. In addition, some Direct-Charge Reimbursable Fund Agreement obligations can be initiated in the funding year and extend past September 30. Any exceptions must have the approval of CB and FR.

Funding Arrangements

  1. There are several types of funding arrangements depending on statutory authority that influence 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. A Funds-In Agreement is captured on either Form 7600A, IAA General Terms and Conditions (GT&C) Section, and Form 7600B, IAA Order Requirements and Funding Information (Order) Section (federal), or Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities (non-federal).

    2. Memorandum of Understanding (MOU) is an agreement between agencies or organizations that may be used in conjunction with Form 7600A, IAA General Terms and Conditions (GT&C) Section, and Form 7600B, IAA Order Requirements and Funding Information (Order) Section, or Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities. The terms and conditions of the MOU must comply with the authorizing language. In the case of certain training reimbursables and with the approval of the Servicewide Reimbursables Team, a Standard Form 182, Authorization, Agreement and Certification of Training, may be used in place of the Form 7600B, IAA Order Requirements and Funding Information (Order) Section.

    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. The combination of an MOU and Form 7600A, IAA General Terms and Conditions (GT&C) Section, and Form 7600B, IAA Order Requirements and Funding Information (Order) Section, may also be used for no-funds agreements.

Types of Agreements

  1. There are two types of reimbursable agreements:

    • Federal government.

    • Nongovernment and state, local, and foreign governments.


    Each type of agreement is accounted for separately in IFS under one of two distinct U.S. Standard General Ledger Accounts.

Federal Government
  1. Reimbursable agreements with other federal agencies (including Treasury) use Form 7600A, IAA General Terms and Conditions (GT&C) Section, and Form 7600B, IAA Order Requirements and Funding Information (Order) Section, or in the case of certain training reimbursables, a Standard Form 182, Authorization, Agreement and Certification of Training, may be used in place of the Form 7600B, IAA Order Requirements and Funding Information (Order) Section if the Servicewide Reimbursable Team approves.

  2. Federal government agreements are normally processed as interagency agreements and must be in conformance with Intragovernmental Business Rules PDF.

  3. Federal customers are billed monthly after the work has been completed unless specifically approved by Financial Reporting.

Non-Government and State, Local, and Foreign Governments
  1. Reimbursable agreements with non–federal entities use Form 14417, Agreement Covering Reimbursable Services With Non-Federal Entities and require the same critical elements contained in Form 7600A, IAA General Terms and Conditions (GT&C) Section and Form 7600B, IAA Order Requirements and Funding Information (Order) Section.

  2. Advance payments are required for agreements with state, local, and foreign governments, commercial organizations, and private businesses because their accounting systems do not interface with the federal government’s accounting systems.

  3. For non-federal customers, billing must be a one-time payment unless specifically approved by Financial Reporting.

Reimbursable Agreement Approval Process

  1. This process is documented in the Reimbursables Standard Operating Procedures available from the Servicewide Reimbursables Team.

Authorizing Officials and Delegation Orders

  1. All business units executing reimbursable agreements or Memoranda of Understanding (MOU) with federal agencies, states, and other external stakeholders must comply with 1.2.2.2, Delegations of Authority for Organization, Finance and Management Activities.

  2. If the MOU, implementing agreement, or other agreement allows for the exchange of a taxpayer return or taxpayer return information, the document must be coordinated with the director, Privacy, Governmental Liaison and Disclosure before the delegated authority may execute the agreement.

Cost Assignment

  1. Cost assignment methods must be consistent with the Federal Accounting Standards Advisory Board (FASAB) accounting standards.

  2. 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 sustaining IRS business units.

  3. 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 consumption basis as the direct-funded projects.

  4. 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 created once the seller provides goods and/or services to the buyer for the amount negotiated in the agreement - meaning that the payment or revenue should not be recognized until costs are incurred from providing the goods and services.

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:

    1. Salaries, benefits, and other employee compensation directly related to the work being performed under the reimbursable agreement.

    2. Accrued annual leave and compensatory time.

    3. Materials and supplies.

    4. Travel and relocation costs.

    5. Contractual services.

    6. Any other costs that are directly attributable to the work outlined in the reimbursable agreement.

Indirect/Overhead Costs
  1. 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. For the purpose of reimbursable agreements, indirect costs include sustaining business unit labor costs that support the IRS as a whole. As of the date of publication, sustaining business units include CFO, C&L, FMSS, HCO, IT, PGLD and the business units and costs funded within the NHQM and 1111 financial plans.

  2. Other-than-full overhead rates that deviate from the standard reduction allowed on the overhead worksheet and that are not related to reimbursable detailee exemptions must be reviewed and signed by the director, Budget Execution.

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

    1. General management and administrative services of sustaining organizations

    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 and 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 1.32.3.2.5, Cost Allocation Methodologies.

  5. Most 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.

Cost Estimates

  1. Determining the cost estimate of a reimbursable agreement requires the identification of the projected full cost of the products and services 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.

  2. The FASAB, SFFAS No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, PDF issued July 1995, 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:

    1. Trace costs directly wherever feasible and economically practicable.

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

    3. Allocate costs on a reasonable and consistent basis.

  3. These methods should be used by RPCs to develop full-cost projections for the cost of the products and/or services provided by reimbursable project(s). This includes labor, non-labor, and overhead costs.

  4. The RPC must calculate direct labor and non-labor costs using a methodology that conforms to the guidance outlined above.

    1. The RPC must provide the direct cost methodology to the Corporate Budget Reimbursables Team for review and signature.

    2. If direct costs are based on a sound methodology, there is no required format for presenting the direct cost methodology. See Corporate Budget website for the direct and indirect cost templates.

    3. Rolling over cost estimates from the previous year is not an acceptable methodology. Cost estimates must be updated every time a new agreement is negotiated.

  5. To determine the appropriate overhead rate for each project annually, reimbursable project owners must use the overhead worksheet developed by Corporate Budget. This worksheet includes standard overhead rates for each category of overhead and allows the RPC to exempt certain categories of overhead that are not applicable to a specific agreement.

    1. There are separate rates and separate overhead worksheets for direct/support business units and for sustaining business units. This is because the overhead methodology for direct/support business units includes all labor performed by sustaining business units as overhead, while the methodology for sustaining business units logically does not.

    2. Direct/support business units include Appeals, Counsel, Criminal Investigation, Large Business & International, Small Business/Self-Employed, Tax Exempt & Government Entities, Taxpayer Advocate Service, and Wage & Investment.

    3. All business units not listed above are sustaining business units.

  6. To complete the reimbursable overhead worksheet, the RPC should be aware of the following:

    1. The worksheet includes percentage rates for each category of overhead costs.

    2. Labor overhead costs capture salary and benefit costs of sustaining business units. Because all IRS employees benefit from the services provided by these organizations, labor overhead costs cannot be exempted without approval from the director, Budget Execution. Such exceptions will be rare and require an explanation.

    3. Non-labor overhead costs are those specific services provided to IRS employees. If some of these non-labor services are not provided to support the specific reimbursable work, then they may be exempted. For any non-labor cost that is exempted, an explanation must be provided.

    4. If non-labor costs needed to support the agreement are known, they should be calculated as direct costs and excluded from the overhead cost calculation.

    5. The customized overhead rate is multiplied by direct labor cost to calculate overhead costs. Direct labor costs are defined as salary and benefit costs for the specific services provided through the reimbursable agreement.

  7. All overhead earnings will be posted to a specific accounting string determined by Corporate Budget and disseminated by the Servicewide Reimbursables Team.

  8. Cost increases that occur during the performance of the agreement must also be recovered, unless the Servicewide Reimbursable Team determines them to be immaterial - meaning that the administrative cost of collecting the increase is more than the amount of the increase.

  9. Cost estimates for annually recurring reimbursable projects should be recalculated each year.

Approval of Direct and Overhead Cost
  1. Reimbursable Project Coordinators (RPCs) must make buyers aware of the requirement to include overhead costs in their agreements and should work with them to develop initial cost estimates. In many cases, negotiation of overhead costs adds time to the process. RPCs should begin this process months in advance of when the work will be performed when possible.

  2. Before collecting signatures for a reimbursable agreement, RPCs must submit the following cost documentation to the Servicewide Reimbursables Team for approval and signature:

    1. Methodology used to calculate direct and indirect costs.

    2. Overhead worksheet specified by the Servicewide Reimbursables Team.

Performance/Cash Awards

  1. When an employee is detailed to another government agency, the responsibility for recommending, approving and managing the accounting of his or her 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.

Budget and Accounting Procedures

  1. This section provides the processing requirements and IFS document transactions needed to complete reimbursable business. Reimbursable earnings may be collected under a non-advance agreement or an agreement paid in advance.

Processing Reimbursables

  1. All reimbursable agreements require the development of a forecast of revenue and budget and the completion of certain IFS transactions. For detailed instructions, see the Reimbursables Standard Operating Procedure available from the Servicewide Reimbursables Team. See Corporate Budget website.

  2. From the initial budget estimates worksheet, to the final earnings transaction and closeout of the reimbursable project, the budget and accounting transactions conform to one of two collection methods: advance payments or non-advance Intragovernmental Payment and Collection System (IPAC) payments.

    1. Monthly billing is the preferred frequency for all agreements. For these agreements, actual costs should be captured monthly to reflect the work that has occurred during that month. It is not appropriate to simply divide the annual cost into equal monthly payments unless the cost of the work performed is consistent from month to month.

    2. Advance payments are used for non-federal customers. They are most often one-time payments with opportunities for upward/downward adjustments as the project nears completion.

    3. Non-advance payments are used for federal customers. They are collected using the IPAC process and follow a pre-set billing frequency (for example, monthly, quarterly, lump-sum). Most opportunities for upward/downward adjustments to non-advance reimbursables occur during the fourth quarter of the fiscal year. The processing step for these collection methods is found in IRM 1.33.3.5.1.1, Indirect/Overhead Costs.

IFS Transactions

  1. IFS reimbursable accounting transactions include:

    1. Forecast of Revenue (FMV1, FMV2, & FMV3) and Transfer Budget (FMBB)

    2. Schedule of Reimbursable Earnings (FV50-BZ)

    3. Post Reimbursable Earnings (FBV0–BZ)

    4. Advance Payment Receipts (F-29-DZ)

    5. Advance Payment Earnings Post & Clearing (FB05-AD, BW, and DR)

    6. Post Credit Memo (FB75–DG)

    7. Collection of Receivable (F-28–DZ)

    8. Record Cash Refund (F110–IP)

    9. General Ledger Account Posting (FB50-DZ)

    10. Automatic Payment Transactions: Status (F110-ZP)

Monthly Reporting Requirements
  1. The validity of reimbursable collections data reported in the central accounts and published in the federal government’s financial reports depends upon the accuracy of the monthly statements of transactions submitted by all departments and agencies. The timeliness of reports depends on strict compliance with BFS-assigned deadlines and the IRS monthly billing and collection timetables.

  2. Adhering to the monthly reporting cycle is a critical element in maintaining IRS internal accounting controls. The IRS processes transactions according to formal IFS posting models. The posting models require certain transactions related to the monthly processing cycle be completed within the same month.

  3. Late entries or those posted outside of the monthly cycle cause accounting relationships to become out-of-balance. Correcting an account misalignment requires Financial Reporting to reconcile and complete adjustments before the IRS financial statements can be forwarded to BFS.

Schedule of Reimbursable Earnings (FV50)
  1. Most reimbursable earnings are considered offsetting collections that should be identified with IRS apportioned reimbursable authority. Reimbursable expenses are initially recorded against the direct fund appropriation codes ending with a "D." These expenses must be transferred to the reimbursable fund accounting string ending with an "R." The purpose of the schedule of reimbursable earnings (FV50) is to transfer expenses from the direct fund to the reimbursable fund. When the expenses are moved under this transaction, it indicates or triggers a billing to be issued to the buyer.

  2. IFS earnings posted against an erroneous buyer number must be reversed. Line items with an erroneous buyer number must be deleted on the forecast of revenue document (FMV1). This involves closing or "setting to complete" the erroneous accounting line and creating a new accounting line for processing future transactions.

  3. The instructions for completing an FV50 can be found on the Financial Management website.

Governments Payables Mailing Addresses and Contacts
  1. Government Payables prefers electronic submission of reimbursable business accounting transactions, justifications, and documentation. However, hard copies are also acceptable if necessary. The following email and mailroom addresses are most commonly used for forwarding these materials:

    1. Reimbursable earnings (BZ earnings) documents should be forwarded to this electronic mailbox: *CFO BFC DCU Reimbursable Program.

    2. EV and OC documents should be forwarded to this electronic mailbox: *CFO BFC Electronic EV.

  2. Hard copies of advance payment checks, money orders and supporting documentation should be sent to the first mailing address below. The second address is intended for Federal Express-type mailings.

    Internal Revenue Service
    P.O. Box 9002
    Beckley, WV 25802-9002




    Beckley Finance Center
    110 North Heber Street
    Beckley, WV 25801-4501

  3. Government Payables assigns specific staff to each business unit's reimbursable projects. The reimbursable project inventory and contacts list are available on the Financial Management website.

Financial Codes

  1. A complete list of all financial codes can be found in the Financial Management Codes Handbook, which is revised quarterly and available from Corporate Budget on its website.

Funded Program Codes
  1. A funded program code is referenced on each agreement and is a critical data element. The funded program code is a unique, 9-character, alphanumeric code.

  2. A funded program (internal order) code must be established before reimbursable documents can be processed in IFS.

  3. Corporate Budget, in conjunction with the business units, determines which funded program codes will be rolled over for a new fiscal year and which new codes need to be established during the course of the fiscal year.

  4. A snapshot of reimbursable agreement funded program codes is available in the Financial Management Codes Handbook. A real-time list of reimbursable agreement funded program codes is available in IFS using transaction KOK5: variant name - IRS-Z002, Reimbursables.

Buyer Numbers
  1. New buyer numbers can be requested from the Governments Payables Team. To obtain a new buyer number, submit a copy of the new project agreement to your Government Payables Team contact, and ensure the TIN/EIN and business address is included.

Prior-Year
  1. OMB Circular A-11 provides guidance on managing prior-year reimbursable agreements. See Circular A-11, Section 20, Terms and Concepts.

  2. In instances where there has been an overpayment of invoices or where advance payments exceed needs, contact Government Payables Section for guidance regarding refunds.

Year-end Closeout
  1. Business units closing out reimbursable agreements at the end of the fiscal year must comply with IRM 1.35.15, Administrative Accounting, Annual Close Guidelines, which assists business units with facilitating and monitoring their year-end close activities.

IFS Status Reports
  1. The following IFS reports support reimbursables monitoring and analysis:

    1. Status of funds report: ZSOF_ECC to check reimbursable fund alignment with project accounting line details.

    2. Earmarked funds journal: S_P99_41000147 displays reimbursable projects for posted earnings and open balances.

    3. Reimbursable audit report: ZOFR011 provides a summary of project by customer and general ledger account.

    4. BW2900 SOAF reports provides historical FTE and budget statuses by fiscal year periods and various sorting options.