- 1.35.19 User Fees
- 18.104.22.168 Overview
- 22.214.171.124 Background
- 126.96.36.199 Authorities
- 188.8.131.52 Related Resources
- 184.108.40.206 Definitions
- 220.127.116.11 Acronyms
- 18.104.22.168 Responsibilities
- 22.214.171.124.1 Chief Financial Officer
- 126.96.36.199.2 Associate Chief Financial Officer for Financial Management
- 188.8.131.52.2.1 Director, Cost Accounting Office
- 184.108.40.206.2.2 Director, Financial Management Policy Office
- 220.127.116.11.2.3 Director, Revenue Accounting Office
- 18.104.22.168.2.4 Director, Financial Reports Office
- 22.214.171.124.2.5 Beckley Finance Center
- 126.96.36.199.2.6 Director, Financial Management Systems Office
- 188.8.131.52.3 Associate Chief Financial Officer for Corporate Budget
- 184.108.40.206.4 Business Units
- 220.127.116.11 Requirements for Deposit of Funds
- 18.104.22.168 31 USC 9701, Fees and Charges for Government Services and Things of Value
- 22.214.171.124.1 OMB Circular A-25, User Charges
- 126.96.36.199 26 USC 7528, Internal Revenue Service User Fees
- 188.8.131.52 26 USC 6103, Confidentiality and Disclosure of Returns and Return Information
- 184.108.40.206 26 USC 6104, Publicity of Information Required From Certain Exempt Organizations and Certain Trusts
- 220.127.116.11 26 USC 6108, Statistical Publications and Studies
- 18.104.22.168 26 USC 6110, Public Inspection of Written Determinations
- 22.214.171.124 The Pension Protection Act of 2006
- 126.96.36.199 The Freedom of Information Act
- 188.8.131.52 Receipt and Deposit of User Fees
- 184.108.40.206 Costing User Fees
- 220.127.116.11 Biennial Review of User Fees
- 18.104.22.168 Annual Monitoring/Review
- 22.214.171.124 Types of User Fees
- 126.96.36.199.1 Installment Agreements
- 188.8.131.52.2 Offers-in-Compromise
- 184.108.40.206.3 Enrollments and Renewals of Enrollment of Enrolled Actuaries
- 220.127.116.11.4 Enrollments and Renewals of Enrollment of Enrolled Agents
- 18.104.22.168.5 Special Enrollment Examinations for Enrolled Agents
- 22.214.171.124.6 Obtaining and Renewing Preparer Tax Identification Numbers
- 126.96.36.199.7 Appeals Advanced Art Determinations
- 188.8.131.52.8 Chief Counsel Rulings and Determination Letters
- 184.108.40.206.9 Tax Exempt and Government Entities Determination Letters, Information Letters, and Other Guidance
- 220.127.116.11.10 Large Business and International Determination Letters
- 18.104.22.168.11 U.S. Residency Certifications
- 22.214.171.124.12 Income Verification Express Services
- 126.96.36.199.13 Reproductions of Individual and Business Tax Returns
- 188.8.131.52.14 Reproductions of Exempt Organizations Returns
- 184.108.40.206.15 Statistical Studies
- 220.127.116.11.16 Public Inspections of Written Determination Background File Documents
- 18.104.22.168.17 Historical Conservation Easements
- 22.214.171.124.18 Freedom of Information Act Requests
Part 1. Organization, Finance, and Management
Chapter 35. Financial Accounting
Section 19. User Fees
July 19, 2016
(1) This transmits new IRM 1.35.19, Financial Accounting, User Fees.
(1) IRM 1.32.19, Servicewide Travel Policies and Procedures, User Fees, dated November 8, 2012, has been superseded. Current guidance previously found in IRM 1.32.19, Servicewide Travel Polices and Procedures, User Fees, has been renumbered and moved to new IRM 1.35.19, Financial Accounting, User Fees, to ensure all Financial Accounting IRMs are in the same IRM section.
(2) IRM 126.96.36.199, Definitions, added definition for Corporate Overhead Rate and deleted definition for Overhead Rate.
(3) IRM 188.8.131.52.2.1 k), Director, Cost Accounting Office, added paragraph to address responsibilities for implementing new user fees.
(4) IRM 184.108.40.206.2.5 a) and d), Beckley Finance Center, revised wording to clarify responsibilities.
(5) IRM 220.127.116.11.4 e), Business Units, added language to ensure business units are responsible for maintaining documentation.
(6) IRM 18.104.22.168.4, Business Units, added paragraphs j, k, and l to make business units responsible for researching debit vouchers, providing additional information necessary to process refunds, and to identify user fees that need to be revised in order for the IRS to better achieve it’s mission.
(7) IRM 22.214.171.124.4(3), Requirements for Deposit of Funds, revised wording to clarify that authorization comes from public laws and are codified.
(8) IRM 126.96.36.199.4(4), Requirements for Deposit of Funds, inserted specific code section.
(9) IRM 188.8.131.52.1(5), 31 USC 9701, Fees and Charges for Government Services and Things of Value, added additional language to ensure user fees do not impact tax administration or taxpayer rights.
(10) IRM 184.108.40.206(4), The Freedom of Information Act, inserted specific code section.
(11) IRM 220.127.116.11(3), Biennial Review of User Fees, removed last sentence requiring business units to incorporate inflation into the costing model and added a sentence requiring the analysis of costing to consider the impact on voluntary compliance and increase to enforcement.
(12) IRM 18.104.22.168, Review and Implementation of New User Fees, the following changes were made:
Changed title of to “Annual Review of User Fees.”
Added a new first paragraph to require the business units to consider if newly implemented fees or existing fees have an impact on tax administration and to make appropriate recommendations.
Inserted new paragraph (2) e) for business units to consider the effect of the fee on voluntary compliance, taxpayer burden, taxpayer rights.
Inserted new paragraph (2) f) for business units to consider the change in demand for the service as a result of a user fee.
Inserted new paragraph (2) g) stating that “The IRS will avoid fees that increase enforcement costs, reduce voluntary compliance, or otherwise create other difficulties in achieving the IRS mission.
(13) IRM 22.214.171.124.1(2), Installment Agreements, revised wording to clarify the difference between a revised and a reinstated installment agreement.
(14) Deleted IRM 126.96.36.199.5, Enrollment and Renewals of Enrollment of Enrolled Retirement Plan Agents, this enrollment is being discontinued.
(15) IRM 188.8.131.52.6, Special Enrollment Examinations for Enrolled Agents and Enrolled Retirement Plan Agents, removed all references to Enrolled Retirement Plan Agents as this enrollment is being discontinued.
(16) Deleted IRM 184.108.40.206.8, Registered Tax Return Preparer Competency Examination, this examination is no longer offered.
(17) Deleted all references to Enrolled Retirement Plan Agents throughout the IRM.
(18) Minor editorial changes have been made throughout the document.
Ursula S. Gillis
Chief Financial Officer
This Internal Revenue Manual (IRM) provides information for implementing user fees and reviewing user fee activities, rates, and reports.
The Chief Financial Officer (CFO), Financial Management (FM) Unit, Cost Accounting Office (CA) develops and maintains this IRM.
The IRS began charging user fees in 1952 when the Independent Offices Appropriations Act (IOAA) of 1952 was passed. The IOAA which is codified by 31 USC Sec 9701, Fees and Charges for Government Services, authorizes agencies to prescribe regulations that establish charges where the Government provides special benefits to a recipient beyond those given to the general public. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the President; these policies are currently set forth in the Office of Management and Budget (OMB) Circular A-25, User Charges. When the IRS began charging user fees under this authority, receipts were deposited to the General Fund for Government.
The Treasury, Postal Service, and General Government Appropriations Act of 1995, enacted on September 30, 1994, allowed the Service to spend up to $119 million per fiscal year of new or increased user fee receipts, provided the fees are based on the cost of providing services.
On January 4, 2005, the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and the Independent Agencies Appropriations Act of 2006 eliminated the $119 million cap on annual spending.
Treasury, Postal Service, and General Government Appropriations Act of 1995, Pub. L. No. 103–329.
Pension Protection Act of 2006, Pub. L. No. 109–280.
26 USC Sec 482, Allocation of Income and Deductions Among Taxpayers.
26 USC Sec 6103, Confidentiality and Disclosure of Returns and Return Information.
26 USC Sec 6108, Statistical Publications and Studies.
26 USC Sec 6110, Public Inspection of Written Determinations.
26 USC Sec 7528, Internal Revenue Service User Fees.
31 USC Sec 3302, Custodians of Money.
26 USC Sec 7809, Deposit of Collections.
31 USC Sec 9701, Fees and Charges for Government Services and Things of Value.
In this IRM, the terms below have the following meanings:
Art - Paintings, sculptures, watercolors, prints, drawings, ceramics, antique furniture, decorative arts, textiles, carpets, silver, rare manuscripts, and other similar objects.
Costs - Expenses incurred in acquiring or producing goods and services.
Corporate Overhead Rate - The rate annually calculated by Cost Accounting and applied to total labor and benefits costs to determine the full cost of providing services.
Direct Costs - Costs incurred that are unique or distinctly traceable to a program, activity, or output. Such costs include salaries, benefits, materials, and supplies.
Full Cost - All costs used in generating the outputs, including all direct and indirect costs.
Imputed Costs - Non-reimbursed inter-entity costs.
Indirect Costs - Costs that cannot be directly linked to a program or activity. Indirect costs include support and sustaining costs.
Market Price - Price for a good, resource, or service based on a competitive open market, which creates neither a shortage nor a surplus of the goods, resources, or services.
Overhead - Costs for support not directly identifiable to the functional area within the business unit.
Special Benefits - Privileges, goods and/or services that give recipients benefits beyond those available to the general public.
User Fees - Charges levied by a Federal agency on individuals or entities directly benefiting from a service provided by a Government program or activity. User fees are charged for Federal activities that provide recipients with benefits greater than those provided to the general public.
The following chart contains acronyms that are used throughout this IRM:
Acronym Definition DDIA Direct Debit Installment Agreement DHHS Department of Health and Human Services DPC Designated Payment Codes EFT Electronic Funds Transfer FOIA Freedom of Information Act IA Installment Agreement IFS Integrated Financial System IOAA Independent Office Appropriations Act IVES Income Verification Express Service LB&I Large Business & International OIC Offer-in-Compromise OMB Office of Management and Budget OPR Office of Professional Responsibility OTCnet Over the Counter Channel Application PCC OTC Paper Check Conversion Over the Counter PTIN Preparer Tax Identification Number RRACS Redesigned Revenue Accounting and Control System RPO Return Preparer Office RSPCC Remittance Strategy Paper Check Conversion SEE Special Enrollment Examination SOI Statistics of Income TDS Transcript Delivery System TFM Treasury Financial Manual UWR Unified Work Request
This section provides responsibilities for:
Chief Financial Officer.
Associate Chief Financial Officer for Financial Management.
Director, Cost Accounting Office.
Director, Financial Management Policy Office.
Director, Revenue Accounting Office.
Director, Financial Reports Office.
Beckley Finance Center.
Director, Financial Management Systems Office.
Associate Chief Financial Officer for Corporate Budget.
The CFO is responsible for:
Overseeing user fee programs including compliance with applicable user fee authorities.
Establishing policies and controls for IRS user fee processes including reviewing and reporting user fees.
The ACFO for FM is responsible for:
Overseeing the biennial review process, which includes obtaining approval for user fee rates and coordinating OMB Circular A-25, User Charges, full cost requirements.
Overseeing the annual financial audit which attests to the reasonableness of user fee collections and other audits performed by the Government Accountability Office or Treasury Inspector General for Tax Administration involving user fees.
Overseeing the implementation of new user fees.
The Director, CA, is responsible for:
Developing and updating policies related to user fees.
Providing guidance to the business units for implementing and monitoring user fees.
Facilitating the biennial review of the cost of all user fees to include reviewing and validating business unit cost estimates for existing and new user fees, preparing the formal documentation, and presenting results to the CFO.
Providing agency overhead rates annually to the business units that incorporate support and sustaining costs to be applied to the direct and indirect business unit costs for user fee activities.
Providing inflation factors to the business units.
Monitoring volumes and revenue against projected amounts and researching unexpected variances.
Reviewing and analyzing BFC and business unit reports prior to final submission.
Providing user fee files for the annual financial audit.
Reviewing and approving BFC audit deliverables related to user fees.
Developing Unified Work Requests (UWR) related to user fees.
Facilitating the implementation of new user fees and changes to existing user fees.
The Director, FMP, is responsible for reviewing and publishing this IRM.
The Director, Revenue Accounting Office (RA), is responsible for:
Providing monthly Redesigned Revenue Accounting and Control System (RRACS) reports to the Financial Reports Office (FR), by the fourth day of the month, for analysis of user fee collections and deposits.
Providing support for system changes and UWRs related to campus systems that process and control user fees.
Providing monthly interim RRACS reports to FR and BFC three business days before month-end.
Providing year-end RRACS reports to FR and BFC within two business days after year-end.
Providing monthly Masterfile reports and weekly reports by campus of installment agreement (IA) user fee collections to CA.
The Director, FR, is responsible for:
Preparing and posting a non-standard Treasury Form 224 entry into the Integrated Financial System (IFS) on a monthly basis and at year-end to record user fee collections initially recorded in RRACS.
Preparing a monthly analysis that includes a comparison between Central Accounting and Reporting System (CARS) and IFS for user fee activity posted, and a reconciliation of budgetary and proprietary general ledger balances associated with user fee activity.
The BFC is responsible for:
Comparing actual user fee deposits to supporting documentation and/or schedules received from the business units and obtaining explanations for differences.
Preparing required reports of user fee collections.
Preparing the President's Budget Receipt Estimate for the upcoming year and following ten years.
Comparing supporting documentation and/or schedules received from the business units to CARS monthly.
Approving FR year-end user fee entry prior to close.
Preparing audit deliverables for user fee periods six, nine, and twelve.
Managing the payment process for new and existing user fees including Pay.gov and OTCnet.
The ACFO for Corporate Budget (CB) is responsible for:
Collaborating with executives to determine the use of user fee funds.
Recording anticipated user fee collections in IFS.
Determining the use of user fee receipts in the MAX system.
Transferring user fees to the appropriate accounts.
Recording Standard Form 1151, Non-Expenditure Transfer Authorizations.
Recording apportionments for user fee receipts.
Instructing the business units to review potential user fees in the annual Instructions for Developing Initiatives.
The business units are responsible for:
Reviewing and approving the monthly Commissioner's Report on User Fee Revenues.
Collecting and reporting user fees within the business unit program area.
Providing quarterly estimates of projected volumes, revenue, and annual estimates for the subsequent ten years.
Providing BFC with monthly activity reports and/or explanations of actual to budget variances within three days of the end of the month.
Executing the biennial review of user fee activities, including maintaining documentation that supports the cost estimates.
Maintaining and tracking information on revenue and volumes to support the financial audit.
Implementing changes to legacy systems used to capture and track user fees.
Providing the BFC with daily deposit tickets to support entry of revenue into IFS within 24 hours.
Reviewing all activities annually for potential new user fees.
Researching debit vouchers and updating case load systems payment information.
Providing BFC refund schedules that include original date of collection.
Identifying areas of concern in relation to user fee rates or activities that may need to be revised to better achieve IRS’s mission.
Under 31 USC 3302, Custodians of Money, absent specific statutory authority, agencies must promptly deposit any funds received for government use to the General Fund.
Treasury, Postal Service and General Appropriations Act, 1995, PL 103–329, provide the authority for the IRS to spend up to $119 million per fiscal year of new or increased user fee receipts implemented as of September 30, 1994. The 2006 Treasury Appropriation Act, PL 109–115, remove the annual $119 million ceiling from PL 103–329.
26 USC 7809, Deposit of Collections, authorizes the user fee receipts to reimburse the appropriation that incurred expenses under the following code sections:
26 USC 6103, Confidentiality and Disclosure of Returns and Return Information.
26 USC 6108, Statistical Publications and Studies.
26 USC 6110, Public Inspection of Written Determinations.
The Pension Protection Act of 2006 requires user fees collected for historic conservation easements to be spent on enforcement activities related to charitable contribution deductions for historic conservation easements. This public law is codified in 26 USC 170(f)(13), Charitable, etc., Contributions and Gifts.
Title 31 USC Section 9701, Fees and Charges for Government Services and Things of Value, provides for the collection of user fees where the government provides special benefits to a recipient beyond those accruing to the general public. The IRS collects fees not covered by other legislation under this authority.
IRS implements user fees under 31 USC 9701, Fees and Charges for Government Services and Things of Value, by regulation.
Title 31 USC Section 9701, Fees and Charges for Government Services and Things of Value, requires the IRS to charge full cost or obtain a waiver from OMB to charge less-than full cost.
The IRS collects the following fees for the following activities:
Installment Agreements (see IRM 220.127.116.11.1).
Offers-in-Compromise (see IRM 18.104.22.168.2).
Enrollments and Renewals of Enrollment of Enrolled Actuaries (see IRM 22.214.171.124.3).
Enrollments and Renewals of Enrollment of Enrolled Agents (see IRM 126.96.36.199.4).
Special Enrollment Examinations for Enrolled Agents (see IRM 188.8.131.52.5).
Obtaining and Renewing Preparer Tax Identification Numbers (see IRM 184.108.40.206.6).
OMB Circular A-25, User Charges, provides presidential policies to government agency executives establishing and charging user fees for special benefits provided to an identifiable recipient beyond those accruing to the general public. The charge imposed recovers full cost to the Federal Government for providing the special benefit or the market price.
Full cost includes all direct and indirect costs to any part of the Federal Government of providing a good, resource, or service.
A special benefit enables the beneficiary to obtain more immediate or substantial gains or values than those that accrue to the general public, provides business stability, or contributes to public confidence in the business activity or beneficiary, or is performed at the request of or for the convenience of the recipient, and is beyond the services regularly received by other members of the same industry or group or general public.
Market price is the price for the good, resource, or service based on competition in open markets, and creates neither a shortage nor a surplus of the good. When a substantial competitive demand exists, competitive bidding or reference to prevailing prices in competitive markets for goods, resources, or services that are similar to those provided by the Government determines the market price.
Agency heads or their designee may recommend to OMB exceptions to the general policy when the cost of collecting the fees would represent an unduly large part of the fee for the activity or any other condition exists that, in the opinion of the agency head or his/her designee, justifies an exception. IRS considers the impact of the user fee on low income taxpayers, tax administration, taxpayer rights, and the cost of collecting the fees when determining the user fee rate and whether to request a waiver, if necessary. For example, the IRS will avoid a fee or seek an exception or waiver if the fee would reduce access to services by low income taxpayers, combine with other costs to create excessive taxpayer burden, or impair tax administration.
Internal Revenue Code (IRC) Section 7528, Internal Revenue Service User Fees, requires the IRS to collect a user fee for ruling letters, opinion letters, determination letters, and other similar requests.
IRS fees, including user fees under section 7528, Internal Revenue Service User Fees, are implemented through the issuance of published guidance.
This legislation allows the IRS to charge a reasonable fee; however, it sets a floor based on the historical average cost.
The IRS collects the following fees under 26 USC 7528, Internal Revenue Service User Fees:
Appeals Advanced Art Determinations (see IRM 220.127.116.11.7).
Chief Counsel Rulings and Determination Letters (see IRM 18.104.22.168.8).
Employee Plans Rulings and Determination Letters (see IRM 22.214.171.124.9).
Exempt Organizations Rulings and Determination Letters (see IRM 126.96.36.199.9).
Pre-filing Agreements (see IRM 188.8.131.52).
Advanced Pricing Agreements (see IRM 184.108.40.206).
Tax Treaty Limitation of Benefits (see IRM 220.127.116.11).
Federal Excise Tax Exemptions (see IRM 18.104.22.168)
Title 26 USC Section 6103, Confidentiality and Disclosure of Returns and Return Information, authorizes the IRS to charge a reasonable fee for reproduction of returns and disclosure of return information.
IRS fees, including user fees under section 6103, Confidentiality and Disclosure of Returns and Return Information, are implemented through the issuance of published guidance.
The IRS collects the following fees under 26 USC 6103, Confidentiality and Disclosure of Returns and Return Information :
U.S. Residency Certifications (see IRM 22.214.171.124.11).
Income Verification Express Services (see IRM 126.96.36.199.12).
Reproductions of Individual and Business Tax Returns (see IRM 188.8.131.52.13).
Title 26 USC Section 6104, Publicity of Information Required from Certain Exempt Organizations and Certain Trusts, authorizes the IRS to charge a reasonable fee for the reproduction and mailing costs for annual returns, reports, applications for exemption, and notice status of certain exempt organizations.
The IRS implements user fees under 26 USC 6104, Publicity of Information Required from Certain Exempt Organizations and Certain Trusts, through an announcement or Internal Revenue Procedure.
The IRS collects the user fee for Reproductions of Exempt Organizations (EO) Returns under this authority (see IRM 184.108.40.206.14 ).
Title 26 USC Section 6108, Statistical Publications and Studies, authorizes the IRS to charge a reasonable fee for providing special statistical studies.
The IRS implements user fees under 26 USC 6108, Statistical Publications and Studies, through an announcement or Internal Revenue Procedure.
The IRS collects a user fee for Statistical Studies under this authority (see IRM 220.127.116.11.15).
Title 26 USC Section 6110, Public Inspection of Written Determinations, authorizes the IRS to charge a fee for the reproduction of a written determination or background file document that is made available for public inspection.
IRS fees, including user fees under section 6110, Public Inspection of Written Determinations, are implemented through the issuance of published guidance.
This legislation requires that the user fee be the actual costs; however, the IRS can waive or reduce the fee if it is determined appropriate.
The IRS collects fees for the public inspections of written determination background file documents (see IRM 18.104.22.168.16).
The Pension Protection Act of 2006 requires the IRS to collect a $500 user fee from any person claiming a deduction for a historical conservation easement donation (see IRM 22.214.171.124.17).
The IRS uses fees collected under this authority are used for enforcement activities related to historical conservation easement donations.
The Freedom of Information Act (FOIA), allows the IRS to charge a user fee for providing certain information covered under the Act to the general public (see IRM 126.96.36.199.18).
The IRS implements user fees under FOIA through an announcement or Internal Revenue Procedure.
This Act requires agencies to limit fees to reasonable standard charges for document search, duplication, and review.
This Act is codified in 5 U.S.C. § 552(a)(4), Records Maintained on Individuals.
The IRS receives user fee remittances at campuses and through lockbox arrangements, headquarters Post Office (PO) boxes, or Pay.gov.
The IRS records user fee deposits on one of two general ledgers; IFS or RRACS. The FR enters user fees originating in RRACS into IFS through a Non-Standard Treasury 224 entry.
The IRS follows the Treasury Financial Manual (TFM) Part 5, Chapter 4000, Making Deposits, and deposits money within 24 hours of receipt. TFM Part 6, Chapter 8000, Cash Management, allows business units to accumulate deposits until they have received $5,000; however, receipts may not be held over a weekend.
A lockbox is a PO box established by a financial institution to receive payments made to the IRS. The financial institution receives, deposits, and reports payments on Standard Form 215, Deposit Ticket.
The IRS uses various Bureau of the Fiscal Service (Fiscal Service) applications to convert paper checks to electronic funds transfer (EFT). These applications include:
Over the Counter Channel Application (OTCnet).
Remittance Strategy Paper Check Conversion (RSPCC).
Paper Check Conversion Over the Counter (PCC OTC).
The BFC deposits paper checks using OTCnet.
Pay.gov is a secure government-wide collection portal administered by Fiscal Service. Customers using Pay.gov may pay by Automated Clearing House (ACH) debit or credit card. Fiscal Service absorbs all credit card fees related to user fee collections. A single credit card transaction cannot exceed $24,999.
Full cost to the government for providing the good or service includes all direct and indirect costs to any part of the Federal Government. The cost of activities includes:
Retirement costs (funded and unfunded).*
Material and supply costs.
Rents on land, buildings, and equipment.
Depreciation of structures and equipment.
Management and supervisory costs.
Cost of enforcement, collection, research, establishment of standards and regulation.
Business units identify all labor and benefit costs associated with the user fee activity. Labor costs includes both direct and indirect time.
The CA provides the business unit with a corporate overhead factor to account for non-labor costs and all other support and sustaining costs paid for by IRS.
If there are extraordinary costs such as contractor or system costs, the CA will provide a modified corporate overhead factor.
Biennially (every two years), the IRS performs a review to recalculate existing user fee charges and consider other activities for which a user fee should be charged.
The CFO distributes a letter to the business units in the odd calendar years requesting that they review user fee activities which fall under their responsibility.
Business unit strategy and finance offices provide the cost of user fee activities and provide calculations and recommendations for maintaining, increasing, or decreasing user fees within 120 days of the request. The cost analysis considers the impact to voluntary compliance and the corresponding increase to enforcement cost.
The ACFO for FM prepares a Biennial Review Report compiling and reporting the results of the review. The ACFO presents the results and business unit recommendations to the CFO.
The CFO submits the Biennial Review to the Commissioner by September 30 of the review year.
The ACFO for FM works with OMB, Treasury, business units, and other stakeholders to implement fee adjustments if a change in rate or a new fee is implemented, or a waiver for a less-than-full-cost user fee is recommended.
Business units are required to monitor services and activities to determine the potential impact of the user fee on services and activities during the annual budget cycle. The business units should consider whether evidence exists that newly implemented user fees or changes to existing fees have impacted tax administration and make appropriate recommendations.
Business units are required to review services and activities for potential new user fees during the annual budget cycle. When performing a review on potential new user fees the business units consider the following factors:
The voluntary nature of the user fee activities. The IRS does not charge taxpayers for special services that they do not request.
The benefit must be identifiable to a specific taxpayer.
The cost of administering the user fee, as this cannot be a substantial amount of the fee.
The impact of the user fee on low-income taxpayers.
The effect of the fee on voluntary compliance, taxpayer burden, and taxpayer rights.
The change in demand for service resulting from the proposed fee.
The IRS will avoid fees that impact enforcement costs, voluntary compliance, or otherwise create other difficulties in achieving the IRS’s mission.
When potential user fees are identified, the business units submit the following information to the CA:
Description of the activity.
Estimated or historical volumes of participants, products, or services involved in the activity.
Estimated or historical cost of the activity.
The proposed rate for the user fee and the potential revenue that could result from it.
The IRS charges user fees for the following activities:
Enrollments and Renewals of Enrollment of Enrolled Actuaries.
Enrollments and Renewals of Enrollment of Enrolled Agents.
Special Enrollment Examinations for Enrolled Agents.
Obtaining and Renewing Preparer Tax Identification Numbers (PTINs).
Appeals Advanced Art Determinations.
Chief Counsel Rulings and Determination Letters.
Tax Exempt and Government Entities Determination Letters, Information Letters, and Other Guidance.
Large Business and International Determination Letters.
U.S. Residency Certifications.
Income Verification Express Services.
Reproductions of Individual and Business Tax Returns.
Reproductions of Exempt Organization (EO) Returns.
Public Inspections of Written Determination Background File Documents.
Historical Conservation Easements.
Freedom of Information Act Requests.
The IRS charges a fee to recover the cost of activities involved in creating and managing IA payment plans. These activities include answering phone calls, printing and mailing notices, and processing collections related to IAs. IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 188.8.131.52.
An IA is an agreement between the IRS and the taxpayer that allows the taxpayer to pay outstanding tax liability with monthly installment payments. The taxpayer agrees to pay a user fee associated with establishing new, revised, or reinstated installment agreements. The IRS charges an origination fee with the establishment of a new agreement, the revision of an existing agreement, or reinstatement of an agreement after the taxpayer defaults on the agreement or the agreement has been terminated. SB/SE administers the IA program.
A Direct Debit Installment Agreement (DDIA) automatically debits the taxpayer's bank account. The monthly electronic transfer occurs on the date that is pre-selected by the taxpayer and transfers directly to the IRS. These agreements have a discounted fee.
Taxpayers with incomes at or below 250% of the Department of Health and Human Services (DHHS) poverty guidelines qualify for a reduced low-income rate for the IA user fee. The DHHS adjusts and publishes poverty guidelines annually. The IRS determines if the taxpayer qualifies for the reduced user fee based on the most recently filed return. If the taxpayer does not meet the criteria, but may qualify due to a change in circumstances, the taxpayer submits Form 13844, Application for Reduced User Fee for Installment Agreements, within 30 days of receipt of the IA acceptance letter.
The IRS receives IA fees with installment tax payments through a lock box or the Electronic Federal Tax Payment Systems (EFTPS). The IA fees and the tax payments are not separately identifiable. Campuses record the payments in RRACS as tax revenue.
Weekly, IRS IT staff runs an automated utility program, called the IA User Fee Sweep Program, against the Integrated Data Retrieval System (IDRS) to reclassify IA user fee collections from tax revenue to user fee revenue. The program reviews all tax modules in the taxpayer’s account that are in IA status and verifies that a user fee has been received. If not, the program looks for subsequent tax payments sufficient to pay the user fee. If sufficient payments have been made, the program transfers the appropriate user fee amount from the tax module to the user fee module. This transaction reverses the tax payment and records the user fee payment.
Monthly, RA provides the CA with a Masterfile report that details revenue and volume data. The CA formats the volume data into a spreadsheet and compares the volumes with the previous year volumes and expected year-to-date volumes and researches unexpected volumes.
The IRS charges a fee to recover the cost of reviewing and processing OIC settlements. IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 184.108.40.206.
An OIC is an agreement between a taxpayer and the IRS that settles a tax liability for payment of less than the full amount owed. The IRS accepts an OIC when there is a doubt as to liability, doubt as to collectibility, or acceptance would promote effective tax administration. SB/SE administers the OIC program.
Taxpayers submit Form 656, Offer in Compromise, and pay the appropriate application fee stated on the form. Low-income taxpayers meeting the IRS Low Income Guidelines are exempt from the application fee.
The IRS retains the user fee for a processable OIC whether or not the offer is accepted. The IRS returns the taxpayer’s check for the user fee and any deposits if the OIC is not processable. See IRM 5.8.2, Centralized Offer in Compromise Initial Processing and Processability.
Brookhaven and Memphis campuses receive OIC user fees. OIC user fees are initially recorded in master file and RRACS as payments against the taxpayer’s debt. During weekly processing, IRS runs a program that summarizes the amounts of these payments and generates a journal entry at the general ledger level. This reduces the RRACS general ledger account balance for tax receipts and increases the balance for the OIC user fee account.
The IRS charges a fee to recover the cost of managing the enrolled actuary program. IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 220.127.116.11.
Enrolled actuaries are individuals who have satisfied the qualifications established by the Joint Board for Enrollment of Actuaries. The Joint Board approves individuals to perform actuarial services before the IRS. The Return Preparer Office (RPO) administers the enrollment process and grants permission to practice before the IRS.
An individual can satisfy qualifications through education, an examination, or based on prior qualified experience. The Society of Actuaries administers the examination.
An individual seeking enrollment with the IRS is subject to a tax compliance check.
Enrolled Actuaries renew their enrollment every three years using Form 5434-A, Application for Renewal of Enrollment.
The IRS receives applications and fees through Pay.gov or a lockbox.
The IRS charges a fee to recover the cost of processing new Enrolled Agent applications and renewals. IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 18.104.22.168.
Enrolled Agents are individuals who have successfully completed the Special Enrollment Examination (SEE) process or have qualified based on prior employment with the IRS and have been approved to practice before the IRS. RPO administers the Enrolled Agent Program and grants permission to practice before the IRS.
Individuals seeking enrollment with the IRS are subject to a tax compliance check.
Individuals who pass the SEE are provided an enrollment card. The card must be renewed with the IRS every three years. Enrolled Agents must register for a Preparer Tax Identification Number (PTIN) and renew the PTIN annually.
Application and renewal fees are received through Pay.gov or a lockbox.
The IRS charges a fee to recover the cost for overseeing the administration of the examination, including the development and approval of examination questions, recording test results, and managing the Enrolled Agent SEE. IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 22.214.171.124.
The SEEs for Enrolled Agents are administered by a vendor. The vendor schedules SEEs and collects the appropriate user fee.
Individuals pay a user fee each time they sit for a part of the Enrolled Agent SEE.
Monthly, the vendor who administers the examination submits SEE user fees to the IRS through Pay.gov.
The IRS charges a fee to initially apply for and to renew a PTIN. See IRM 126.96.36.199.
Individuals who prepare all or substantially all of a tax return or claim for refund for compensation must obtain a PTIN; individuals who only prepare certain returns listed in Notice 2011-6, Implementation of Rules Governing Tax Return Preparers, are not required to obtain a PTIN. Return preparers renew their PTIN each filing season they prepare tax returns.
A third party vendor administers the program to issue PTIN numbers and collects the user fees. Daily, the vendor submits PTIN user fees to the IRS through Pay.gov.
The IRS charges a user fee to recover the cost of labor, benefits, and overhead for performing an art determination. The IRS can charge a reasonable fee which may be less than full cost. See IRM 188.8.131.52.
Taxpayers can request art valuations for income, estate, or gift tax purposes. The Office of Art Appraisal Services under the Chief, Appeals, reviews the fair market value claims on works of art and issues a Statement of Value. Taxpayers can rely on the Statements of Value for completing tax returns as long as the statements are based on facts.
A taxpayer seeking a Statement of Value:
Submits a copy of a qualified appraisal of the art item(s).
Pays the user fee.
Completes and submits an appraisal summary.
Identifies the jurisdiction for examination of the taxpayer's tax return.
Advanced Art Determination fees are collected through Pay.gov.
The IRS charges a fee to recover the cost of labor, benefits, and overhead for providing rulings and determination letters. The IRS can charge a reasonable fee which may be less than full cost. See IRM 184.108.40.206.
Chief Counsel provides letter rulings, closing agreements, and determination letters to taxpayers upon their request.
Taxpayers submit requests for letter rulings or determinations along with a check or money order for the user fee associated with the request to the Chief Counsel PO box.
Chief Counsel deposits payments through OTCnet.
The IRS charges a fee to recover the cost of labor, benefits, and overhead used to provide Employee Plans and Exempt Organizations with determinations letters, information letters, and other guidance. The IRS may charge a reasonable fee that is less than full cost. See IRM 220.127.116.11.
TE/GE provides letter rulings, determination letters, information letters, and other guidance for Employee Plans and Exempt Organizations. CA maintains a list of various fee categories and rates.
TE/GE receives fees at the Cincinnati Submission Processing Center (CSPC).
The CSPC deposits payments through the deposit function at the campus and records user fee deposits in RRACS.
The IRS charges a fee to recover the cost of labor, benefits, and overhead used to provide a taxpayer with Pre-Filing Agreements, Federal Excise Tax Exemptions, and Tax Treaty Limitation of Benefits Interpretations, and Advanced Pricing Agreements. The IRS can charge a reasonable fee which may be less than full cost. See IRM 18.104.22.168.
Taxpayers who are serviced by LB&I can request a Pre-Filing Agreement which is consideration of an issue before filing a tax return. LB&I sends an invoice for the user fee amount to the taxpayer if the request is accepted. The taxpayer submits payment for the user fee directly to BFC or Pay.gov. BFC notifies LB&I of receipt.
LB&I receives requests from taxpayers for Federal Excise Tax Exemptions and Tax Treaty Limitation of Benefits Interpretations through a PO box or through Pay.gov.
Taxpayers may request an Advanced Pricing Agreement to resolve actual or potential transfer pricing disputes as an alternative to the traditional examination process. LB&I receives transfer pricing agreements requests and user fees through a PO box or Pay.gov.
Payments received through a PO box are mailed to BFC for deposit.
The IRS charges a fee to recover the cost of labor, benefits, and overhead associated with providing taxpayers with a U.S. Residency Certification. The IRS can charge a reasonable fee which may be less than full cost. See IRM 22.214.171.124.
A U.S. Residency Certification certifies that a person is a U.S. resident and files a U.S. tax return. Some income tax treaties between the U.S. and foreign countries can reduce withholding from certain types of income paid to U.S. residents. Treaty partners sometimes require the IRS to certify residency of the individual claiming treaty benefits.
To receive a Letter of U.S. Residency Certification, taxpayers send Form 8802, Application for United States Residency Certification, and the appropriate user fee to the IRS.
The IRS receives U.S. Residency Certification user fees through a lockbox or Pay.gov.
The IRS charges a fee to recover the cost of labor, benefits, and overhead associated with providing income verification express service (IVES) to approved customers who have signed up for this service. The IRS can charge a reasonable fee which may be less than full cost. See IRM 126.96.36.199.
The IVES program provides taxpayer transcripts to customers within two business days. Users submit Form 4506T, Request For Transcript of Tax Return, signed by the taxpayers to the campuses by fax. The campus processes the request through the TDS.
The IRS records IVES user fees using the accrual basis of accounting. TDS sends the transcripts to customers throughout the month. At the end of the month, TDS interfaces with IFS to generate invoices based on the number of transcripts provided. At the same time, revenue and receivables are systemically recorded in IFS.
Approved customers pay electronically via debit or credit card through Pay.gov. FMS pulls an IVES report from Pay.gov and uploads the report into IFS daily. This process records customer payments and reverses receivables.
The IRS charges a fee to recover the cost of making a photocopy of a taxpayer’s individual and/or business tax return. The IRS can charge a reasonable fee which may be less than full cost. See IRM 188.8.131.52.
Taxpayers can obtain copies of their tax returns for the current year and three prior years. The IRS charges a fee for reproducing tax returns. Taxpayers request photocopies of their tax returns and attachments from the IRS by submitting Form 4506, Request for Copy of Tax Return.
The campuses receive payments for photocopy user fees and record the fees in RRACS as user fee revenue.
The IRS charges a fee to recover the cost associated with providing an electronic copy of an EO tax return to a taxpayer. The IRS can charge a reasonable fee which may be less than full cost. See IRM 184.108.40.206.
The IRS provides copies of not-for-profit entity tax returns.
The Ogden campus receives requests for EO tax returns and payments are received by the Ogden Campus.
The IRS charges a fee to recover the cost associated with creating and providing taxpayers with statistical studies. The IRS can charge a reasonable fee which may be less than full cost. See IRM 220.127.116.11.
The IRS provides special statistical studies to the public as requested.
Taxpayers submit a written request to the Director, Research, Analysis, and Statistics. Statistics of Income (SOI) estimates the cost of providing the service and sends an invoice to the taxpayer or directs the taxpayer to the published prices on the current Statistics of Income Bulletin.
SOI receives payments through Pay.gov or a PO box. SOI sends paper checks to the BFC for processing.
The IRS charges a fee to recover the costs associated with providing a copy of a written determination to a taxpayer. The IRS can charge a reasonable fee which may be less than full cost. See IRM 18.104.22.168.
The IRS provides taxpayers with copies of written determination background file documents.
Taxpayers submit written requests to Chief Counsel. Counsel estimates the cost of providing the service and sends a payment agreement the taxpayer. Chief Counsel processes the request after the payment has been received.
Chief Counsel receives payments through a PO box and deposits checks through OTCnet.
The IRS charges a fee set by legislation related to the historical conservation easement charitable deduction. See IRM 22.214.171.124.
A taxpayer who claims the Historical Conservation Easement as a charitable deduction on their tax return must pay a user fee and submit Form 8283, Noncash Charitable Contributions, along with the fee.
The IRS receives the user fee at the BFC through Pay.gov.
The BFC notifies the Ogden Campus to record the transaction on the taxpayer's record on Masterfile.
The IRS charges a fee to recover the cost associated with providing taxpayers with information that falls under the Freedom of Information Act (FOIA). The IRS can charge a reasonable fee which may be less than full cost. See IRM 126.96.36.199.
The Freedom of Information Act mandates public access to the records of Federal agencies, unless the information involved is protected from disclosure by one of FOIA's nine exemptions or three exclusions. The Office of Privacy, Governmental Liaison and Disclosure administers the FOIA program.
Title 5 USC Section 552, Public Information, Agency rules, Opinions, Orders, Records, and Proceedings, requires Federal agencies to charge reasonable standard fees to recover direct costs except when the information disclosed is in the public's interest. Agencies are precluded by law from charging fees if the cost of collection exceeds the amount collected.
The taxpayer agrees to pay in advance if the FOIA request is estimated to exceed $250.
The Office of Privacy, Governmental Liaison and Disclosure receives FOIA user fees through a PO Box and forwards the payments to BFC via overnight mail. See IRM 11.3.13, Freedom of Information Act, for the specific fee structure.