1.35.19 User Fees

Manual Transmittal

July 26, 2019

Purpose

(1) This transmits revised IRM 1.35.19, Financial Accounting, User Fees.

Material Changes

(1) IRM 1.35.19.1, Program Scope and Objectives – Added to conform to the new internal control requirements described in IRM 1.11.2, IRM Process. Updated existing IRM content to place information involving internal controls for the IRM under the subsection. The subsequent sections were renumbered.

(2) IRM 1.35.19.1.1, Background – Merged prior paragraphs (2) and (3) and added new paragraph (3) to include the Bipartisan Budget Act of 2018.

(3) IRM 1.35.19.1.2, Authorities – Added (1)(d) to include the Tax Increase Prevention Act of 2014.

(4) IRM 1.35.19.1.2, Authorities – Added (1)(o) to include the Bipartisan Budget Act of 2018.

(5) IRM 1.35.19.1.3.3, Director, Cost Accounting and User Fees – Merged Cost Accounting Office and Beckley Finance Center responsibilities to reflect new CFO FM structure and streamlined items to higher level.

(6) IRM 1.35.19.1.3.7 Associate CFO for Corporate Budget – Updated to more accurately describe office responsibilities.

(7) IRM 1.35.19.1.3.8, Responsibilities, IT – Added

(8) IRM 1.35.19.1.3.9, Business Units – Updated to remove the responsibility for reviewing and approving the monthly Commissioner’s Report on User Fee Revenues, which is now completed in the Cost Accounting and User Fees office.

(9) IRM 1.35.19.1.4, Program Management and Review – Added new subsection to conform with the new internal control requirements described in IRM 1.11.2, IRM Process.

(10) IRM 1.35.19.1.5, Program Controls – Added new subsection to conform with the new internal control requirements described in IRM 1.11.2, IRM Process.

(11) IRM 1.35.19.1.6, Terms/Definitions – Added definitions for support costs and sustaining costs and updated other cost definitions to be consistent with those of IRM 1.35.16, Managerial Cost Accounting.

(12) IRM 1.35.19.7.2.2, Responsibilities, Director, Financial Management Policy Office – Deleted, as office was eliminated.

(13) IRM 1.35.19.7.2.5, Responsibilities, Beckley Finance Center – Moved to paragraph (2) of 1.35.19.1.3.3, Director, Cost Accounting and User Fees.

(14) IRM 1.35.19.11, The Tax Increase Prevention Act of 2014 – Added

(15) IRM 1.35.19.11 (3), Receipt and Deposit of User Fees – Deleted, as the updated Treasury Financial Manual does not have the time requirement.

(16) IRM 1.35.19.13, Costing User Fees – Updated paragraph (1) to indicate that the IRS corporate overhead rate factor is required to be applied by the business units when developing costing for user fees and deleted paragraph (4) that had allowed for a modified corporate overhead factor.

(17) IRM 1.35.19.16.1, Installment Agreements, paragraphs (1), (3) and (6) – Updated to incorporate the new regulations based on the Bipartisan Budget Act of 2018.

(18) IRM 1.35.19.16.1, Installment Agreements – Added paragraphs (4) and (5) to include the new fee categories for online payment agreements and voice balance due agreements, revised paragraph (9) to update monthly analysis and added paragraph (10) to explain annual revenue crossover analysis.

(19) IRM 1.35.19.16.2, Offer in Compromise, paragraph (6) – Added to include monthly offer in compromise analysis.

(20) IRM 1.35.19.16.7, Chief Counsel Rulings and Determination Letters - Updated to remove references to paper checks; Chief Counsel only receives payments through Pay.gov.

(21) IRM 1.23.19.16.15, Public Inspections of Written Determination Background File Documents – Updated to remove references to paper checks; Chief Counsel only receives payments through Pay.gov.

(22) IRM 1.35.19.16.17, Freedom of Information Act Requests, paragraph (5) – Corrected IRM reference for specific fee structure.

(23) IRM 1.35.19.16.18, Certified Professional Employer Organizations – Added to reflect new user fee.

(24) IRM 1.35.19.21.6, Obtaining and Renewing Preparer Tax Identification Numbers – Deleted, as the fee is not being charged due to ongoing litigation.

(25) Updated office names and acronyms throughout IRM to correspond with new structure from recent realignments within CFO Financial Management.

(26) Minor editorial changes were made throughout the document.

Effect on Other Documents

This IRM supersedes IRM 1.35.19, dated July 19, 2016.

Audience

Business unit finance offices and employees responsible for managing user fee activities.

Effective Date

(07-26-2019)

Ursula S. Gillis
Chief Financial Officer

Program Scope and Objectives

  1. Purpose: Provides information for implementing user fees and reviewing user fee activities, rates and reports.

  2. Audience: Business unit finance offices and employees responsible for managing user fee activities.

  3. Policy Owner: Deputy associate CFO for Financial Management (FM).

  4. Program Owner: Cost Accounting and User Fees (CA/UF), CFO.

  5. Primary Stakeholders: Business units that charge user fees.

  6. Program Goals: Ensure internal controls for user fee collection are implemented and activity cost calculations are accurate and consistent.

Background

  1. The IRS implemented user fees when the Independent Offices Appropriations Act (IOAA) of 1952 was passed. The IOAA, codified by 31 USC 9701, Fees and charges for Government services and things of value, authorizes agencies to prescribe regulations that establish charges where the government provides special benefits to a recipient beyond those given to the general public. Regulations implementing user fees are subject to policies prescribed by the president in the Office of Management and Budget (OMB) Circular A-25, User Charges. When the IRS began implementing user fees under this authority, receipts were deposited to the government’s general fund.

  2. Subsequent legislation allowed the IRS to retain and spend a portion of the user fees collected. The Treasury, Postal Service, and General Government Appropriations Act of 1995 authorized the IRS to expend up to $119 million per fiscal year of new or increased user fee receipts based on the cost of providing services. The annual spending cap was eliminated in the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and the Independent Agencies Appropriations Act of 2006.

  3. The Bipartisan Budget Act of 2018 modified user fee requirements for installment agreements, limiting fees to those in effect at its enactment and waiving fees for low-income taxpayers who enter into direct debit installment agreements. It also established reimbursement for low-income taxpayers who completed an installment agreement and were unable to make electronic debit payments.

Responsibilities

  1. This section provides responsibilities for the:

    1. CFO and deputy CFO

    2. associate CFO for FM and deputy associate CFO for Administrative FM

    3. director, Cost Accounting and User Fees

    4. director, Custodial Accounting

    5. director, Financial Reporting

    6. director, Financial Management Systems

    7. associate CFO for Corporate Budget

    8. Information Technology division

    9. Business units

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

    1. Overseeing user fee programs, including compliance with applicable authorities.

    2. Establishing policies and controls for IRS user fee processes, including reviewing and reporting.

Associate CFO for FM and Deputy Associate CFO for Administrative FM
  1. The associate CFO for FM and deputy associate CFO for Administrative FM are responsible for:

    1. Establishing, maintaining and ensuring compliance with accounting policies and procedures for user fees.

    2. Overseeing the biennial review process, including obtaining approval for user fee rates and coordinating OMB Circular A-25, User Charges, full cost requirements.

    3. Overseeing the annual financial statement audit, which attests to the reasonableness of user fee collections, and other audits performed by the Government Accountability Office (GAO) or the Treasury Inspector General for Tax Administration (TIGTA) relating to user fees.

    4. Overseeing the implementation of new user fees.

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

    1. Developing policies, leading biennial reviews and providing guidance to the business units for implementing and monitoring user fees.

    2. Providing annual overhead rates to the business units.

    3. Monitoring volumes and revenue against projected amounts and researching unexpected variances.

    4. Validating and monitoring user fee costing and processes.

    5. Developing Unified Work Requests (UWR) for user fees.

    6. Comparing actual user fee deposits and Central Accounting Reporting System (CARS) monthly reports to supporting documentation received from the business units, including explanations for variances.

    7. Preparing user fee collection reports, the President's Budget Receipt Estimates and GAO user fee deliverables for the financial statement audit.

    8. Managing the payment process for new and existing user fees, including Pay.gov and OTCnet.

    9. Approving the year-end user fee entry prepared by Financial Reporting (FR) prior to close.

Director, Custodial Accounting
  1. The director, Custodial Accounting, is responsible for providing:

    1. Monthly Redesigned Revenue Accounting and Control System (RRACS) analysis reports to FR by the fourth day of the month.

    2. Support for system changes and UWRs for campus systems.

    3. Monthly interim RRACS reports to FR and CA/UF three business days before the end of each month.

    4. Year-end RRACS reports to FR and CA/UF within two business days after the fiscal year-end.

    5. Monthly reports, by campus, of installment agreement (IA) user fee collections to CA/UF.

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

    1. Preparing and posting a non-standard Treasury Form 224 entry into the Integrated Financial System (IFS) monthly and at the end of the fiscal year to record user fee collections initially recorded in RRACS.

    2. Preparing a monthly analysis comparing CARS and IFS user fee activity, and reconciling budgetary and proprietary user fee general ledger balances.

Director, Financial Management Systems
  1. The director, Financial Management Systems (FMS), is responsible for maintaining the exchange of information between IFS, the Transcript Delivery System (TDS) and Pay.gov.

Associate CFO for Corporate Budget
  1. The associate CFO for Corporate Budget is responsible for:

    1. Determining with senior leadership the use of user fee funds and preparing the user fee plan for OMB.

    2. Recording anticipated collections in IFS.

    3. Recording Standard Forms 1151, Non-Expenditure Transfer Authorizations.

    4. Transferring user fees between parent account and IRS appropriated accounts.

    5. Recording apportionments.

Information Technology Division
  1. The IT division is responsible for:

    1. Posting weekly IA reports provided through an annual UWR to Control D.

    2. Posting monthly IA and offer in compromise reports provided through an annual UWR to the CFO Accounts Receivable Management System.

    3. Providing nine- and twelve-month files of IA user fees to CFO based on UWR requirements.

Business Units
  1. The business units are responsible for:

    1. Collecting and reporting user fees within their program areas.

    2. Providing quarterly estimates of projected volumes and revenue, and annual estimates for ten subsequent years.

    3. Providing CA/UF with monthly activity reports and explanations of actual to budget variances within three days of the end of the month.

    4. Executing the biennial review of user fee activities, including maintaining documentation to support cost estimates.

    5. Maintaining and tracking information on revenue and volumes to support financial audits.

    6. Implementing changes to legacy systems used to monitor user fees.

    7. Providing CA/UF with daily deposit tickets to support IFS revenue entries within 24 hours.

    8. Researching debit vouchers and updating case load systems’ payment information.

    9. Providing CA/UF with refund schedules with original collection dates.

    10. Reviewing activities annually for potential new user fees or necessary revisions to existing user fee rates or activities.

Program Management and Review

  1. The program reports used to review the user fee program include the:

    1. Commissioner’s chart

    2. Biennial Review of User Fee Charges report

    3. Offer in compromise analysis

    4. Installment agreement analysis

  2. Program effectiveness is determined by the CA/UF office comparing actual user fee collections to the business unit projections and analyzing variances.

Program Controls

  1. The CA/UF office is responsible for:

    1. Compiling and analyzing monthly volume and revenue information.

    2. Reviewing supporting documentation to ensure user fee collections are classified and recorded correctly.

    3. Developing the overhead rates and managing the allocation cycles, which supports the costing methodologies for business units.

    4. Reviewing the business unit costing documents submitted during the biennial review to ensure accuracy and consistency.

    5. Ensuring preparers, reviewers and approvers have separate roles and responsibilities.

    6. Saving reports and supporting documentation on a shared-drive with access limited to users with the appropriate job requirements.

  2. Business units are responsible for:

    1. Reviewing user fee charges every two years to ensure rates are adjusted to reflect changes in costs and to determine if other agency programs should assess fees.

    2. Implementing internal controls (e.g., management reviews, system access, etc.) applicable to their specific user fee processes.

Terms/Definitions

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

    1. Art - Paintings, sculptures, watercolors, prints, drawings, ceramics, antique furniture, decorative arts, textiles, carpets, silver, rare manuscripts and other similar objects.

    2. Costs - The monetary value of resources used in performing activities or in acquiring or producing goods and services.

    3. Corporate overhead rate - The rate calculated annually by CA/UF and applied to total labor and benefit costs to determine the full cost of providing services.

    4. Direct costs - The costs incurred directly by programs due to their budget execution. These include salaries, benefits, consulting, materials, supplies, etc.

    5. Full cost - All costs used in generating activities, products and services, including direct, indirect and imputed costs.

    6. Imputed costs - The unreimbursed costs required to be recognized by accounting standards.

    7. Indirect costs - The costs of resources that are jointly or commonly used and cannot be reasonably identified and charged to a specific activity.

    8. Market price - Price for goods, resources or services based on a competitive open market that creates neither a shortage nor a surplus of the goods, resources or services.

    9. Overhead - Support costs not directly identifiable to a business unit functional area.

    10. Special benefits - Privileges, goods or services that give recipients benefits beyond those available to the general public.

    11. Support costs - The business unit costs that primarily support other IRS business units.

    12. Sustaining costs - The business unit costs that support IRS Servicewide operations.

    13. 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.

Acronyms

  1. The following chart contains acronyms used throughout this IRM:

    Acronym Definition
    CA/UF Cost Accounting and User Fees [office]
    FM Financial Management [division]
    GAO Government Accountability Office
    GPFM Government Payables and Funds Management [office]
    IA Installment Agreement
    IFS Integrated Financial System
    OMB Office of Management and Budget
    OTCnet Over the Counter Channel Application
    RRACS Redesigned Revenue Accounting and Control System
    SEE Special Enrollment Examination
    UWR Unified Work Request

Related Resources

  1. Related resources for this IRM include:

    1. IRM 1.35.16, Managerial Cost Accounting

    2. GAO Federal User Fees, A Design Guide

    3. OMB Circular A-25, User Charges

Requirements for Deposit of Funds

  1. 31 USC 3302, Custodians of money, specifies that agencies must promptly deposit any funds received for government use to the general fund, absent specific statutory authority.

  2. Treasury, Postal Service and General Appropriations Act, 1995, PL 103–329, provided the authority for the IRS to retain and 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, removed the annual $119 million ceiling.

  3. 26 USC 7809, Deposit of collections, authorizes that user fee receipts can reimburse the appropriation that incurred expenses under the following code sections:

    1. 26 USC 6103, Confidentiality and disclosure of returns and return information

    2. 26 USC 6108, Statistical publications and studies

    3. 26 USC 6110, Public inspection of written determinations

  4. The Pension Protection Act of 2006 requires user fees collected for historic conservation easements to be spent on enforcement activities for charitable contribution deductions for historic conservation easements. This public law is codified in 26 USC 170(f)(13), Charitable, etc., contributions and gifts.

31 USC 9701, Fees and Charges for Government Services and Things of Value

  1. 31 USC 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 recipients beyond those given to the general public. The IRS collects fees not covered by other legislation under this authority.

  2. The IRS implements user fees under Section 9701 by regulation.

  3. Section 9701 requires the IRS to charge full cost or obtain a waiver from OMB to charge less than full cost.

  4. The IRS collects fees under Section 9701 for the following activities:

    1. Installment agreements (see IRM 1.35.19.16.1)

    2. Offers in compromise (see IRM 1.35.19.16.2)

    3. Enrollments and enrollment renewals of enrolled actuaries (see IRM 1.35.19.16.3)

    4. Enrollments and enrollment renewals of enrolled agents (see IRM 1.35.19.16.4)

    5. Special enrollment examinations for enrolled agents (see IRM 1.35.19.16.5)

OMB Circular A-25, User Charges

  1. The OMB Circular A-25, User Charges, provides guidance to government agencies for establishing and charging user fees for special benefits provided to recipients beyond those given to the general public. The charge imposed recovers full cost to the federal government for providing the special benefit or the market price.

  2. Full cost includes all direct and indirect costs to any part of the federal government for providing a good, resource or service.

  3. A special benefit enables the beneficiary to obtain more immediate or substantial gains or values than those given 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. It is beyond the services regularly received by other members of the same industry or group or the general public.

  4. 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.

  5. Agency heads or their designees may recommend to OMB exceptions to the general policy when the cost of collecting the fees would represent an unduly part of the fee for the activity or any other condition exists that, in the opinion of the agency head or his or her designee, justifies an exception. IRS considers the implication of the user fee on low-income taxpayers, tax administration, taxpayer rights and 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 for low-income taxpayers, combine with other costs to create excessive taxpayer burden or impair tax administration.

26 USC 7528, Internal Revenue Service User Fees

  1. 26 USC 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.

  2. The IRS fees, including user fees under Section 7528, are implemented through the issuance of published guidance.

  3. This legislation authorizes the IRS to charge a reasonable fee; however, it sets a floor based on the historical average cost.

  4. The IRS collects the following fees under Section 7528:

    1. Appeals advanced art valuation determinations (see IRM 1.35.19.16.6)

    2. Chief Counsel rulings and determination letters (see IRM 1.35.19.16.7)

    3. TE/GE determination letters, information letters and other guidance (see IRM 1.35.19.16.8)

    4. LB&I determination letters (see IRM 1.35.19.16.9)

26 USC 6103, Confidentiality and Disclosure of Returns and Return Information

  1. 26 USC 6103, Confidentiality and disclosure of returns and return information, authorizes the IRS to charge a reasonable fee for reproducing returns and disclosing return information.

  2. The IRS fees, including user fees under Section 6103, are implemented through the issuance of published guidance.

  3. The IRS collects the following fees under Section 6103:

    1. U.S. residency certifications (see IRM 1.35.19.16.10)

    2. Income Verification Express Service (see IRM 1.35.19.16.11)

    3. Reproductions of individual and business tax returns (see IRM 1.35.19.16.12)

26 USC 6104, Publicity of Information Required from Certain Exempt Organizations and Certain Trusts

  1. 26 USC 6104, Publicity of information required from certain exempt organizations and certain trusts, authorizes the IRS to charge a reasonable fee for reproducing and mailing costs for annual returns, reports, applications for exemption, and notice status of certain exempt organizations.

  2. The IRS implements user fees under Section 6104 through an announcement or revenue procedure.

  3. The IRS collects the user fee for reproducing exempt organizations’ returns under this authority (see IRM 1.35.19.16.13).

26 USC 6108, Statistical Publications and Studies

  1. 26 USC 6108, Statistical publications and studies, authorizes the IRS to charge a reasonable fee for providing special statistical studies.

  2. The IRS implements user fees under Section 6108 through an announcement or revenue procedure.

  3. The IRS collects a user fee for statistical studies under this authority (see IRM 1.35.19.16.14).

26 USC 6110, Public Inspection of Written Determinations

  1. 26 USC 6110, Public inspection of written determinations, authorizes the IRS to charge a fee for reproducing a written determination or background file document for public inspection.

  2. The IRS fees, including user fees under Section 6110, are implemented through the issuance of published guidance.

  3. This legislation requires that the user fee be the actual costs; however, the IRS can waive or reduce the fee if appropriate.

  4. The IRS collects fees for the public inspection of written determination background file documents (see IRM 1.35.19.16.15).

The Pension Protection Act of 2006

  1. 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 1.35.19.16.16).

  2. The IRS user fees collected under this authority are used for historical conservation easement donation enforcement activities.

The Freedom of Information Act

  1. 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 1.35.19.16.17).

  2. The IRS implements FOIA user fees through an announcement or revenue procedure.

  3. This Act requires agencies to limit fees to reasonable standard charges for document search, duplication and review.

  4. This Act is codified in 5 USC Section 552(a)(4), Records maintained on individuals.

The Tax Increase Prevention Act of 2014

  1. The Tax Increase Prevention Act of 2014 allows the IRS to charge an annual user fee not to exceed $1,000 per year for a program to certify professional employer organizations (see IRM 1.35.19.16.18).

Receipt and Deposit of User Fees

  1. The IRS receives user fee remittances at campuses and through lockbox arrangements, the Beckley Finance Center mail room or Pay.gov.

  2. A lockbox is a post office (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.

  3. The IRS uses the following Bureau of the Fiscal Service (Fiscal Service) applications to convert paper checks to electronic funds transfer (EFT):

    1. Over the Counter Channel Application (OTCnet)

    2. Remittance Strategy Paper Check Conversion (RS-PCC)

  4. The Government Payables and Funds Management (GPFM) office deposits paper checks using OTCnet.

  5. Pay.gov is a secure governmentwide collection portal administered by Fiscal Service. Customers using Pay.gov may pay by Automated Clearing House (ACH) debit or credit card.

    1. The Fiscal Service absorbs all credit card fees for user fee collections.

    2. Credit card transactions on one card cannot exceed $24,999.99 on the same day.

  6. The IRS records user fee deposits on one of two general ledgers: IFS or RRACS. The FR office enters user fees originating in RRACS into IFS through a non-standard Treasury 224 entry.

Costing User Fees

  1. Business units are required to consider full costs and apply the IRS corporate overhead rate factor when developing user fee costing. Full cost for providing the good or service includes direct, indirect and imputed costs. The cost of activities includes:

    1. Labor and benefits

    2. Service and consulting

    3. Rent and building costs

    4. Depreciation

    5. Travel, training and communication

    6. Supplies (including equipment, printing and postage)

    7. Enforcement

  2. Business units identify labor and benefit costs for the user fee activity. Labor costs include both direct and indirect time.

  3. The CA/UF office provides the business units with a corporate overhead factor to account for non-labor costs and all other support and sustaining costs paid by the IRS. Expenses not paid by the IRS are not included in the IRS corporate overhead factor.

Biennial Review of User Fees

  1. The IRS performs a review every two years to recalculate existing user fee activity costs and consider other activities for which a user fee should be imposed.

  2. 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 effect on voluntary compliance and the corresponding increase to enforcement cost.

  3. The associate CFO for FM prepares the biennial review report and presents the results and business unit recommendations to the CFO.

  4. The CFO submits the biennial review to the IRS commissioner by September 30th of the review year.

  5. The associate CFO for FM works with OMB, Treasury, the business units and other stakeholders to implement fee adjustments if a change in rate or a new fee is implemented, or if a waiver for a less-than-full-cost user fee is recommended.

Annual Monitoring/Review

  1. Business units are required to monitor services and activities to determine the potential effect 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 affected tax administration and make appropriate recommendations.

  2. Business units are required to review services and activities for potential new user fees during the annual budget cycle. When performing this review, the business units consider the:

    1. Voluntary nature of the user fee activities; the IRS does not charge taxpayers for special services that they do not request.

    2. Identifiable benefit to a specific taxpayer.

    3. Cost of administering the user fee.

    4. Effect of the user fee on low-income taxpayers.

    5. Effect of the fee on voluntary compliance, taxpayer burden and taxpayer rights.

    6. Expected change in demand for service resulting from the proposed fee.

  3. The IRS avoids fees that increase enforcement costs, reduce voluntary compliance or otherwise create difficulties in achieving the IRS’s mission.

  4. When potential user fees are identified, the business units submit the following information to CA/UF:

    1. Description of the activity.

    2. Estimated or historical volumes of participants, products or services.

    3. Estimated or historical cost of the activity.

    4. The proposed rate for the user fee and the potential resulting revenue,

Types of User Fees

  1. The IRS charges user fees for the following:

    1. Installment agreements

    2. Offers in compromise

    3. Enrollments and enrollment renewals of enrolled actuaries

    4. Enrollments and enrollment renewals of enrolled agents

    5. Special enrollment examinations for enrolled agents

    6. Appeals advanced art valuation determinations

    7. Chief Counsel rulings and determination letters

    8. TE/GE determination letters, information letters and other guidance

    9. LB&I determination letters

    10. U.S. residency certifications

    11. Income Verification Express Service

    12. Reproductions of individual and business tax returns

    13. Reproductions of exempt organization returns

    14. Statistical studies

    15. Public inspections of written determination background file documents

    16. Historical conservation easements

    17. Freedom of Information Act requests

    18. Certified professional employer organizations

Installment Agreements

  1. The IRS charges a fee to recover the cost of activities for creating and managing IA payment plans. These activities include answering phone calls, printing and mailing notices, and processing IA collections. The IRS must set the fees at full cost, not to exceed the amounts in effect at the enactment of the Bipartisan Budget Act of 2018 (February 9, 2018), or obtain a waiver from OMB. See IRM 1.35.19.3, 31 USC 9701, Fees and charges for Government services and things of value.

  2. An IA is an agreement between the IRS and the taxpayer that allows the taxpayer to pay his or her outstanding tax liability with monthly installment payments. The taxpayer agrees to pay a user fee for the cost of establishing a new, revised or reinstated IA. The IRS charges an origination fee to establish a new agreement, revise an existing agreement, or reinstate an agreement after the taxpayer defaults on an agreement or an agreement has been terminated. The SB/SE division administers the IA program.

  3. A direct debit installment agreement (DDIA) automatically debits the taxpayer's bank account for a monthly transfer to the IRS on a date pre-selected by the taxpayer. These agreements have a lower user fee compared to non-direct debit agreements and the fee is waived for low-income taxpayers.

  4. An online payment agreement (OPA) is established by the taxpayer at IRS.gov. The fee is lower than the fee charged when a taxpayer applies using other methods (phone, mail or in-person) because OPAs do not require employee assistance.

  5. A voice balance due agreement is established by the taxpayer through the automated phone service. The fee is lower than the fee charged when a taxpayer applies using other methods (agreements established with live phone assistance, by mail or in-person) because voice balance due agreements do not require employee assistance.

  6. Taxpayers with incomes at or below 250 percent of the Department of Health and Human Services poverty guidelines, adjusted and published annually, qualify for a reduced low-income user fee. User fees are waived for low-income taxpayers entering into IAs on or after April 10, 2018, if they agree to make electronic payments through a DDIA. Low-income taxpayers who indicate they are unable to make electronic payments through a debit instrument will receive a reimbursement of the reduced user fee upon completion of the IA. A low-income taxpayer will not be reimbursed for the user fee if the IA is terminated. Low-income taxpayers are identified systemically using their most recently filed tax return. Taxpayers who are not identified as low-income, but believe they meet the requirements for low-income status, must complete Form 13844, Application for Reduced User Fee for Installment Agreements, within 30 days of receipt of the IA acceptance letter.

  7. The IRS receives IA fees with installment tax payments through a lockbox or the Electronic Federal Tax Payment System (EFTPS). Campuses record the payments in RRACS as tax revenue. The IA fees and the tax payments are not separately identifiable, so a separate process reclassifies user fee collections from tax revenue to record the IA user fee revenue.

  8. The IRS IT staff executes a weekly automated utility program, the IA User Fee Sweep Program, to reclassify the Integrated Data Retrieval System (IDRS) IA user fee collections from tax revenue to user fee revenue. The program reviews all tax modules in the taxpayer’s account in IA status and verifies 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 received, the program transfers the user fee amount from the tax module to the user fee module, reversing the tax payment and recording the user fee payment.

  9. The IT staff provides CA/UF a weekly report that details the volume of user fees collected from the weekly sweep program and a monthly master file report with detailed revenue data. The CA/UF accountants reconcile the data with the RRACS revenue, compare the volume with the previous year and expected year-to-date volumes, and research unexpected variances.

  10. Each October, CA/UF estimates the tax revenue received in the prior fiscal year that will be reclassified as user fee revenue in the current fiscal year during the sweep process and records an accrual entry, if necessary.

Offers in Compromise

  1. The IRS charges a fee to recover the cost for reviewing and processing OIC settlements. The IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 1.35.19.3, 31 USC 9701, Fees and charges for Government services and things of value.

  2. An OIC is an agreement between a taxpayer and the IRS that settles a tax liability for less than the full amount owed. The IRS accepts an OIC when there is doubt as to liability or collectability, or where acceptance would promote effective tax administration. The SB/SE division administers the OIC program.

  3. Taxpayers submit Form 656, Offer in Compromise, and pay the appropriate application fee (user fee) stated on the form. Taxpayers meeting the IRS low-income guidelines are exempt from the application fee.

  4. The IRS retains the user fee for a processable OIC whether or not the OIC is accepted. The IRS returns the taxpayer’s check for the user fee and any deposits if the OIC is not processable.

  5. The Brookhaven and Memphis campuses receive OIC user fees, which are initially recorded in master file and RRACS as payments against the taxpayer’s debt. During weekly processing, IT runs a program that summarizes the payments and generates a journal entry at the general ledger level, reducing the RRACS general ledger account balance for tax receipts and increasing the OIC user fee account for the fees.

  6. The IT division provides a monthly master file detail report of user fee transactions to CA/UF to analyze and identify all payments that do not equal the user fee amount. Non-matching payments are sent to SB/SE for correction.

Enrollments and Enrollment Renewals of Enrolled Actuaries

  1. The IRS charges a fee to recover the cost for managing the enrolled actuary program. The IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 1.35.19.3, 31 USC 9701, Fees and charges for Government services and things of value.

  2. Enrolled actuaries have satisfied qualifications established by the Joint Board for Enrollment of Actuaries, which approves individuals to perform actuarial services before the IRS. The Return Preparer Office administers the enrollment process and grants permission to practice before the IRS.

  3. Individuals can satisfy qualifications through education, examination or prior qualified experience.

  4. Individuals seeking enrollment are subject to a tax compliance check.

  5. Enrolled actuaries renew their enrollment every three years using Form 5434-A, Application for Renewal of Enrollment.

  6. The IRS receives applications and fees through Pay.gov or a lockbox.

Enrollments and Enrollment Renewals of Enrolled Agents

  1. The IRS charges a fee to recover the cost for processing new enrolled agent applications and renewals. The IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 1.35.19.3, 31 USC 9701, Fees and charges for Government services and things of value.

  2. Enrolled agents are individuals who successfully completed the Special Enrollment Examination (SEE) process or who qualified based on prior IRS employment and have been approved to practice before the IRS. The Return Preparer Office administers the enrolled agent program and grants permission to practice before the IRS.

  3. Individuals seeking enrollment are subject to a tax compliance check.

  4. Individuals who pass the SEE are provided an enrollment card, which 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.

  5. Application and renewal fees are received through Pay.gov or a lockbox.

Special Enrollment Examinations for Enrolled Agents

  1. The IRS charges a fee to recover the cost for overseeing the administration of the SEE, including developing and approving examination questions, recording test results and managing the program. The IRS must set the fees at full cost or obtain a waiver from OMB. See IRM 1.35.19.3, 31 USC 9701, Fees and charges for Government services and things of value.

  2. The enrolled agent SEEs are administered by a vendor that schedules the examination and collects the user fee.

  3. Individuals pay a user fee each time they sit for a part of the enrolled agent SEE.

  4. The vendor who administers the examination submits SEE user fees to the IRS through Pay.gov.

Appeals Advanced Art Valuation Determinations

  1. The IRS charges a user fee to recover the cost for performing an advanced art valuation. The IRS can charge a reasonable fee, which may be less than full cost. See IRM 1.35.19.4, 26 USC 7528, Internal Revenue Service user fees.

  2. 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 (SOV). Taxpayers can rely on the SOV for completing tax returns if the statements are based on facts.

  3. A taxpayer seeking a SOV:

    1. Submits a copy of a qualified appraisal of the art item(s)

    2. Pays the user fee

    3. Completes and submits an appraisal summary

    4. Identifies the jurisdiction for examination of the taxpayer's tax return

  4. Advanced art valuation determination fees are collected through Pay.gov.

Chief Counsel Rulings and Determination Letters

  1. The IRS charges a fee to recover the cost for providing rulings and determination letters. The IRS can charge a reasonable fee, which may be less than full cost. See IRM 1.35.19.4, 26 USC 7528, Internal Revenue Service user fees.

  2. Chief Counsel provides letter rulings, closing agreements and determination letters to taxpayers upon request.

  3. Taxpayers pay the user fee on Pay.gov and submit a copy of the payment voucher with their requests for letter rulings or determinations.

TE/GE Determination Letters, Information Letters and Other Guidance

  1. The IRS charges a fee to recover the cost for providing 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 1.35.19.4, 26 USC 7528, Internal Revenue Service user fees.

  2. The TE/GE division provides letter rulings, determination letters, information letters and other guidance for employee plans and exempt organizations. The CA/UF maintains a list of various fee categories and rates.

  3. The TE/GE division receives fees at the Cincinnati Submission Processing Center (CSPC) and through Pay.gov.

  4. The CSPC deposits payments through the deposit function at the campus and records user fee deposits in RRACS.

LB&I Determination Letters

  1. The IRS charges a fee to recover the cost for providing a taxpayer with pre-filing agreements, federal excise tax exemptions, 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 1.35.19.4, 26 USC 7528, Internal Revenue Service user fees.

  2. Taxpayers serviced by LB&I can request a pre-filing agreement, which is consideration of an issue before filing a tax return. The LB&I division sends a user fee invoice to the taxpayer if the request is accepted. The taxpayer submits payment for the user fee directly to GPFM or Pay.gov. The GPFM office notifies LB&I of receipt.

  3. The LB&I division receives requests from taxpayers for federal excise tax exemptions and tax treaty limitation of benefits interpretations through a PO box or through Pay.gov.

  4. Taxpayers may request an advanced pricing agreement to resolve actual or potential transfer pricing disputes as an alternative to the traditional examination process. The LB&I division receives transfer pricing agreements requests and user fees through a PO box or Pay.gov.

  5. Payments received through a PO box are mailed to GPFM for deposit.

U.S. Residency Certifications

  1. The IRS charges a fee to recover the cost for providing taxpayers with a U.S. residency certification. The IRS can charge a reasonable fee, which may be less than full cost. See IRM 1.35.19.5, 26 USC 6103, Confidentiality and disclosure of returns and return information.

  2. A U.S. residency certification confirms a person is a U.S. resident who 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.

  3. To receive a letter of U.S. residency certification, taxpayers file Form 8802, Application for United States Residency Certification, and submit the appropriate user fee to the IRS.

  4. The IRS receives U.S. residency certification user fees through a lockbox or Pay.gov.

Income Verification Express Service

  1. The IRS charges a fee to recover the cost for administering the Income Verification Express Service (IVES) program. The IRS can charge a reasonable fee, which may be less than full cost, to approved customers who have signed up for this service. See IRM 1.35.19.5, 26 USC 6103, Confidentiality and disclosure of returns and return information.

  2. The IVES program provides taxpayer transcripts to customers within two business days. Users fax Form 4506T, Request for Transcript of Tax Return, signed by the taxpayer, to the campuses.The campus processes the request through the Transcript Delivery System (TDS).

  3. The IRS records IVES user fees using the accrual basis of accounting. The TDS transmits the transcripts to customers during the month and interfaces with IFS at month-end to generate invoices based on the number of transcripts provided and to record revenue and receivables.

  4. Approved customers pay electronically via debit or credit card through Pay.gov. The FMS office pulls an IVES report from Pay.gov and uploads the report into IFS daily. This process records customer payments and reverses receivables.

Reproductions of Individual and Business Tax Returns

  1. The IRS charges a fee to recover the cost for photocopying 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 1.35.19.5, 26 USC 6103, Confidentiality and disclosure of returns and return information.

  2. Taxpayers can obtain copies of their tax returns and attachments for the current year and three prior years by submitting Form 4506, Request for Copy of Tax Return.

  3. The campuses receive payments for photocopy user fees and record the fees in RRACS as user fee revenue.

Reproductions of Exempt Organizations Returns

  1. The IRS charges a fee to recover the costs for providing an electronic copy of an exempt organization tax return to a taxpayer. The IRS can charge a reasonable fee, which may be less than full cost. See IRM 1.35.19.6, 26 USC 6104, Publicity of information required from certain exempt organizations and certain trusts.

  2. The Ogden campus receives requests and payments for copies of exempt organization tax returns.

Statistical Studies

  1. The IRS charges a fee to recover the costs for creating and providing taxpayers with statistical studies. The IRS can charge a reasonable fee, which may be less than full cost. See IRM 1.35.19.7, 26 USC 6108, Statistical publications and studies.

  2. The IRS provides special statistical studies requested by the public.

  3. Taxpayers submit a written request to the director of Research, Applied Analytics, and Statistics. The Statistics of Income division 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.

  4. The Statistics of Income division receives payments through Pay.gov or a PO box and sends any paper checks received to GPFM for processing.

Public Inspections of Written Determination Background File Documents

  1. The IRS charges a fee to recover the costs for providing a copy of a written determination to a taxpayer. The IRS can charge actual costs or a reduced charge less than full cost. See IRM 1.35.19.8, 26 USC 6110, Public inspection of written determinations.

  2. The IRS provides taxpayers with copies of written determination background file documents.

  3. Taxpayers submit written requests to Chief Counsel, who estimates the cost of providing the service and sends a payment agreement to the taxpayer. Chief Counsel processes the request after the payment has been received.

  4. Chief Counsel receives payments through Pay.gov and matches payments to the submitted applications.

Historical Conservation Easements

  1. The IRS charges a fee set by legislation for the historical conservation easement charitable deduction. See IRM 1.35.19.9, The Pension Protection Act of 2006.

  2. A taxpayer who claims the historical conservation easement charitable deduction on his or her tax return must pay a user fee and submit Form 8283, Noncash Charitable Contributions, along with the fee.

  3. The IRS receives the user fee at GPFM through Pay.gov.

  4. The GPFM office notifies the Ogden Campus to record the transaction on the master file taxpayer's record.

Freedom of Information Act Requests

  1. The IRS charges a fee to recover the costs for providing taxpayers with information that falls under the Freedom of Information Act (FOIA). The IRS can impose a reasonable fee, which may be less than full cost. See IRM 1.35.19.10, The Freedom of Information Act.

  2. The FOIA 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.

  3. 5 USC 552, Public information, agency rules, opinions, orders, records, and proceedings, requires federal agencies to impose reasonable standard fees to recover direct costs except when the information disclosed is in the public's interest. Agencies are precluded by law from imposing fees if the cost of collection exceeds the amount collected.

  4. The taxpayer agrees to pay in advance if the FOIA request is estimated to exceed $250.

  5. The Office of Privacy, Governmental Liaison and Disclosure receives FOIA user fees through a PO box and forwards the payments to GPFM via overnight mail. See IRM 11.3.5, Freedom of Information Act, for the specific fee structure.

Certified Professional Employer Organizations

  1. The IRS charges a fee to recover the costs for certifying professional employer organizations under Pub. L. 113-295, section 7705. The fee cannot exceed $1,000 per year. See 1.35.19.11, The Tax Increase Prevention Act of 2014.

  2. Organizations apply for certification, which allows them to be treated as the employer of any individual performing services covered by a contract meeting certain requirements.

  3. The SB/SE division receives the certification fees through Pay.gov.