Federal law and policy requires agencies, including the IRS, to charge a user fee to recover the cost of providing certain services to the public that confer a special benefit to the recipient. In addition, the Internal Revenue Code authorizes or requires the IRS to charge a user fee for other specified services. Generally, a user fee reimburses the IRS for the cost of providing the service. If a user fee is too low to cover the entire cost of providing a service, the remaining cost is paid for out of the IRS’s general operating budget, with the result that the service is subsidized by the IRS. The IRS follows Office of Management and Budget (OMB) guidelines and applicable law in administering its user fee program. Under those guidelines, the IRS generally charges a fee that recovers the full cost to the IRS of providing the relevant service. In order to charge a user fee that does not recover the full cost of a service, for instance, to reduce or eliminate a user fee for low-income taxpayers, the IRS may be required to request an exception from OMB. Every two years, federal agencies are required to review their user fees to determine whether they are recovering the full cost of providing relevant services and to determine if there are additional services for which the agency should charge a user fee. The IRS recently completed its 2015 biennial review. This review showed that the cost of providing some services for which IRS charges a user fee has increased, whereas the cost of providing other such services has decreased. For example, during the 2015 review the IRS calculated that the cost of administering the preparer tax identification number (PTIN) program decreased. As a result, the IRS published temporary regulations in November 2015 to reduce the PTIN user fee from $50 to $33. [T.D. 9742, dated November 16, 2015] During the review, the IRS also calculated that the IRS cost to administer the Pre-Filing Agreement (PFA) Program is higher than the current user fee. As a result, the user fee to participate in the PFA Program has been increased from $50,000 to $134,300 and will be further increased to full cost when the increase is fully implemented. [Revenue Procedure 2016-30 PDF] Historically, the IRS often charged a user fee that recovered less than the full cost of a service in order to make the service more accessible to a broader range of taxpayers. However, in light of prevailing constraints on IRS resources for tax administration, Treasury and the IRS have determined that it is necessary to recoup the full costs of services that confer special benefits on identifiable recipients beyond those accruing to the general public or that are subject to a fee under the Internal Revenue Code. Further, such services will be provided at less than full cost only when there is a compelling tax administration reason to do so (for example, in the case of certain services provided to low-income taxpayers). Therefore, in the near future the IRS expects to revise a number of existing user fees and to implement new user fees for some additional services. These new or revised user fees will be implemented in regulations or other published guidance. Notably, the IRS intends to continue its policy of reducing or eliminating user fees for low-income taxpayers.