[Federal Register: October 5, 2006 (Volume 71, Number 193)]
[Rules and Regulations]
[Page 58740-58742]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc06-6]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 300
[TD 9288]
RIN 1545-BF68
User Fees Relating to Enrollment
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains amendments to the regulations relating
to user fees for the special enrollment examination to become an
enrolled agent, the application for enrollment of enrolled agents, and
the renewal of this enrollment. The charging of user fees is authorized
by the Independent Offices Appropriations Act (IOAA) of 1952.
DATES: Effective Date: November 6, 2006.
Applicablity Date: For date of applicability, see Sec. 300.0(c).
FOR FURTHER INFORMATION CONTACT: Concerning cost methodology, Eva
Williams, (202) 622-6400; concerning the regulations, Matthew Cooper,
(202) 622-4940 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document amends the regulations relating to user fees for the
special enrollment examination to become an enrolled agent, the
application for enrollment of enrolled agents, and the renewal of this
enrollment. The charging of user fees is authorized by the IOAA of
1952, which is codified at 31 U.S.C. 9701.
The IOAA of 1952 authorizes agencies to prescribe regulations that
establish charges for services provided by the agency. The charges must
be fair and be based on the costs to the government, the value of the
service to the recipient, the public policy or interest served, and
other relevant facts. The IOAA of 1952 provides that regulations
implementing user fees are subject to policies prescribed by the
President, which are currently set forth in OMB Circular A-25, 58 FR
38142 (July 15, 1993) (the OMB Circular).
The OMB Circular encourages user fees for government-provided
services that confer benefits on identifiable recipients over and above
those benefits received by the general public. Under the OMB Circular,
an agency that seeks to impose a user fee for Government-provided
services must calculate its full cost of providing those services. In
general, a user fee should be set at an amount in order for the agency
to recover the cost of providing the special service, unless the Office
of Management and Budget grants an exception.
On August 29, 2006, a notice of proposed rulemaking (REG-145154-05)
was published in the Federal Register. Approximately 40 written
comments responding to the proposed regulations were received. A public
hearing was held on September 29, 2006, but there were no requests to
speak at the hearing. After consideration of the comments, the proposed
regulations are adopted by this Treasury decision.
[[Page 58741]]
Enrolled Agent Program
Section 330 of Title 31 of the United States Code authorizes the
Secretary of the Treasury to regulate practice before the Treasury
Department. Pursuant to section 330 of Title 31, the Secretary has
published regulations governing practice before the IRS in 31 CFR part
10 and reprinted them as Treasury Department Circular No. 230 (Circular
230). These regulations are administered by the IRS Office of
Professional Responsibility (OPR).
Section 10.3 of Circular 230 generally authorizes attorneys,
certified public accountants, enrolled agents and enrolled actuaries to
practice before the IRS. An enrolled agent is defined as an individual
enrolled as an agent pursuant to the provisions of Circular 230. The
provisions of Circular 230 provide that an individual desiring to
become an enrolled agent is eligible for enrollment through either the
successful passing of a written examination or through demonstration of
sufficient expertise in tax administration based on former employment
with the IRS. Specifically, Sec. 10.4(a) authorizes the Director of
OPR to grant enrollment to an applicant who demonstrates special
competence in tax matters by passing a written examination administered
by, or administered under the oversight of, the Director of OPR and who
has not engaged in any conduct that would justify the censure,
suspension, or disbarment of any practitioner under the provisions of
Circular 230. Accordingly, every year OPR develops and administers a
Special Enrollment Examination (SEE) that is given to all applicants
desiring to become enrolled agents so that they can practice before the
IRS. The IRS charged applicants a user fee of $55 ($45 if taking the
examination in parts) in order to take the 2005 SEE.
Section 10.4(b) authorizes the Director of OPR to grant enrollment
for former IRS employees if the former employee meets certain
requirements, including length of employment with the IRS and
substantive tax expertise. Application for enrollment based on former
employment with the IRS must be made within three years from the date
of separation from such employment.
Once eligible for enrollment, by either passing the examination or
because of former employment with the IRS, an applicant must file an
application for enrollment on Form 23, ``Application for Enrollment to
Practice before the Internal Revenue Service,'' with the Director of
OPR. As part of the application for enrollment process, the applicant
must enclose a check or money order payable to the IRS in the amount
set forth on Form 23, which constitutes a fee charged to each applicant
for enrollment. The fee is nonrefundable regardless of whether the
applicant is granted enrollment. The current user fee for enrollment on
the Form 23 (Rev. February 2005) is $80. The Director of OPR will act
upon an application for enrollment and issue an enrollment card to each
individual whose application for enrollment to practice before the IRS
is approved.
Pursuant to Sec. 10.6(d), each individual, once enrolled, is
required to renew the enrollment every three years to maintain an
active enrollment to practice before the IRS. In order to qualify for
renewal, an applicant must certify the completion of the continuing
professional education requirements set forth in Sec. 10.6(e) of
Circular 230. A nonrefundable user fee of $80 is currently charged for
each application for renewal of enrollment filed with the Director of
OPR on Form 8554, ``Application for Renewal of Enrollment to Practice
Before the Internal Revenue Service.''
Contracting Out of Special Enrollment Examination
OPR has recently contracted out certain functions pertaining to the
SEE to a private contractor. The contractor will furnish the resources,
facilities, and services necessary to administer the entire SEE
program, which includes examination development, administration of SEE,
notification to IRS of candidates who took the examination, and the
results of the examination. The contractor will receive payment for its
services by charging a fee to examination applicants. OPR will,
nonetheless, still maintain an oversight role with respect to the SEE.
The contractor will collect a user fee on behalf of the IRS based on
the full costs incurred by the IRS. These final regulations only
establish a user fee with respect to the government costs for
overseeing the SEE and do not include any fee that the contractor may
charge for its services. Accordingly, while the user fee imposed
pursuant to these regulations is less than the user fee that applicants
were charged in 2005, the total fee that applicants will be charged is
greater. The IRS estimates that the efficiencies resulting from using a
contractor will reduce the total fees that would otherwise be charged
by the IRS in order to recover the full cost of the IRS administering
all aspects of the SEE. Further information about the contracting out
of the SEE can be found at http://www.irs.gov/taxpros/agents/index.html
.
Summary of Comments
The final regulations establish an $11 per part user fee for the
SEE. The final regulations establish separate $125 user fees for the
enrollment and renewal of enrollment process. Most of the comments on
the proposed regulations did not favor the higher fees. These comments
focused on the increased economic burden on enrolled agents resulting
from the higher fees. Several comments also stated that the Request for
Proposal (RFP) for the examination implied that the IRS would collect
its fee from the amount that the contractor is charging for its
services. One comment requested that the IRS publicly release the
costing methodology and the schedule for reevaluating the user fees, as
well as provide a clarification of the ``Special Analyses'' section of
the preamble. For the following reasons, these final regulations follow
the proposed regulations without change.
The OMB Circular requires the IRS to calculate and recover its full
cost of providing services under the enrolled agent program. In
accordance with the OMB Circular, these final regulations increase the
fees to bring them in line with actual costs based upon a recent review
of the enrolled agent program. The IRS is in compliance with the OMB
Circular in its methodology for computation of the actual cost and will
follow the OMB Circular's direction providing for a biennial
reevaluation of the fees.
The IRS has determined that the full cost to the IRS of overseeing
the SEE is $11 per part per applicant. This revised user fee reflects
the change in IRS costs of administering the examination program as a
result of contracting out of the examination to a private contractor.
For the first examination cycle (October 5, 2006 to December 1, 2006),
the contractor is not collecting any user fee on behalf of the IRS. In
future years, consistent with the RFP, the contractor will collect the
user fee based on the full costs incurred by the IRS in overseeing the
examination, which is separate and distinct from the fee that the
contractor is charging for its services.
The IRS has determined that the full cost of administering the
enrollment and renenrollment process is $125 per enrolled agent. Before
this final regulation, the most recent increase in user fees for the
enrollment and renewal of enrollment process was in September 1995.
The Chief Counsel for Advocacy of the Small Business Administration
(SBA) commented that the certification in the proposed regulations
regarding
[[Page 58742]]
the economic impact on small entities in the ``Special Analyses''
section of the preamble could be clearer. Specifically, the SBA
requested that the certification identify the number of enrolled agents
and the appropriate North American Industry Classification System
(NAICS) codes for enrolled agents, estimate the percent of enrolled
agents that are operating as or employed by small entities based upon
the small business size standards established by the SBA, and further
explain why the increased fees are not economically significant. The
``Special Analyses'' section of the final regulations adopts these
recommended changes.
Special Analyses
It has been determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866. Therefore, a
regulatory assessment is not required. It is hereby certified that
these regulations will not have a significant economic impact on a
substantial number of small entities. Accordingly, a regulatory
flexibility analysis is not required. This certification is based on
the information that follows. This final rule affects enrolled agents,
of which there are currently 45,261 active. The economic impact of
these regulations on any small entity would result from a small entity,
including a sole proprietor, being required to pay a fee prescribed by
these regulations in order to obtain a particular service. The
appropriate NAICS codes for enrolled agents relate to tax preparation
services (NAICS code 541213) and other accounting services (NAICS code
541219). Entities identified under these codes are considered small
under the SBA size standards (13 CFR 121.201) if their annual revenue
is less than $6.5 million or $7.5 million respectively. The IRS
estimates that 99 percent of enrolled agents are operating as or
employed by small entities. Therefore, the IRS has determined that this
final rule will affect a substantial number of small entities. The
dollar amounts of the increases in fees are not, however, substantial
enough to have a significant economic impact on any entity subject to
the fees. The amounts of the fees are commensurate with, if not less
than, the amount of fees charged for other professional examination and
enrollment fees. Persons who elect to take the examination and apply
for enrollment or renewal of enrollment also receive benefits from
obtaining the enrolled agent designation. The Chief Counsel for
Advocacy of the Small Business Administration submitted comments on the
regulation, which are discussed elsewhere in this preamble.
Drafting Information
The principal author of these regulations is Matthew S. Cooper of
the Office of the Associate Chief Counsel (Procedure & Administration),
Administrative Provisions & Judicial Practice Division.
List of Subjects in 26 CFR Part 300
Reporting and recordkeeping requirements, User fees.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 300 is amended as follows:
PART 300--USER FEES
0
Paragraph 1. The authority citation for part 300 continues to read in
part as follows:
Authority: 31 U.S.C. 9701.
0
Par. 2. Section 300.0 is amended as follows:
0
1. Paragraphs (b)(4), (b)(5), and (b)(6) are added.
0
2. Paragraph (c) is revised.
The additions and revision read as follows:
Sec. 300.0 User fees; in general.
* * * * *
(b) * * *
(4) Taking the special enrollment examination to become an enrolled
agent.
(5) Enrolling an enrolled agent.
(6) Renewing the enrollment of an enrolled agent.
(c) Effective date. This part 300 is applicable March 16, 1995,
except that the user fee for processing offers in compromise is
applicable November 1, 2003, and the user fee for the special
enrollment examination, enrollment, and renewal of enrollment for
enrolled agents is applicable November 6, 2006.
0
Par. 3. Section 300.4 is added to read as follows:
Sec. 300.4 Special enrollment examination fee.
(a) Applicability. This section applies to the special enrollment
examination to become an enrolled agent pursuant to 31 CFR 10.4(a).
(b) Fee. The fee for taking the special enrollment examination is
$11 per part, which is the government cost for overseeing the
examination and does not include any fees charged by the examination
administrator.
(c) Person liable for the fee. The person liable for the special
enrollment examination fee is the applicant taking the examination.
0
Par. 4. Section 300.5 is added to read as follows:
Sec. 300.5 Enrollment of enrolled agent fee.
(a) Applicability. This section applies to the initial enrollment
of enrolled agents with the IRS Office of Professional Responsibility
pursuant to 31 CFR 10.5(b).
(b) Fee. The fee for initially enrolling as an enrolled agent with
the IRS Office of Professional Responsibility is $125.
(c) Person liable for the fee. The person liable for the enrollment
fee is the applicant filing for enrollment as an enrolled agent with
the IRS Office of Professional Responsibility.
0
Par. 5. Section 300.6 is added to read as follows:
Sec. 300.6 Renewal of enrollment of enrolled agent fee.
(a) Applicability. This section applies to the renewal of
enrollment of enrolled agents with the IRS Office of Professional
Responsibility pursuant to 31 CFR 10.6(d)(6).
(b) Fee. The fee for renewal of enrollment as an enrolled agent
with the IRS Office of Professional Responsibility is $125.
(c) Person liable for the fee. The person liable for the renewal of
enrollment fee is the person renewing their enrollment as an enrolled
agent with the IRS Office of Professional Responsibility.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
Approved: October 2, 2006,
Eric Solomon,
Acting Deputy Assistant Secretary for Tax Policy.
[FR Doc. 06-8525 Filed 10-3-06; 10:00 am]
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