[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Rules and Regulations]
[Pages 8298-8300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3755]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 300
[TD 8589]
RIN 1545-AS84
User Fees
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations relating to user fees
for certain services provided to specific persons and implements the
Independent Offices Appropriations Act (IOAA).
EFFECTIVE DATE: March 16, 1995.
FOR FURTHER INFORMATION CONTACT: Concerning costing methodology, Robert
Miller, (202) 535-9701(x3222); concerning installment agreements, Kevin
Connelly, (202) 622-3640 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The IOAA, codified at 31 U.S.C. 9701, authorizes agencies to
prescribe regulations that establish charges for services provided by
the agency (user fees). 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
expressly provides that regulations implementing user fees ``are
subject to policies prescribed by the President * * *.''
The FY 1995 Appropriations Bill for the Treasury Department (the
1995 Appropriations Bill) includes a provision relating to the
establishment of new fees for services provided by the IRS if the fees
are authorized by another law, such as the IOAA.
Since 1959, the Office of Management and Budget (OMB) has issued
policy guidance on user fees through Circular A-25 (the OMB Circular).
See FPC v. New England Power Co., 415 U.S. 345, 349-51 (1974) (citing
the OMB Circular). On July 15, 1993, OMB issued a revised version of
the OMB Circular in the Federal Register (58 FR 38142), which provides
updated policy guidance on user fees. Under the OMB Circular, user fees
for Government-provided services that confer benefits on identifiable
recipients over and above those benefits received by the general public
are encouraged. The amount of the user fee imposed should recover the
cost for providing the special benefit or the value of the special
benefit. [[Page 8299]]
For these fees, the IRS followed the guidance provided by the OMB
Circular and the relevant court cases in calculating the costs of the
services provided. Under the OMB Circular, each agency is to include in
its calculation of the cost of providing a benefit:
(1) Direct and indirect personnel costs, including salaries and
fringe benefits such as medical insurance and retirement.
(2) Physical overhead, consulting, and other indirect costs,
including material and supply costs, utilities, insurance, travel, and
rents or imputed rents on land, buildings, and equipment.
(3) Management and supervisory costs.
(4) The costs of enforcement, collection, research, establishment
of standards, and regulation, including any environmental impact
statements.
On December 28, 1994, a notice of proposed rulemaking (PS-39-94)
relating to user fees under 31 U.S.C. 9701 was published in the Federal
Register (59 FR 66828). Written comments responding to the notice were
received and a public hearing was held on January 20, 1995. Commenters
expressed concern that some taxpayers cannot afford to pay a fee in
addition to their installment payments. The IRS is concerned about the
effect of the fee on such taxpayers. Accordingly, the IRS intends to
use existing administrative procedures to take into account the
taxpayer's ability to pay in structuring the payment schedule,
including the payment of the fee. After consideration of the comments,
the proposed regulations are adopted by this Treasury decision.
Entering into Installment Agreements
Section 6159 of the Internal Revenue Code authorizes the IRS to
enter into a written agreement with any taxpayer for the payment of
that taxpayer's outstanding tax obligation in installments. Each
taxpayer that enters into an installment agreement receives the special
benefit of being allowed to pay an outstanding tax obligation over time
rather than immediately.
Before entering into an installment agreement, the IRS must first
determine whether such an agreement is appropriate, then set up the
agreement, process payments, and monitor for conformance with the
agreement.
The amount of the installment agreement fee has been determined by
using activity-based costing. In a 1993 study, the IRS analyzed the
work activities related to establishing new installment agreements at
both the Service Center (pre-assessment) and District Office levels
(post assessment). The costs incurred in establishing new installment
agreements at Service Centers and District Offices were averaged in
computing a uniform fee. Projected costs for program start-up and
training and software maintenance were developed. Lockbox and
remittance processing costs (based on an historic average of 8.5
payments per agreement) were calculated. These figures were added to
the initial activity-based costing totals. The activity-based
methodology did not include some indirect cost elements (primarily
executive support) which were then calculated at a 2.3% indirect cost
rate. Based on this costing methodology, the installment agreement fee
is $43.
Restructuring or Reinstating Installment Agreements
When a taxpayer fails to meet any of the conditions of an
installment agreement, that agreement is deemed to be in default. The
IRS has the right to terminate an installment agreement in default.
Each taxpayer that has an installment agreement restructured or
reinstated receives not only the special benefit of being allowed to
pay an outstanding tax obligation over time rather than immediately but
also the special benefit of avoiding a potential enforcement action,
including but not limited to the filing of liens and the making of
levies.
Before restructuring or reinstating an installment agreement, the
IRS must monitor for nonconformance, analyze the cause(s) of default,
correspond with the taxpayer, analyze the taxpayer's responses, and, if
appropriate, restructure or reinstate the agreement.
The amount of the restructuring or reinstatement fee was calculated
by determining direct labor costs and overhead labor costs derived from
the IRS' Work Planning and Control tracking system, standard
correspondence and postage costs incurred in preparing and mailing
certified notices, and an indirect cost factor representing support
cost. Examining program history through fiscal year 1993, the IRS
estimated the total number of installment agreements likely to be
restructured or reinstated in fiscal year 1995 as approximately
150,000. Based on this costing methodology, the restructuring or
reinstatement fee is $24.
Special Analyses
Although it has been determined that this Treasury decision is a
significant regulatory action as defined in EO 12866, the Office of
Management and Budget has waived the preparation of a regulatory
assessment. Because no substantive changes were made to these
regulations subsequent to their submission to the Office of Management
and Budget, the provisions of section 6(a)(3)(E) of EO 12866 do not
apply. 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. The economic
impact of these regulations on any small entity would result from the
entity being required to pay a fee prescribed by these regulations in
order to obtain a particular service. However, due to the small dollar
amount of each of these fees, the economic impact on any entity subject
to one of the fees would not be significant. Pursuant to section
7805(f) of the Internal Revenue Code, the notice of proposed rulemaking
preceding these regulations was submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact
on small business.
Drafting Information
The principal authors of these regulations are Ruth Hoffman, Office
of Assistant Chief Counsel (Passthroughs and Special Industries) and
Tom Baker, Office of Assistant Chief Counsel (General Legal Services).
However, other personnel from the IRS and Treasury Department
participated in their development.
List of Subjects in 26 CFR Part 300
Estate taxes, Excise taxes, Gift taxes, Income taxes, Reporting and
recordkeeping requirements, User fees.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 300 is added to read as follows:
PART 300--USER FEES
Sec.
300.0 User fees; in general.
300.1 Installment agreement fee.
300.2 Restructuring or reinstatement of installment agreement fee.
Authority: 31 U.S.C. 9701.
Sec. 300.0 User fees; in general.
(a) In general. The regulations in this part 300 are designated the
User Fee Regulations and provide rules relating to user fees under 31
U.S.C. 9701.
(b) Applicability. User fees are imposed on the following services:
(1) Entering into an installment agreement.
(2) Restructuring or reinstating an installment agreement.
(c) Effective date. This part 300 is effective March 16, 1995.
[[Page 8300]]
Sec. 300.1 Installment agreement fee.
(a) Applicability. This section applies to installment agreements
under section 6159 of the Internal Revenue Code.
(b) Fee. The fee for entering into an installment agreement is $43.
(c) Person liable for fee. The person liable for the installment
agreement fee is the taxpayer entering into an installment agreement.
Sec. 300.2 Restructuring or reinstatement of installment agreement
fee.
(a) Applicability. This section applies to installment agreements
under section 6159 of the Internal Revenue Code that are in default. An
installment agreement is deemed to be in default when a taxpayer fails
to meet any of the conditions of the installment agreement.
(b) Fee. The fee for restructuring or reinstating an installment
agreement is $24.
(c) Person liable for fee. The person liable for the restructuring
or reinstatement fee is the taxpayer that has an installment agreement
restructured or reinstated.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: February 1, 1995.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 95-3755 Filed 2-10-95; 12:57 pm]
BILLING CODE 4830-01-P
