part1-209

1.32.19 
User Fees

1.32.19.1 
(10-29-2008)
Overview

  1. This IRM provides information for implementing and reviewing user fee activities, rates and reports.

  2. User fees are important to the Internal Revenue Service (IRS) because user fees provide a significant amount of resources
    to IRS to fund ongoing operations, as well as providing funds to the Treasury General Fund. There are many activities performed
    throughout IRS, including a biennial review, that are necessary to have a successful user fee program that complies with the
    various statutes controlling federal user fees. This IRM outlines these activities and the organizations responsible for conducting
    them.

  3. This IRM is intended for IRS offices preparing proposals for new fees or reviewing cost estimates for existing fees during
    the biennial review. It provides guidance for deciding when a user fee is appropriate, discusses key planning and implementation
    problems, and lists steps for developing acceptable cost estimates. These steps are general guidelines on how a user fee is
    developed. The implementation of a user fee is different from individual offices.

  4. This IRM is developed and maintained by the Associate Chief Financial Officer (ACFO) for Internal Financial Management.

1.32.19.2 
(10-29-2008)
Background

  1. When Congress first determined that IRS should retain part of its user fee collections, they included language in the IRS
    appropriation to provide this authority. The 1995 Treasury Appropriation Act specified that the IRS could retain a maximum
    of $119 million per year of new and increased user fees it collected, and that any amounts received in excess of this cap
    were to be placed in the General Fund of the U.S. Treasury. However, the 2006 Treasury Appropriation Act (Transportation,
    Treasury, Housing and Urban Development, The Judiciary, The District of Columbia, And Independent Agencies Appropriations
    Act, 2006, Public Law 109-115) removed the $119 million ceiling. Rates for user fees in effect as of September 30, 1994, determine
    the amount of each user fee collection that must be deposited to the General Fund.

1.32.19.2.1 
(10-29-2008)
General Authority

  1. Federal agencies are generally authorized to collect user fees in 31 USC § 9701, which states that government agencies can prescribe regulations establishing fees for services or items of value provided
    by the agencies. Once a user fee has been authorized via statute or legislation, user fees can be charged when benefits which
    exceed those available to the general public are provided. Fees charged are based on the costs to the Government of providing
    the service or item, the value of these services and/or items to the recipient, public policy or interest served, or other
    relevant facts.

  2. Specific types of user fees assessed by the IRS are authorized by other legal authorities cited in this IRM.

1.32.19.2.1.1 
(10-29-2008)
Policy

  1. It is IRS policy to not charge a rate that is greater than full cost to the Government. Office of Management and Budget (OMB) Circular A-25, User Charges, establishes Federal policy regarding user fees. Circular A-25 states:

    1. User fees should be charged for all “Federal activities that convey special benefits to recipients beyond those accruing to
      the general public.”

    2. Charges should be “at least as great as costs to the Government”
      for providing these benefits.

    3. Agencies should recommend legislative changes if an existing law prohibits or restricts the agency’s ability to impose user
      fees.

1.32.19.2.1.2 
(10-29-2008)
OMB Basis for User Fee Amounts

  1. Depending on the nature of the benefit, full cost or market price should be charged.

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

    1. Direct and indirect personnel costs, including salaries, fringe benefits, and all funded or unfunded retirement costs;

    2. Other indirect costs include consulting, physical overhead, materials and supplies, utilities, insurance, travel, rent or
      imputed rent on land, buildings, and equipment. Imputed rental costs include depreciation of structures and equipment, and
      an annual rate of return (the average long-term Treasury bond rate) on land, structures, equipment, and other capital resources
      used;

    3. Management and supervisory costs; and

    4. Costs of enforcement, collection, research, establishment of standards, and regulations.

  3. The Government can assess the recipient the full cost or the market price, whichever applies, when the public receives benefits
    as an incidental consequence of the special benefits provided to identified recipients. The agency is not required to allocate
    the costs of benefits to the public.

  4. However, under business-type conditions, such as when the agency is leasing space in a federally owned building, or selling
    goods, user fees should be based on market prices, in which case the fees charged may exceed the full cost to the government
    and may yield net revenues. OMB Circular A-25 defines market price as the price based on competition in open markets, which
    creates neither a shortage nor a surplus of the good, resource, or service.

  5. An agency may request an exception from OMB to charge less than full cost for a particular service or to provide a full waiver
    from the user fee. The impact of the user fee on low-income taxpayers, tax administration and the cost of collecting the fees
    should be considered when requesting a waiver.

  6. User charges are collected in advance or when providing the services, unless appropriations and authority allow reimbursable
    services. OMB encourages using rates rather than fixed dollar amounts to allow for changes in Government costs or in market
    prices.

1.32.19.3 
(10-29-2008)
Definitions

  1. User fees are charges or assessments levied by a Federal agency on persons 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.

  2. Market price is the price for the good, revenue or service based on competition in open markets, which creates neither a shortage nor
    a surplus of the goods, resources or services.

  3. Special benefits describes privileges, goods, and services that give a recipient benefits beyond those available to the general public. Examples
    of special benefits are:

    1. The beneficiary is able to obtain immediate or substantial gains or values that are greater than those available to the general
      public, such as receiving an installment agreement or letter ruling. The gains or values may not be measurable in monetary
      terms.

    2. The service is provided at the request or convenience of the recipient, such that it is beyond the services regularly provided
      to members of the same industry, group, or general public.

    3. The service provides business stability or encourages public confidence in the business activities of the recipient.

1.32.19.4 
(10-29-2008)
Responsibilities

  1. The CFO and the Business Units have responsibilities to ensure user fees are properly charged, collected, deposited and reported
    to various stakeholders.

1.32.19.4.1 
(10-29-2008)
Chief Financial Officer (CFO)

  1. The CFO has oversight responsibilities for the initial assessment, updates, and collection of user fees. While the CFO does
    not own any of the programs for which fees are charged, it does have the responsibility to ensure that fees are appropriately
    collected, deposited and reported.

1.32.19.4.1.1 
(10-29-2008)
Internal Financial Management (IFM)

  1. The Associate Chief Financial Officer (ACFO) for IFM:

    1. Coordinates the user fee program.

    2. Prepares reports for Treasury, OMB, and other external stakeholders.

    3. Issues to the Business Units a memorandum that initiates and provides guidance for the biennial review, and oversees the biennial
      review process.

    4. Coordinates the annual audit of user fees for the financial statement process; monitors monthly collections; reviews projections;
      and reviews the biennial review workpapers submitted by the Business Units.

    5. Coordinates requests to OMB of any waivers of OMB Circular A-25 requirements. These requests are signed by the Commissioner
      and addressed to the Director of OMB.

    6. Monitors user fee collections to ensure accuracy and completeness of collections.

1.32.19.4.1.1.1 
(10-29-2008)
Beckley Finance Center (BFC)

  1. The BFC:

    1. Analyzes and reconciles actual deposits to supporting documentation/schedules received from the business units.

    2. Prepares required reports of user fee collections.

    3. Prepares the President’s Budget Receipt Estimate for the upcoming year and following 10 years.

    4. Provides information on user fees posted in the Interim Revenue Accounting and Control System (IRACS) to the Office of Financial
      Reports to support entry of user fee collections in the Integrated Financial System (IFS).

1.32.19.4.1.1.2 
(10-29-2008)
Office of Cost Accounting

  1. The Office of Cost Accounting:

    1. Provides guidance to the Business Units during the initial costing of new user fees and the biennial reviews of the cost of
      all user fees.

    2. Provides the agency Overhead Rate annually to the Business Units that incorporates centrally paid costs such as rents, utilities,
      MITS costs, AWSS costs, etc., to be applied to the direct and indirect Business Unit costs for user fee activities.

1.32.19.4.1.1.3 
(10-29-2008)
Office of Financial Reports

  1. The Office of Financial Reports:

    1. Prepares and posts a non-Standard Form 224 (non-cash) entry into IFS on a monthly basis to record user fee collections initially
      recorded in IRACS.

    2. Prepares a monthly reconciliation between Government Wide Accounting (GWA) and IFS for user fees posted.

1.32.19.4.1.2 
(10-29-2008)
Revenue Financial Management (RFM)

  1. The ACFO for RFM:

    1. Provides monthly IRACS reports to the ACFO IFM and Business Units to facilitate the reconciliation of user fee collections
      and deposits by the fourth business day of the month.

    2. Provides support for system changes and Unified Work Requests related to Campus systems that process and control user fees.

1.32.19.4.1.3 
(10-29-2008)
Corporate Performance Budgeting (CPB)

  1. The ACFO for CPB:

    1. Enters anticipated user fee collections into IFS.

    2. Works with the executives to determine use of the user fee funds.

    3. Transfers user fee funds to the appropriate accounts.

1.32.19.4.2 
(10-29-2008)
Business Units

  1. The collection and reporting of user fees is the responsibility of the Business Unit that manages the program for which fees
    are charged. The Business Unit:

    1. Provides quarterly estimates in July for the following two years. Estimates should include projections of revenue and volume
      of collections.

    2. Provides the BFC with monthly activity reports and/or explanation of actual to budget variances within three business days
      of the end of the month. Irregularities should be reported to the ACFO IFM on a timely and ongoing basis.

    3. Reviews and approves the monthly Commissioner’s Report on User Fee Revenues.

    4. Executes the biennial review, including the review of current costs of user fee activities.

    5. Maintains case information and develops a method to track cases and fee information.

    6. Maintains case files for audit purposes.

    7. Coordinates any changes to legacy systems used to capture and track user fees to ensure guidelines are followed appropriately.

    8. Provides the BFC with daily deposits information for those user fees not processed in the campuses. The information is to
      be sent within 48 hours via fax or electronic medium.

1.32.19.5 
(10-29-2008)
Procedures

  1. The IRS is required to perform certain activities in order to manage the user fee process and comply with user fee legislation.
    The following activities are part of the overall user fee program.

1.32.19.5.1 
(10-29-2008)
Receipt of User Fees

  1. User fees remittances may be received at the campuses, through lockbox agreements, National Office post office boxes, or Pay.gov.
    The IRS follows the Treasury Financial Management Service (FMS) guidelines for payment receipts. FMS guidelines require federal
    agencies to move payment processing to the electronic environment. The use of Pay.gov is recommended. Pay.gov is an FMS system
    that collects user fees electronically using a customers debit or credit card.

  2. Unless a statute provides otherwise, receipts are to be credited to the General Fund of the Treasury as miscellaneous receipts,
    as required by 31 USC § 3302. Generally, the authority to use fees credited to an agency’s appropriations is subject to limits in its annual appropriations
    language.

1.32.19.5.2 
(10-29-2008)
Implementation of New User Fees

  1. The decisions made and the implementation of a new user fee must be documented and retained. A new user fee is a multi-stage
    process, whereby:

    1. An activity that meets the criteria for charging a user fee is identified.

    2. The cost of the activity is calculated and a proposed fee is determined. Further information is included in IRM 1.32.19.5.3.

    3. The Business Unit submits a proposal for the new user fee to the CFO for concurrence of the Commissioner. The proposal package
      should include the cost calculation, recommended fee level, justification for less-than-full-cost if appropriate, and the
      timeline and action plan for implementation of the new fee. The timing for implementation of a new fee is dependent on actions
      required to be taken prior to the effective date of a new user fee (e.g., regulatory process, system programming).

    4. The program office should consider the impact on tax administration and the affect on low-income taxpayers when setting user
      fee rates or determining whether to request a below-full-cost user fee. The Commissioner is required to submit a request to
      OMB for a waiver of the fee or a lower than full cost fee. The waiver request must be renewed every four years.

    5. The Business Units and CFO work with the Modernization and Information Technology Services (MITS) division to ensure that
      information systems are reprogrammed and system controls are implemented.

    6. The CFO works with the Business Units and Chief Counsel to ensure that new or revised regulations related to new user fees
      are implemented as required by Treasury and OMB.

    7. The Business Units and CFO work with Communications and Liaison to ensure appropriate communications with the public and Congress.

    8. The CFO collaborates with OMB and Treasury budget personnel to resolve budget related matters pertaining to the implementation
      of new fees.

1.32.19.5.3 
(10-29-2008)
Biennial Review of User Fees

  1. Business units are required to review their user fee charges biennially (every two years). The CFO will distribute a letter
    to the Business Units in June of the odd calendar years notifying them of their responsibility to review their user fee cost
    calculations and business activities for which a user fee should be charged. These reviews must be documented and retained.

  2. The finance office within each Business Unit should coordinate the response for all user fee programs within that Business
    Unit and work closely with the ACFO IFM, Office of Cost Accounting to complete the reviews. The cost of services for a user
    fee should be recalculated based on an analysis of program costs in accordance with IRS’ Managerial Cost Accounting Policy
    and OMB Circular A-25. The new cost calculations along with proposals for maintaining fees at the current level, increasing
    fees, or instituting new fees are due to the CFO within 60 days of the request for review. After clearance of the draft with
    the Business Units and other stakeholders, the CFO will submit completed reviews to the Commissioner for approval by September
    30 of the review year. If a change in rate or a waiver for a less-than-full-cost user fee is required, the CFO will work with
    the OMB, Treasury, the Business Units, and other stakeholders to implement the fee adjustment.

  3. To ensure the recovery of full cost, the CFO provides the Business Units with the overhead rate for inclusion in their user
    fee calculations. All costs are reviewed to meet OMB’s full cost requirement.

  4. The biennial review should:

    1. Ensure existing user fee charges are covered and, if necessary, adjusted to reflect any changes in costs.

    2. Determine if any additional fees should be assessed.

    3. Ensure OMB Circular A-123, Managements Responsibility for Internal Control, requirements are met and appropriate audit standards are applied to the collection process.

    4. Ensure that adequate documentation is maintained for the fees charged, methods used to determine them, and collections.

    5. Provide records to OMB upon request in accordance with OMB Circular A-11, Preparation, Submission, and Execution of the Budget.

  5. The first question to ask is whether the proposed fee is really a user fee. Lacking new legislation, the proposed fee must
    meet the criteria of the Administrative Act of 1952, (i.e., voluntary, specific benefits available to identifiable fee-payers
    based on actual cost). Once the proposed fee passes the “Is it a user fee?”
    test, the following should be considered when evaluating the fee:

    1. Is there a legitimate business case for instituting the fee?
      Will implementation of the fee further the interests of tax administration, the Federal Government, or the citizens? As an
      example, the business case for the installment agreement fee was that the IRS had absorbed substantial costs instituting the
      streamlined installment agreement process for taxpayers who were receiving a special benefit, i.e., paying over time, and
      that the agency should recover its costs. Further, it was hoped that the fee would encourage taxpayers who could afford to
      pay-in-full would do so, rather than opting for an installment agreement. The revenue generated by a proposed fee must always
      be a part of the business case.

    2. Is the fee readily administrable?
      Can we easily collect the fee prior to rendering service? If not, a billing system is required, likely at substantial cost.
      What changes will be necessary for our organization, paper processes, and computer systems to implement and collect the fee?
      What new work and systems support will be required? How substantial are those costs?

    3. Is the fee for something were already doing?
      If not, then were going into a new business, with new costs that the fee revenue must cover. To go into a new business, the
      business case should be very strong. We need to be careful to distinguish proposals that look like new businesses, but actually
      replace or complement current IRS processes.

    4. Does implementation of the fee require major data processing changes?
      The lead time needed to make data processing (DP) changes is substantial. IRS multiple DP systems make implementing fees,
      which depend upon such changes, difficult. For instance, Master File developers must update their programming to account for
      user fees paid in certain tax modules. Further, data processing changes generally have a January 1 implementation deadline,
      which creates pressure on the implementation time frame.

    5. What are the public implications of the new fee?
      Is there an organized constituency that would oppose the fee and what are the ramifications of such opposition? Any new fee
      proposal should spell out for top management the possible reaction of stakeholders outside the agency, as well as a communications
      strategy that the IRS can use to educate the public at large.

1.32.19.5.4 
(10-29-2008)
Recommendations for Implementing User Fees

  1. Before implementation of the fees, Business Units should consider:

    1. Customer Identification Look at what group of people this fee will affect and the economic issues behind the fee. For example, Taxpayer Service found
      that if the economy is better, more people pay their taxes in full and there are fewer installment agreements.

    2. Management Information Systems During the planning phase, attention needs to be paid to how the implementation process will be tracked, what indicators
      will be used to signal progress and problems, and how data will be developed and verified.

    3. Impact on Overall Demand The implementation of user fees may have a significant impact on program demand. Potential impacts should be analyzed and
      tracking mechanisms put in place.

    4. Operational Workflow It is very useful to flowchart the current (pre-fee) work process, and then overlay the additions and changes that will take
      place after fees are implemented.

    5. Remittance Processing Each new fee program will raise new payment, collection and refund problems. A separate remittance processing plan is necessary
      as part of pre-implementation planning. Payment tracking systems will also be needed, as well as possible modifications to
      existing lockbox processing agreements.

  2. During implementation of the fee, management needs to ensure that their program includes:

    1. Planning Internal implementation requires separate planning, as does costing, regulatory approval and external communications that
      are typically faced during the policy development process. For fees that impose significant new requirements, it is important
      to designate a clear chain of command to deal with problems, appoint an implementation team in the National Office and implementation
      coordinators in key field offices and make sure that field and National Office implementation efforts are coordinated by means
      of meetings or teleconferences.

    2. Training Pre-implementation training pilots and expanded training efforts are useful. Although an extensive effort to train field
      personnel (through such means as teleconferences, information releases, and an implementation hotline) was previously launched,
      more training may have prevented some implementation issues.

1.32.19.5.5 
(10-29-2008)
Internal Controls

  1. The Federal Managers’ Financial Integrity Act (FMFIA), Public Law 97-255, requires heads of agencies to establish internal
    controls see IRM 1.4.2, Monitoring and Improving Internal Accounting and Administrative Controls.

  2. To meet regulatory requirements for effective internal controls, the CFO manages and oversees the user fee process by:

    1. Providing for the oversight of user fees and the monitoring of the processing and reporting of collections.

    2. Ensuring that adequate documentation exists to support the establishment of the user fees, and the collection, deposit and
      reporting of the user fees. IRM 3.30.123.3, Accounting and Deposit Guidelines, provides specific guidelines pertaining to
      controls over cash receipts.

    3. Analyzing monthly user fee reports submitted by the business units and reconciling the amounts on such reports to deposits
      processed. Explanations for significant variances are pursued and reported by the BFC.

    4. Coordinating GAO’s audit of user fees and providing GAO detailed reports and electronic files.

1.32.19.6 
(10-29-2008)
User Fees

  1. The IRS charges specific user fees for various services.

1.32.19.6.1 
(10-29-2008)
Installment Agreements (IA)

  1. Taxpayers can obtain permission from the IRS to pay a tax liability with monthly installment payments and agree to pay the
    user fees associated with establishing new or reinstating defaulted agreements.

  2. Agreements are generally for the full tax liability and penalties. Interest continues to accrue during the agreement.

  3. To secure an IRS installment agreement, taxpayers submit Form 9465,Installment Agreement Request; Form 433-D, Installment
    Agreement; Form 2159, Payroll Deduction Agreement; or call the IRS toll-free number to request a monthly installment plan.

  4. Taxpayers who do not pay the user fee when they file the Form 433-D or Form 9465 will receive a CP 521, Installment Agreement
    Reminder Notice, for the first payment and the user fee.

  5. For additional information see:

    1. IRM 5.14.1, Securing Installment Agreements

    2. IRM 5.19.1.5, Methods of Payment

1.32.19.6.1.1 
(10-29-2008)
Authority

  1. The authority to collect installment agreement user fees is provided under 31 USC § 9701.

  2. Title 26 of the Code of Federal Regulations (26 CFR), Part 300, authorizes the IRS to assess user fees when establishing or
    revising any active or pending installment agreements. An origination user fee is charged when an agreement is established.
    A reinstatement fee is charged when an existing agreement is revised.

1.32.19.6.1.2 
(10-29-2008)
Types of Installment Agreements

  1. Guaranteed Installment Agreement. A request for an installment agreement cannot be turned down if the tax owed is not more than $10,000 and all three of the
    following conditions apply:

    1. All income tax returns have been filed timely during the past five tax years, and the amount of income tax due has been paid
      without using an installment agreement. A spouse is included if the requested installment agreement is for a jointly filed
      return.

    2. The IRS determines that the taxpayer cannot pay the tax owed in full when it is due and the taxpayer provides the IRS with
      information needed to make that determination. IRS policy grants guaranteed agreements even if taxpayers are able to fully
      pay their accounts as a matter of policy.

    3. The taxpayer agrees to pay the full amount owed within three years and to comply with the filing and payment requirements
      while the agreement is in effect.

  2. Streamlined Installment Agreement. A taxpayer may request a streamlined installment agreement if the unpaid balance of all assessment is $25,000 or less. The
    unpaid balance of assessments includes tax, penalty, and interest. Streamlined agreements must be paid in full within a 60-month
    period or prior to the expiration of the ten-year statutory period for collection, whichever is earlier.

    1. Online Payment Agreement (OPA). Individuals who owe $25,000 or less in combined tax, penalties, and interest can use the OPA application to request a payment
      agreement. The application allows the individual to apply for an installment agreement and receive immediate notification
      of approval. The OPA uses the terms “installment agreement”
      and “payment agreement/plan”
      interchangeably.

  3. Direct Debit Installment Agreement (DDIA). The DDIA system is a means by which funds are automatically debited from a taxpayer’s bank account for the agreed upon installment
    amount and transferred to the IRS. The monthly electronic transfer occurs on the date that is pre-selected by the taxpayer.
    These agreements have a discounted fee.

  4. Partial Payment Installment Agreement. When a taxpayer is unable to make monthly payments that will pay off the tax liability within the remainder of the ten-year
    statutory period for collection, a partial payment installment agreement may be established. The IRS determines the monthly
    payments, and, in most cases, equity in assets is also used to pay the tax liability. This type of agreement is reviewed every
    two years.

  5. In-Business Trust Fund Express Installment Agreement. When a business cannot immediately pay its full liability, and the liability is $10,000 or less, this type of agreement
    may be established. The amount due must be paid within 24 months or prior to the ten-year statutory period for collection,
    whichever is earlier.

  6. For additional information see:

    1. Form 5.14.5, IRM Streamlined, Guaranteed and In-Business Trust Fund Express Installment Agreements and Extensions of Time
      to Pay

    2. IRM 5.14.1, Securing Installment Agreements

    3. IRM 21.2.1.6.1, Online Payment Agreement

1.32.19.6.1.3 
(10-29-2008)
Installment Agreement Fees

  1. For the most current user fees associated with Installment Agreements, see IRM 5.14.1, Securing Installment Agreements.

  2. Low-Income Rate: Taxpayers with incomes at or below 250% of the Health and Human Services (HHS) Poverty Guidelines are qualified to pay the
    low-income rate for the installment agreement user fee. The HHS poverty guidelines are adjusted annually and published by
    HHS. HHS makes these available at http://aspe.hhs.gov/poverty. Taxpayers are billed the lower rate based on certain Master File criteria. If the taxpayer did not meet the criteria but
    may qualify for the lower rate due to changed circumstances, the taxpayer must submit Form 13844 within 30 days of receipt
    of installment agreement acceptance letter in order to receive the reduced fee.

1.32.19.6.1.4 
(10-29-2008)
IRACS Reports

  1. Each month, the BFC receives from the ACFO RFM, the RACS-6504, Nationwide Installment Agreements Fees. This report provides
    information on new and reinstated IA user fees by campus. The fees reported in the IA user fee report have been recorded via
    journal voucher into IRACS.

  2. Each month, the BFC also receives from the ACFO RFM the RACS 004A, Monthly General Ledger Trial Balance. This consolidated
    report details all user fees processed within IRACS at the campuses.

1.32.19.6.2 
(10-29-2008)
Advance Art Determination User Fees

  1. Appeals provides a service similar to Chief Counsel’s letter ruling process whereby taxpayers can request art evaluations
    for income, estate, or gift tax purposes.

  2. Taxpayers may submit a request to IRS for a Statement of Value that can be used to substantiate the value of the art prior
    to filing the tax return that reports the charitable contribution or the estate or gift tax return that first reports the
    transfer of the item.

    1. If IRS issues a Statement of Value, the taxpayer may rely on the Statement of Value for completing the tax return as long
      as the statement is based on accurate facts.

    2. The Office of Art Appraisal Services under the Chief of Appeals reviews fair market value claims on works of art and issues
      the Statement of Value.

  3. The term “art”
    includes paintings, sculptures, watercolors, prints, drawings, ceramics, antique furniture, decorative arts, textiles,
    carpets, silver, rare manuscripts, and other similar objects.

  4. A taxpayer who wants to receive a Statement of Value must take the following steps:

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

    2. Pay the appropriate user fee amount.

    3. Complete and submit an appraisal summary.

    4. Identify the jurisdiction for examination of the taxpayers tax return.

  5. See IRM 8.18.1, for information on the Appraisal/Valuation process.

1.32.19.6.2.1 
(10-29-2008)
Authority

  1. The authority that permits advance art determination is 26 CFR 601.201, established by Rev. Proc. 96-15 and 1996-3 IRB 41.
    This Revenue Procedure generally applies to an item of art that has been appraised at $50,000 or more.

  2. IRC § 7528 directs the Secretary of the Treasury or delegate to establish a program requiring the payment of user fees for requests
    to the IRS for letter rulings, opinion letters, determination letters, and similar requests. The requirements for fees charged
    under the program are as follows:

    1. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

    2. The fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in
      each category and subcategory.

    3. The fees are payable in advance.

    4. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

  3. IRC § 7528 (b)(3) directs the Secretary of the Treasury to provide for exemptions and reduced fees under the program as the Secretary of the
    Treasury determines to be appropriate, but the average fee applicable to each category may not be less than the amount specified
    in IRC § 7528.

1.32.19.6.2.2 
(10-29-2008)
Fees

  1. Revenue Procedure 96-15, Section 5, gives user fee charges for requests for Statements of Value from the IRS.

1.32.19.6.3 
(10-29-2008)
Chief Counsel User Fees

  1. The first Revenue Procedure published in the Internal Revenue Bulletin (IRB) each year explains how the IRS provides advice
    to taxpayers on issues under the jurisdictions of the Associate Chief Counsel (ACC) Corporate, the ACC Financial Institutions
    and Products, the ACC Income Tax and Accounting, the ACC (International), the ACC Passthroughs & Special Industries, the ACC
    Procedure and Administration, and the Division Counsel/ACC Tax Exempt and Government Entities.

  2. Guidance may be provided in the form of letter rulings, closing agreements, determination letters, information letters, and
    oral advice.

    1. A letter ruling is a written determination by an Associate Chief Counsel office issued to a taxpayer in response to the taxpayer’s written
      inquiry. It is made prior to filing a required return or report about its status for tax purposes, the tax effects of its
      actions or transactions. A letter ruling interprets and applies the tax laws to the taxpayer’s specific set of facts. It includes
      the written permission or denial of permission to a request for a change in a taxpayer’s accounting method or accounting period.
      Once issued, a letter ruling may be revoked or modified for any number of reasons unless it is accompanied by a “closing agreement.”

    2. A closing agreement is a final agreement between the IRS and a taxpayer on a specific issue or liability. It is entered into under the authority
      in IRC § 7121 and is final, unless fraud, malfeasance, or misrepresentation of a material fact can be shown.

    3. A determination letter is a written determination issued by a Director that applies the principles and precedents previously announced by the IRS
      to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in the statute,
      a tax treaty, the regulations, a conclusion in a revenue ruling, opinion, or court decision that represents the position of
      the IRS.

1.32.19.6.3.1 
(10-29-2008)
Authority

  1. IRC § 7528 directs the Secretary of the Treasury or his/her delegate to establish a program requiring the payment of user fees for requests
    to the IRS for letter rulings, opinion letters, determination letters, and similar requests. The requirements for fees charged
    under the program are as follows:

    1. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

    2. The fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in
      each category and subcategory.

    3. The fees are payable in advance.

    4. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

    5. The fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in
      each category and subcategory.

  2. IRC § 7528 (b)(3) directs the Secretary of the Treasury to provide for exemptions and reduced fees under the program as the Secretary determines
    to be appropriate, but the average fee applicable to each category may not be less than the amount specified in IRC § 7528.

1.32.19.6.3.2 
(10-29-2008)
Fees

  1. The schedule of user fees can be found in Appendix A of the first revenue procedure each year, 200X-1 e.g., for 2008, see Rev. Proc. 2008-1 and IRB 2008-1.

1.32.19.6.3.3 
(10-29-2008)
Advance Pricing Agreements

  1. IRC § 482 provides that the Secretary of the Treasury may distribute, apportion, or allocate gross income, deductions, credits, or
    allowances between or among two or more commonly controlled businesses if necessary to reflect clearly the income of such
    businesses. An Advance Pricing Agreement (APA) is designed to resolve actual or potential transfer pricing disputes as an
    alternative to the traditional examination process.

  2. An Advance Pricing Agreement (APA) is an agreement between a taxpayer and the IRS in which the parties set forth, in advance of controlled transactions, the
    best transfer pricing method (TPM) within the meaning of IRC § 482 of the Code and the regulations. The agreement specifies the controlled transactions or transfers, transfer pricing methodology
    (TPM), APA term, operational and compliance provisions, appropriate adjustments, critical assumptions regarding future events,
    required APA records, and annual reporting responsibilities.

  3. The APA Program is under the jurisdiction of the Office of the Associate Chief Counsel (International).

1.32.19.6.3.3.1 
(10-29-2008)
Fees

  1. The schedule of user fees for Advance Pricing Agreements is given in Rev. Proc. 2006-9.

1.32.19.6.4 
(10-29-2008)
Tax Exempt and Government Entities User Fees

  1. The Tax Exempt and Government Entities Division is responsible for providing letter rulings, determination letters, information
    letters, and other guidance for Employee Plans and Exempt Organizations.

  2. The majority of user fee collections for Exempt Organizations (EO) and Employee Plan (EP) organizations are processed at the
    Cincinnati Submission Processing Center (CSPC) in the Letter and Information Network User-Fee System (LINUS). The LINUS system
    records EO and EP application receipts or other cases established by CSPC. Each month, MITS sends an Excel format file to
    BFC with the prior months activity. The BFC compiles a nine month file to identify a population of transactions for the GAO
    auditors.

  3. The Receipt and Control Operations at CSPC send a processing report listing weekly activity to the Accounting Control and
    Operation unit at CSPC and to BFC. The Accounting Control and Operation unit identifies the differences between the activity
    report and RACS general ledger. This reconciliation report is sent to BFC by the fifth business day of the month.

  4. Revenue Procedures are issued in the IRB each year to provide taxpayers information on rulings, information letters, issuance,
    technical advice, determination letters, and user fees for Employee Plans and Exempt Organizations. This guidance is normally
    published in January of the issue year, IRB 200X-1.

1.32.19.6.4.1 
(10-29-2008)
Authority

  1. IRC § 7528 directs the Secretary of the Treasury or delegate to establish a program requiring the payment of user fees for requests
    to the IRS for letter rulings, opinion letters, determination letters, and similar requests. The requirements for fees charged
    under the program are as follows:

    1. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

    2. The fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in
      each category and subcategory.

    3. The fees are payable in advance.

    4. The fees are to vary according to categories or subcategories established by the Secretary of the Treasury.

    5. The fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in
      each category and subcategory.

  2. IRC § 7528 (b)(3) directs the Secretary of the Treasury to provide for exemptions and reduced fees under the program as the Secretary of the
    Treasury determines to be appropriate, but the average fee applicable to each category may not be less than the amount specified
    in IRC § 7528.

1.32.19.6.4.2 
(10-29-2008)
Fees

  1. The revenue procedure provides guidance on the user fee program relating to requests for letter rulings, opinion letters,
    determination letters, and other matters under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.
    It also addresses requests for administrative scrutiny determinations.

  2. The revenue procedure includes a schedule of user fees applicable to specific categories or subcategories of submissions.


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