[Federal Register Volume 71, Number 167 (Tuesday, August 29, 2006)]
[Proposed Rules]
[Pages 51179-51181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7246]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 300

[REG-145154-05]
RIN 1545-BF68


User Fees Relating to Enrollment

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed 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. This document also contains a notice of public hearing on these 
proposed regulations.

DATES: Written or electronically-generated comments must be received by 
September 28, 2006. Outlines of topics to be discussed at the public 
hearing scheduled for September 29, 2006, must be received by September 
28, 2006.

ADDRESSES: Comments are encouraged to be submitted to: CC:PA:LPD:PR 
(REG-145154-05), room 5203, Internal Revenue Service, P.O. Box 7604, 
Ben Franklin Station, Washington, DC 20044. Submissions may be sent 
electronically via the IRS Internet site at http://www.irs.gov/regs or 
via the Federal eRulemaking Portal at http://www.regulations.gov (IRS-
REG-145154-05).

FOR FURTHER INFORMATION CONTACT: Concerning submissions of comments 
and/or to be placed on the building access list to attend the hearing, 
Richard Hurst at [email protected] or at (202) 622-
7180; concerning cost methodology, Eva Williams at (202) 622-6400; 
concerning the proposed regulations, Matthew Cooper at (202) 622-4940 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    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, section 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

[[Page 51180]]

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 
part) 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 section 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 section 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 exam 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 proposed 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 by using a contractor, however, the 
total fees incurred will be less than 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.

User Fees for Special Enrollment Examination, Enrollment, and Renewal 
of Enrollment

    The user fee that the IRS currently charges applicants in order to 
take the SEE is being modified to reflect the change in IRS costs of 
administering the exam program as a result of the contracting out of 
the exam. The user fees that the IRS currently charge applicants for 
the enrollment and renewal of enrollment process are less than the 
actual cost of overseeing the enrollment process. The IRS is proposing 
new user fees to take the SEE to become an enrolled agent, the 
application for enrollment and the renewal of such enrollment.
    Proposed section 300.4 establishes an $11 per part user fee for the 
SEE. Proposed sections 300.5 and 300.6 establish separate $125 user 
fees for the enrollment and renewal of enrollment process.

Authority

    The IOAA of 1952 (31 U.S.C. 9701) 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. Pursuant to the 
guidelines in the OMB Circular, the IRS has calculated its cost of 
providing services under the enrolled agents program. The IRS has 
determined that the full cost to the IRS of overseeing the SEE is $11 
per part per applicant. The IRS has determined that the full cost of 
administering the enrollment and renenrollment process is $125 per 
enrolled agent.
    The proposed user fees will be implemented under the authority of 
the IOAA of 1952 and the OMB Circular.

Proposed Effective Date

    These regulations are proposed to apply thirty days after the date 
of publication in the Federal Register of the final regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking 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. 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 dollar 
amount of the fee is not, however, substantial enough to have a 
significant economic impact on any entity subject to the fee. Moreover, 
payment of the fee is voluntary. The only persons subject to the fee 
are those who elect to take the special enrollment exam. Persons who 
elect to take the exam will have determined that it is in their 
economic interest to do so. Pursuant to section 7805(f) of the Internal 
Revenue Code, this notice of proposed rulemaking will be submitted to 
the Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact.

[[Page 51181]]

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on the substance 
of the proposed regulations, as well as on the clarity of the proposed 
rules and how they can be made easier to understand. All comments will 
be available for public inspection and copying.
    A public hearing has been scheduled for September 29, 2006, at 10 
a.m. in the 11th floor conference room at 1901 S. Bell Street, Crystal 
City, VA. Due to building security procedures, all visitors must 
present photo identification to enter the building. Because of access 
restrictions, visitors will not be admitted beyond the immediate 
entrance area more than 30 minutes before the hearing starts. For 
information about having your name placed on the building access list 
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section 
of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit electronic or 
written comments and an outline of the comments to be discussed and the 
time to be devoted to each topic (signed original and eight (8) copies) 
by September 28, 2006. A period of ten (10) minutes will be allotted to 
each person for making comments. An agenda showing the scheduling of 
the speakers will be prepared after the deadline for receiving outlines 
has passed. Copies of the agenda will be available free of charge at 
the hearing.

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.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 300 is proposed to be amended as follows:

PART 300--USER FEES

    Paragraph 1. The authority citation for part 300 continues to read 
as follows:

    Authority: 31 U.S.C. 9701.

    Par. 2. Section 300.0 is amended as follows:
    1. Paragraphs (b)(4), (5), and (6) are added.
    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 thirty days after the date of publication 
in the Federal Register of the final regulations.
    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 
$11.00 per part.
    (c) Person liable for the fee. The person liable for the special 
enrollment examination fee is the applicant taking the examination.
    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 $125.00.
    (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.
    Par. 5. Section 300.6 is added to read as follows:


Sec.  300.5  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 $125.00.
    (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.
[FR Doc. 06-7246 Filed 8-25-06; 12:09 pm]
BILLING CODE 4830-01-P