[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Rules and Regulations]
[Pages 72366-72370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23301]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 300

[TD 9982]
RIN 1545-BQ26


User Fees Relating to Enrolled Actuaries

AGENCY: Internal Revenue Service (IRS), Treasury.

[[Page 72367]]


ACTION: Final regulations.

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SUMMARY: These final regulations amend existing regulations relating to 
user fees for enrolled actuaries. The final regulations increase both 
the enrollment and renewal of enrollment user fees for enrolled 
actuaries from $250 to $680. These regulations affect individuals who 
apply to become an enrolled actuary or seek to renew their enrollment. 
The Independent Offices Appropriation Act of 1952 authorizes charging 
user fees.

DATES: 
    Effective date: These regulations are effective on October 20, 
2023.
    Applicability date: For the applicability dates, see Sec. Sec.  
300.7(d) and 300.8(d).

FOR FURTHER INFORMATION CONTACT: Carolyn M. Lee at 202-317-6845 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains amendments to 26 CFR part 300--User Fees. On 
October 5, 2022, a notice of proposed rulemaking (NPRM) (REG-100719-21) 
and notice of public hearing was published in the Federal Register (87 
FR 60357). The NPRM proposed amending the regulations relating to the 
user fees for enrolled actuaries. The document proposed increasing the 
amount of the user fee for both the new enrollment and renewal of 
enrollment for enrolled actuaries from $250 to $680 per enrollment 
application or renewal application. The NPRM contained a detailed 
explanation of the legal background and user fee calculations regarding 
the amendment to these regulations.
    Four comments were submitted in response to the notice of proposed 
rulemaking. There were no requests to speak at the scheduled public 
hearing. Consequently, the public hearing was cancelled (87 FR 80109). 
After consideration of the written comments, the Department of the 
Treasury (Treasury Department) and the IRS have decided to adopt 
without modification the regulations proposed by the notice of proposed 
rulemaking.

Summary of Comments

    The four comments submitted in response to the notice of proposed 
rulemaking are available at https://www.regulations.gov or upon 
request.

1. Comments Not Seeking Modification or Clarification of the User Fee

    Some comments did not address modification or clarification of the 
user fee.
    One comment expressed concern about the applicability date of the 
user fees for enrolled actuaries who apply to renew their enrollment 
for the 2023-2025 enrollment cycle. The proposed regulation amending 26 
CFR 300.8, Renewal of enrollment of enrolled actuary fee, stated the 
effective date would be 30 days after the regulation is published as a 
final regulation in the Federal Register. The comment noted that 
applications for the enrollment renewal would be available in early 
January 2023 to enrolled actuaries seeking to renew their enrollment 
for the 2023-2025 enrollment cycle, and renewal of enrollment 
applications and fees must be submitted by March 1, 2023, to be 
effective beginning April 1, 2023. These final regulations are being 
published after the close of the 2023 season for timely renewal of 
enrollment. Consequently, the $250 renewal of enrollment user fee in 
effect on January 1, 2023, was in effect throughout the timely renewal 
season that closed March 1, 2023.
    Another comment recommended adding a provision to the user fee 
regulations to eliminate the in-person continuing education formal 
program requirements. Continuing education requirements for enrolled 
actuaries are governed by 20 CFR 901.11. The comment regarding 
continuing education requirements for enrolled actuaries is outside the 
scope of these regulations.
    In addition, a comment recommended that the Joint Board for the 
Enrollment of Actuaries (Joint Board) consider approaches to make its 
cost structure more efficient, presenting as examples adopting a longer 
enrollment cycle, and making the continuing professional education 
(CPE) audit process more efficient for enrolled actuaries and for 
qualifying sponsors of enrolled actuary continuing education. These 
regulations relate to the methodology used to determine user fees for 
new enrollment and renewal of enrollments. The operation of the Joint 
Board is outside the scope of these regulations. Nonetheless, the IRS 
continually looks for program efficiencies, which it takes into 
consideration during the enrolled actuary user fee biennial review.

2. Comments Seeking Modification or Clarification of the User Fee

    The summary of comments below addresses those comments that make 
recommendations concerning, or seeking clarification of, the user fees 
set forth in the proposed regulations relating to the user fees for new 
enrollments and renewal of enrollments for enrolled actuaries.
A. Enrolled Actuary Enrollment Processes Must Be Financially Self-
Sustaining
    One comment questioned why the user fee is calculated based on the 
number of enrolled actuary applicants. Enrolled actuary applicants 
seeking to be enrolled as new enrolled actuaries or to renew their 
enrolled actuary enrollment are the principal beneficiaries of the 
services provided by the Joint Board; that is, the enrolled actuary new 
enrollment and renewal of enrollment processes conducted by the IRS 
Return Preparer Office (RPO) under the oversight of the Joint Board. An 
individual who has been granted new enrollment or renewal of enrollment 
as an enrolled actuary by the Joint Board may perform pension actuarial 
services under the Employee Retirement Income Security Act of 1974 
(ERISA) Public Law 93-406, Title III, section 3042, Sept. 2, 1974, 88 
Stat. 1002, and practice before the IRS as provided by the rules 
governing practice before the IRS, published in 31 CFR subtitle A, part 
10, and reprinted as Treasury Department Circular No. 230 (Circular 
230). Enrollment confers special benefits on individuals who are 
enrolled actuaries beyond those that accrue to the general public.
    The Independent Offices Appropriation Act of 1952 (IOAA) (31 U.S.C. 
9701) authorizes each agency to promulgate regulations establishing the 
charge for services the agency provides (user fees). The IOAA states 
that the services provided by an agency should be self-sustaining to 
the extent possible. 31 U.S.C. 9701(a). The IOAA provides that user fee 
regulations are subject to policies prescribed by the President. The 
policies are currently set forth in the Office of Management and Budget 
(OMB) Circular A-25 (OMB Circular A-25), 58 FR 38142 (July 15, 1993).
    Section 6a(1) of OMB Circular A-25 states that when a service 
offered by an agency confers special benefits to identifiable 
recipients beyond those accruing to the general public, the agency is 
to charge a user fee to recover the full cost of providing the service 
(unless the agency requests, and the OMB grants, an exception to the 
full-cost requirement). An agency that seeks to impose a user fee for 
government-provided services must calculate the full cost of providing 
those services.
    In accordance with OMB Circular A-25, the RPO completed its 2021 
biennial review of the enrollment and renewal of enrollment user fees 
associated with enrolled actuaries. As discussed in the notice of 
proposed rulemaking, during its review, the RPO took into account

[[Page 72368]]

increases in labor, benefits, and overhead costs incurred in connection 
with providing enrollment services to individuals who enroll or renew 
enrollment as enrolled actuaries since the user fee was promulgated in 
2007. The costs include activities related to verifying that an 
individual meets the requirements for enrollment or renewal of 
enrollment as an enrolled actuary. The RPO also took into account a 
reallocation of certain labor costs in their methodology to include 
costs associated with certain human resource matters, formalizing 
policies and procedures, and other administrative support. The RPO 
followed the generally accepted accounting principles established by 
the Federal Accounting Standards Advisory Board.
    As required by section 6a(1) of OMB Circular A-25, the costs 
allocated to the enrollment and renewal processes for enrolled 
actuaries are borne in full by the identifiable group of actuaries who 
apply for new enrollment and renewal of enrollment services. 
Accordingly, the number of enrolled actuary applicants is used by the 
RPO to determine the per-applicant user fee. As described in the 
proposed regulations, to arrive at the total cost per application, the 
IRS divided the estimated three-year total of enrolled actuary costs by 
the total volume of applications expected over the same three-year 
period. Based on the number of applicants, the full cost of 
administering the enrollment and renewal for enrollment processes for 
enrolled actuaries increased from $250 to $680 per enrollment.
B. Justification for the Increase in User Fees
    Several comments were received expressing concern about the amount 
by which the user fees increased, and sought clarification for what 
caused the increase. One commenter requested an explanation of the 
difference in outcomes between the 2019 biennial review when user fees 
were not increased and the 2021 biennial review. Commenters also 
inquired about the factors causing the reallocation of RPO's human 
resources, resulting in RPO's correction during the 2021 biennial 
review of the average time allocated to enrolled actuary enrollment and 
renewal of enrollment processes from 40 percent to 65 percent. Another 
commenter, questioning the increase in enrollment user fees between the 
2019 biennial review and the 2021 biennial review, stated for 
comparison that the Bureau of Labor Statistics (BLS) Employment Cost 
Index (ECI) for private industry worker wages and salaries showed an 
increase of no more than 10 percent to 15 percent from the 2020-2022 
enrollment cycle to the 2023-2025 enrollment cycle. The same commenter 
observed that many of the intellectual capital services the Treasury 
Department and the IRS provide across the organization are not directly 
relevant to enrolled actuaries and the services they provide to 
qualified pension plans. In the same vein, a commenter expressed an 
incorrect belief that the enrolled actuary enrollment user fees include 
costs not attributable to the enrolled actuary program for government 
employees who, among their overall responsibilities not allocated to 
the enrolled actuary program, have duties including working for the 
Joint Board.
    More specifically, a commenter questioned the accuracy of the IRS's 
determination that 65 percent of four RPO employees' time is dedicated 
to enrollment activities during the three-year enrollment cycle, given 
the unevenness in enrollments and renewals during each of the three 
years. The 2021 biennial review was based on 214 applications in 2018, 
132 applications in 2019, and 3,584 applications in 2020. According to 
this commenter, if the volume of applications is uneven, the percentage 
of time IRS employees spend working on enrollment activities would be 
similarly uneven and would not average 65 percent over the three-year 
enrollment cycle. Another commenter requested information about the 
change in the number of applicants relative to prior years. The 
commenter posited that if enrollments were decreasing, enrollment 
processes costs also should decrease because there are fewer 
applications to review. Enrolled actuary total new and renewal of 
enrollment applications have declined. The 2021 biennial review, based 
on fiscal years 2018, 2019, and 2020, showed approximately 450 fewer 
enrolled actuary applicants compared to the previous cycles.
    These comments generally reflect an assumption that the enrolled 
actuary enrollment fees are solely attributable to enrollment 
applications processing. As explained in the proposed regulations, the 
methodology for calculating full costs associated with new and renewal 
of enrollment applications was updated during the 2021 biennial review. 
Prior costing analyses only considered the time associated with the 
actual processing of new and renewal of enrollment applications. 
However, application processing is only one aspect of the cost 
analysis. The current increase in user fees was, in part, the result of 
the RPO determining that the methodology previously used to compute 
labor allocations was outdated and did not capture the full costs 
associated with administering enrolled actuary enrollment and renewal 
of enrollment. Under the previous methodology, the salaries and 
benefits of RPO staff supporting the new and renewal of enrollment of 
enrolled actuaries were computed at 40 percent of four RPO staff 
members' salaries and benefits, with associated overhead. To more 
accurately calculate the full RPO costs directly associated with the 
enrolled actuary enrollment program, the updated costing analysis 
accounts for not only the time and resources involved in application 
processing, but also the additional time and resources spent to 
administer the enrolled actuary program. These activities continue 
throughout the three-year enrollment cycle even though enrollment 
application volume fluctuates. The RPO's responsibilities with respect 
to the enrolled actuary program beyond application processing include 
conducting yearly tax compliance and continuing professional education 
(CPE) audits of enrolled actuaries, communicating with inactive 
enrolled actuaries, implementing regulatory improvements, investigating 
discipline cases, and supporting the work of Joint Board Advisory 
Committee members.
    The 2021 biennial review established that four RPO employees 
devoted an average of 65 percent of their time over the three-year 
enrollment cycle to enrolled actuary enrollment activities. 
Accordingly, the correct allocation of RPO's labor costs to the 
enrolled actuary enrollment and renewal of enrollment processes was 65 
percent of the four RPO staff members' time, which was used to 
calculate the user fees in these final regulations. More specifically, 
during the 2021 biennial review, the IRS projected the estimated costs 
of direct labor and benefits based on the actual salary and benefits of 
the four employees who devote time to conducting enrolled actuary 
enrollment and renewal of enrollment processes, reduced to reflect the 
percentage of time each individual actually spends on those activities. 
The RPO's managers estimated the percentage of time these employees 
devoted to conducting enrollment activities based on the managers' 
knowledge of program assignments. In addition, the full costs of 
related oversight and support costs, plus travel, training, and 
supplies, were included in the 2021 biennial review user fee 
computations. These costs had not been included in the user fee 
computation previously.

[[Page 72369]]

    Applying the refined methodology and including full costs in the 
2021 biennial review resulted in the increase of $430 in new and 
renewal of enrollment user fees for the three-year enrollment cycle to 
$680, or $143.33 per year.
    One commenter appeared to not understand that the change in the 
internal allocation methodology applied only to the RPO staff who 
actually provided the enrollment services. This commenter observed that 
a change in the Treasury Department's and IRS's internal allocation 
methodology for human resources should not result in a significant 
increase in enrolled actuary user fees because many of the services the 
agencies provide are not directly relevant to enrolled actuaries. Human 
resource allocation throughout the Treasury Department was not used as 
a cost factor attributed to the four RPO staff providing enrollment 
services. Neither were costs associated with agency-wide IRS human 
resource allocation; instead, those costs were one of several indirect 
costs used to compute the overhead rate included in the rate 
calculation methodology as described in the notice of proposed 
rulemaking.
C. Impact of User Fees on New and Renewal of Enrollments
    Two comments questioned whether increasing user fees may discourage 
individuals from enrolling as enrolled actuaries or renewing their 
enrollment. These commenters were concerned that a decline in the 
number of enrolled actuaries could minimize the competition for 
services, which could result in increased costs passed to the consumers 
of services provided by enrolled actuaries. One commenter queried 
whether there had been consideration given to phasing in the increased 
user fees and implementing a cap on the user fees. The same commenter 
stated that, in circumstances of declining enrolled actuary enrollment, 
the remaining enrolled actuaries might in effect be penalized by 
substantially increasing user fees. This commenter observed that 
requiring enrolled actuaries to bear the full cost of enrollment 
processing may be to the detriment, instead of the benefit, of the 
enrollment of actuaries.
    The Treasury Department and the IRS recognize the valuable service 
enrolled actuaries provide to taxpayers. As discussed in section 2.A of 
the Summary of Comments, OMB Circular A-25 states that when a service 
offered by a Federal agency provides special benefits to identifiable 
recipients beyond those accruing to the general public, the agency will 
establish a user fee to recover the full cost to the government of 
providing the service (unless the agency requests, and the OMB grants, 
an exception to the full-cost requirement). Also discussed in section 
2.A of the Summary of Comments, the IRS confers benefits on individuals 
who are enrolled actuaries beyond those that accrue to the general 
public by allowing them to perform pension actuarial services under 
ERISA and to practice before the IRS. The Treasury Department and the 
IRS comply with OMB Circular A-25 by charging user fees to recover the 
full cost of overseeing the enrollment and renewal of enrollment 
processes. Based on the 2021 biennial review, the RPO determined that 
the full cost of administering the enrolled actuary new and renewal of 
enrollment processes increased from $250 to $680 per enrollment 
application for the three-year enrollment period. The fee is an 
increase of $143.33 per year for the period. The Treasury Department 
and the IRS have not requested an exception from the OMB because there 
is no data that indicates the user fee for new enrollment or renewal of 
enrollment is cost prohibitive or that any other condition exists that 
justifies an exception.
D. Applicability of OMB Circular A-25
    One commenter queried whether there should be an exemption from the 
user fee in certain circumstances, as permitted by OMB Circular A-25. 
As an example, the commenter described a scenario when enrolled actuary 
status is required to qualify for employment but the employment 
position itself does not involve providing pension actuarial services 
or representing a taxpayer before the IRS. According to the commenter, 
the enrolled actuary in this scenario should not be subject to the user 
fee because the employer does not benefit from the performance of the 
particular services the enrolled actuary status permits. This is a 
misunderstanding of the role ``benefit'' plays in the OMB Circular A-25 
requirement to charge a user fee. As explained in the notice of 
proposed rulemaking and this preamble, the user fee is required to 
recover the full cost of providing the service of new and renewal of 
enrollment to an individual who has been approved by the Joint Board to 
perform actuarial services required under ERISA and to represent 
clients in certain circumstances before the IRS. This service confers 
special benefits to the enrolled actuary. Any third-party benefit, such 
as to an enrolled actuary's employer or clients, is not a consideration 
with respect to the OMB Circular A-25 requirement. The scenario 
presented by the commenter does not justify an exception to the full-
cost recovery requirement.

Special Analyses

I. Regulatory Planning and Review

    Pursuant to the Memorandum of Agreement, Review of Treasury 
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory 
actions issued by the IRS are not subject to the requirements of 
section 6(b) of Executive Order 12866, as amended. Therefore, a 
regulatory impact assessment is not required.

II. Regulatory Flexibility Act (RFA)

    The notice of proposed rulemaking included an initial regulatory 
flexibility analysis (IRFA). No comments pertaining to the analysis 
were received. Based on the IRFA, the Treasury Department and the IRS 
determined the rule is not expected to have a significant economic 
impact on a substantial number of small entities and a final regulatory 
flexibility analysis is not required. As discussed in the IRFA, the 
regulations affect actuaries who apply for enrollment as an enrolled 
actuary or renewal of enrollment with the Joint Board. Only 
individuals, not businesses, can apply for new enrollment or to renew 
enrolled actuary certification. Therefore, the economic impact of these 
regulations, an increase of $143.33 per year for the three-year 
enrollment period, on any small entity generally will be the result of 
an individual actuary owning a small business, or a small business 
employing an actuary and requiring the individual to apply for enrolled 
actuary status or renew as an enrolled actuary with the Joint Board. 
Pursuant to the RFA (5 U.S.C. chapter 6), it is hereby certified that 
these regulations will not have a significant economic impact on a 
substantial number of small entities.
    Pursuant to section 7805(f) of the Internal Revenue Code, the 
notice of proposed rulemaking was submitted to the Office of Chief 
Counsel for Advocacy of the Small Business Administration (SBA) for 
comment on its impact on small business. The Chief Counsel for the 
Office of Advocacy of the SBA did not provide any comments.

III. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a final rule that includes any 
Federal mandate that may

[[Page 72370]]

result in expenditures in any one year by a state, local, or tribal 
government, in the aggregate, or by the private sector, of $100 million 
in 1995 dollars, updated annually for inflation. This rule does not 
include any Federal mandate that may result in expenditures by state, 
local, or tribal governments, or by the private sector in excess of 
that threshold.

IV. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on state and local 
governments, and is not required by statute, or preempts state law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive order. These final regulations do not have 
federalism implications and do not impose substantial direct compliance 
costs on state and local governments or preempt state law within the 
meaning of the Executive order.

V. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

Drafting Information

    The principal author of these regulations is Carolyn M. Lee, Office 
of the Associate Chief Counsel (Procedure and Administration). Other 
personnel from the Treasury Department and the IRS participated in the 
development of the regulations.

List of Subjects in 26 CFR Part 300

    Reporting and recordkeeping requirements, Use fees.

Adoption of Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS amend 26 CFR part 
300 as follows:

PART 300--USER FEES

0
Paragraph 1. The authority citation for part 300 continues to read as 
follows:

    Authority:  31 U.S.C. 9701.


0
Par. 2. Section 300.7 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec.  300.7  Enrollment of enrolled actuary fee.

* * * * *
    (b) Fee. The fee for initially enrolling as an enrolled actuary 
with the Joint Board for the Enrollment of Actuaries is $680.00.
* * * * *
    (d) Applicability date. This section is applicable beginning 
November 20, 2023.


0
Par. 3. Section 300.8 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec.  300.8  Renewal of enrollment of enrolled actuary fee.

* * * * *
    (b) Fee. The fee for renewal of enrollment as an enrolled actuary 
with the Joint Board for the Enrollment of Actuaries is $680.00.
* * * * *
    (d) Applicability date. This section is applicable beginning 
November 20, 2023.

Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
    Approved: October 4, 2023.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2023-23301 Filed 10-19-23; 8:45 am]
BILLING CODE 4830-01-P