User Fees for Processing Installment Agreements, 51538-51540 [E6-14421]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 71, Number 168 (Wednesday, August 30, 2006)]
[Proposed Rules]
[Pages 51538-51540]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14421]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 300

[REG-148576-05]
RIN 1545-BF69


User Fees for Processing Installment Agreements

AGENCY: Internal Revenue Service (IRS), Treasury.

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

-----------------------------------------------------------------------

SUMMARY: This document contains proposed amendments to the regulations 
relating to user fees for installment agreements. The proposed 
amendments affect taxpayers who wish to pay their liabilities through 
installment agreements. This document also contains a notice of public 
hearing on these proposed regulations.

DATES: Written and electronic comments must be received by September 
29, 2006. Outlines of topics to be discussed at the public hearing 
scheduled for October 17, 2006, must be received by September 25, 2006.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-148576-05), Internal 
Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. 
Alternatively, taxpayers may send submissions electronically directly 
to the IRS Internet site at www.irs.gov/regs, or via the Federal e-
Rulemaking Portal at www.regulations.gov (IRS REG-148576-05). The 
public hearing will be held in the auditorium of the New Carrollton 
Federal Building, 5000 Ellin Road, Lanham, MD.

FOR FURTHER INFORMATION CONTACT: Concerning submissions and/or to be 
placed on the building access list to attend the hearing, Kelly Banks, 
202-622-7180; concerning cost methodology, Eva Williams, 202-435-

[[Page 51539]]

5514; concerning the proposed regulations, William Beard, 202-622-3620 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    The Independent Offices Appropriations Act (IOAA), which is 
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 must 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 provides 
that regulations implementing user fees are subject to policies 
prescribed by the President. Those policies 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, the amount of a user fee should recover the cost of providing 
the service, unless the Office of Management and Budget (OMB) grants an 
exception.
    Section 6159 authorizes the IRS to enter into an agreement with any 
taxpayer for the payment of tax in installments. Section 6331(k) 
generally prohibits the IRS from levying to collect taxes while an 
installment agreement in effect. A taxpayer that enters into an 
installment agreement therefore receives a special benefit of being 
allowed to pay an outstanding tax obligation over time. Before entering 
into an installment agreement, the IRS must examine the taxpayer's 
financial position to determine whether such an agreement is 
appropriate. Once the agreement is in effect, the IRS must process the 
payments and monitor compliance.
    Under sections 300.1 and 300.2, the IRS currently charges $43 for 
entering into an installment agreement and $24 for restructuring an 
installment agreement or reinstating an installment agreement that is 
in default. The amount of the fees has not changed since the fees were 
first implemented in 1995. As required by the OMB Circular, the IRS 
recently completed a review of the installment agreement program and 
determined that the full cost of an installment agreement is $105. The 
IRS also determined that the full cost of restructuring or reinstating 
an installment agreement is $45. The higher costs associated with 
installment agreements result from increases in labor and other costs 
since 1995 and refinements in the costing model to better account for 
the full cost of an installment agreement. In accordance with the OMB 
Circular, these proposed regulations increase the fees to bring them in 
line with actual costs.
    These proposed regulations propose to charge less than full cost 
for entering into an installment agreement in cases where the taxpayer 
chooses to pay by way of a direct debit from the taxpayer's bank 
account. The proposed fee for such an installment agreement is $52. The 
reduced fee would only apply to new installment agreements; the charge 
would still be $45 for restructuring or reinstating an installment 
agreement, regardless of the method of payment. While the OMB Circular 
requires agencies to charge full cost, OMB has granted an exception to 
the full cost requirement of the OMB Circular for direct debit 
installment agreements. In addition, the IRS believes that charging 
less than full cost will encourage taxpayers to choose to pay by direct 
debit. The IRS has determined that the default rate on direct debit 
installment agreements is much lower than that for other agreements. 
These agreements are therefore beneficial both to taxpayers and to tax 
collection.

Proposed Effective Date

    These regulations are proposed to be effective 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 the entity 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. 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 on small business.

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 the Treasury Department request comments on the 
clarity of the proposed regulations and how they may be made easier to 
understand. All comments will be available for public inspection and 
copying.
    A public hearing has been scheduled for October 17, 2006, at 10 
a.m. in the auditorium of the New Carrollton Federal Building, 5000 
Ellin Rd., Lanham, MD. Due to building security procedures, visitors 
must enter at the main entrance. In addition, 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 Monday, September 25, 2006. A period of 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 William Beard, Office 
of Associate Chief Counsel (Procedure and Administration), Collection, 
Bankruptcy and Summonses Division.

Lists 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:

[[Page 51540]]

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 300.1(b) is amended by adding a sentence to the end 
of the paragraph to read as follows:


Sec.  300.1  Installment agreement fee.

* * * * *
    (b) * * * Effective January 1, 2007, the fee for entering into an 
installment agreement is $105, except that the fee is $52 when the 
taxpayer pays by way of a direct debit from the taxpayer's bank 
account.
* * * * *
    Par. 3. Section 300.2(b) is amended by adding a sentence to the end 
of the paragraph to read as follows:


Sec.  300.2  Restructuring or reinstatement of installment agreement 
fee.

* * * * *
    (b) * * * Effective January 1, 2007, the fee for restructuring or 
reinstating an installment agreement is $45.
* * * * *

Mark. E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E6-14421 Filed 8-29-06; 8:45 am]
BILLING CODE 4830-01-P