User Fees for Processing Installment Agreements and Offers in Compromise, 53702-53704 [2013-21243]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 78, Number 169 (Friday, August 30, 2013)]
[Proposed Rules]
[Pages 53702-53704]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21243]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 300

[REG-144990-12]
RIN 1545-BL37


User Fees for Processing Installment Agreements and Offers in 
Compromise

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 
that provide user fees for installment agreements and offers in 
compromise. The proposed amendments affect taxpayers who wish to pay 
their liabilities through installment agreements and offers in 
compromise. This document also provides a notice of public hearing on 
these proposed amendments to the regulations.

DATES: Written or electronic comments must be received by September 30, 
2013. Outlines of topics to be discussed at the public hearing 
scheduled for October 1, 2013, at 10 a.m. must be received by September 
30, 2013.

ADDRESSES: Send submissions to: Internal Revenue Service, CC:PA:LPD:PR 
(REG-144990-12), Room 5203, Post Office Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
144990-12), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20044, or sent electronically via the 
Federal eRulemaking Portal at https://www.regulations.gov (indicate IRS 
and REG-144990-12). The public hearing will be held in the IRS 
Auditorium beginning at 10 a.m. at the Internal Revenue Service 
Building, 1111 Constitution Avenue NW., Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning submissions and/or to be 
placed on the building access list to attend the hearing, 
Oluwafunmilayo (Funmi) Taylor, at (202) 622-7180; concerning cost 
methodology, Eva Williams, at (202) 435-5514; concerning the proposed 
regulations, Girish Prasad, at (202) 622-3620 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    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 
agencies (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 the Office of Management and Budget (OMB) Circular A-25, 58 FR 
38142 (July 15, 1993) (the OMB Circular).
    The OMB Circular encourages agencies to charge 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 OMB grants an 
exception.

Installment Agreements

    Section 6159 of the Internal Revenue Code (Code) authorizes the IRS 
to enter into an agreement with any taxpayer for the payment of tax in 
installments. 26 CFR 301.6159-1. Before entering into an installment 
agreement, the IRS may examine the taxpayer's financial position to 
determine whether such an

[[Page 53703]]

agreement is appropriate. Once the agreement is in effect, the IRS must 
process the payments and monitor compliance. Section 6331(k)(2) of the 
Code generally prohibits the IRS from levying to collect taxes while a 
request to enter into an installment agreement is pending, and if 
rejected for 30 days thereafter, and, if a timely appeal of rejection 
is filed, for the duration of the appeal. Section 6331(k)(2) of the 
Code also generally prohibits the IRS from levying to collect taxes 
while an installment agreement is 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.
    Under sections 300.1 and 300.2 of the Treasury Regulations, the IRS 
currently charges $105 for entering into an installment agreement, 
except that the fee is $52 for a direct debit installment agreement, 
which is an agreement whereby the taxpayer authorizes the IRS to 
request the monthly electronic transfer of funds from the taxpayer's 
bank account to the IRS, and the fee is $43 if the taxpayer is a low-
income taxpayer (notwithstanding the method of payment). Also, the IRS 
currently charges $45 for restructuring or reinstating an installment 
agreement that is in default. The amount of the fees has not changed 
since 2007. As required by the OMB Circular, the IRS recently completed 
a routine review of the installment agreement program and determined 
that the full cost of an installment agreement is $282, except that the 
cost is only $122 for a direct debit installment agreement. The IRS 
also determined that the full cost of restructuring or reinstating an 
installment agreement is $85.
    In accordance with the OMB Circular, these proposed amendments to 
the regulations increase the installment agreement fees to recover more 
of the costs associated with such agreements. The proposed regulations 
propose to charge less than full cost. While agencies are generally 
required to charge full cost, the OMB Circular permits exceptions to 
this requirement when the cost of collecting the fees would represent 
an unduly large part of the fee for the activity or any other condition 
exists that, in the opinion of the agency head or his designee, 
justifies an exception. OMB has granted an exception to the full cost 
requirement of the OMB Circular. After discussions with OMB, the 
proposed fee for entering into an installment agreement is $120, and 
the proposed fee for restructuring or reinstating an installment 
agreement is $50. The fee for a direct debit installment agreement 
remains $52, and low income taxpayers, as defined in 26 CFR 
300.1(b)(2), would continue to pay $43 for any new installment 
agreement, including a direct debit installment agreement. The proposed 
regulations do not increase the fee for direct debit installment 
agreements because these agreements have a significantly higher 
completion rate. The proposed fees balance the need to recover costs 
with the goals of encouraging the use of installment agreements in 
general and direct debit installment agreements in particular.

Offers in Compromise

    Section 7122 of the Internal Revenue Code gives the Secretary the 
authority to compromise any civil or criminal case arising under the 
internal revenue laws, prior to the referral of that case to the 
Department of Justice. An offer to compromise may be accepted if there 
is doubt as to liability, if there is doubt as to collectibility, or if 
acceptance will promote effective tax administration. 26 CFR 301.7122-
1(b). Before accepting an offer to compromise, the IRS must examine the 
taxpayer's financial position to determine whether such a compromise is 
appropriate unless it is an offer under section 7122(d)(3)(B) 
(regarding offers relating only to issues of liability). Once the IRS 
accepts an offer to compromise, the IRS must process the payments and 
monitor compliance. When the IRS accepts an offer to compromise, the 
taxpayer receives the benefit of resolving its tax liabilities for a 
compromised amount, provided the taxpayer complies with the terms of 
the compromise agreement. Further, section 6331(k)(1) of the Code 
generally prohibits the IRS from levying to collect taxes while a 
request to enter into an offer to compromise is pending, and if 
rejected for 30 days thereafter, and, if a timely appeal of a rejection 
is filed, for the duration of the appeal.
    Under section 300.3 of the Treasury Regulations, the IRS currently 
charges $150 for processing an offer to compromise, except that no fee 
is charged if an offer is based solely on doubt as to liability, or 
made by a low income taxpayer, as defined in 26 CFR 300.3(b)(1)(ii). 
Also, the fee is generally applied to the unpaid taxes if the offer is 
accepted to promote effective tax administration or accepted based on 
doubt as to collectibility (in this latter case, a determination must 
be made that collection of an amount greater than the amount offered 
would create economic hardship). The amount of the fee has not changed 
since 2003. As required by the OMB Circular, the IRS recently completed 
a routine review of the offer to compromise program and determined that 
the full cost of an offer to compromise is $2,718.
    In accordance with the OMB Circular, this proposed amendment to the 
regulations increases the offer to compromise fee to recover more of 
the costs associated with such offers. These proposed regulations 
propose to charge less than full cost. While agencies are generally 
required to charge full cost, the OMB Circular permits exceptions to 
this requirement when the cost of collecting the fees would represent 
an unduly large part of the fee for the activity or any other condition 
exists that, in the opinion of the agency head or his designee, 
justifies an exception. As with the installment agreement fees, OMB has 
granted an exception to the full cost requirement of the OMB Circular. 
After discussions with OMB, the proposed fee for processing an offer to 
compromise is $186. Low-income taxpayers and taxpayers making offers 
based solely on doubt as to liability will continue to pay no fee. 
Also, as now, the fee is generally applied to the unpaid taxes if the 
offer is accepted to promote effective tax administration or accepted 
based on doubt as to collectibility (in this latter case, a 
determination must be made that collection of an amount greater than 
the amount offered would create economic hardship). The proposed fee 
balances the need to recover costs with the goal of encouraging offers 
in compromise.
    The new fee rate for both installment agreements and offers in 
compromise will be effective January 1, 2014.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as supplemented by Executive Order 13563. 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 Code, this notice of 
proposed rulemaking will be submitted to the Chief Counsel for Advocacy 
of the Small Business

[[Page 53704]]

Administration for comment on its impact on small business.

Comments and Public Hearing

    Before these proposed amendments to the regulations are adopted as 
final regulations, consideration will be given to any comments that are 
submitted timely to the IRS as prescribed in this preamble under the 
``Addresses'' heading. The IRS and Treasury Department request comments 
on all aspects of the proposed regulations. All comments will be 
available at www.regulations.gov or upon request.
    A public hearing has been scheduled for October 1, 2013, beginning 
at 10 a.m. in the IRS Auditorium of the Internal Revenue Service 
Building, 1111 Constitution Avenue NW., Washington, DC 20044. Due to 
building security procedures, visitors must enter at the Constitution 
Avenue 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 written or 
electronic comments and submit an outline of the topics to be discussed 
and the amount of time to be devoted to each topic (a signed original 
and eight (8) copies) by September 30, 2013. 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 Kimberly Barsa of the 
Office of Associate Chief Counsel (Procedure and Administration).

List of Subjects in 26 CFR Part 300

    Estate taxes, Excise taxes, Gift taxes, Income taxes, 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

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

    Authority:  31 U.S.C. 9701.

0
Par. 2. In Sec.  300.1, paragraphs (b) introductory text and (d) are 
revised to read as follows:


Sec.  300.1  Installment agreement fee.

* * * * *
    (b) Fee. The fee for entering into an installment agreement before 
January 1, 2014, is $105. The fee for entering into an installment 
agreement on or after January 1, 2014, is $120. A reduced fee applies 
in the following situations:
* * * * *
    (d) Effective/applicability date. This section is applicable 
beginning January 1, 2014.
0
Par. 3. In Sec.  300.2, paragraphs (b) and (d) are revised to read as 
follows:


Sec.  300.2  Restructuring or reinstatement of installment agreement 
fee.

* * * * *
    (b) Fee. The fee for restructuring or reinstating an installment 
agreement before January 1, 2014, is $45. The fee for restructuring or 
reinstating an installment agreement on or after January 1, 2014, is 
$50.
* * * * *
    (d) Effective/applicability date. This section is applicable 
beginning January 1, 2014.
0
Par. 4. In Sec.  300.3, paragraphs (b)(1) introductory text and (d) are 
revised to read as follows:


Sec.  300.3  Offer to compromise fee.

* * * * *
    (b) Fee. (1) The fee for processing an offer to compromise before 
January 1, 2014, is $150. The fee for processing an offer to compromise 
on or after January 1, 2014, is $186. No fee will be charged if an 
offer is--
* * * * *
    (d) Effective/applicability date. This section is applicable 
beginning January 1, 2014.

Beth Tucker,
Deputy Commissioner for Operations Support.
[FR Doc. 2013-21243 Filed 8-29-13; 8:45 am]
BILLING CODE 4830-01-P