81 FR 4221 - Special Enrollment Examination User Fee for Enrolled Agents

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 16 (January 26, 2016)

This document contains proposed amendments to the regulation relating to the user fee for the special enrollment examination to become an enrolled agent. 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 this proposed regulation. The proposed regulation affects individuals taking the enrolled agent special enrollment examination.

[Federal Register Volume 81, Number 16 (Tuesday, January 26, 2016)]
[Proposed Rules]
[Pages 4221-4223]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-01629]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-134122-15]
RIN 1545-BN09


Special Enrollment Examination User Fee for Enrolled Agents

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 regulation 
relating to the user fee for the special enrollment examination to 
become an enrolled agent. 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 this proposed 
regulation. The proposed regulation affects individuals taking the 
enrolled agent special enrollment examination.

DATES: Written or electronic comments must be received by February 24, 
2016. Requests to speak and outlines of topics to be discussed at the 
public hearing scheduled for February 25, 2016, must be received by 
February 24, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-134122-15), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered between the 
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-134122-15), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC, or sent via the Federal eRulemaking Portal at 
www.regulations.gov (IRS REG-134122-15). The public hearing will be 
held in the IRS Auditorium, Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning this proposed regulation, 
Jonathan R. Black, (202) 317-6845; concerning submissions of comments 
and/or requests for a hearing, Regina Johnson (202) 317-6901 (not toll-
free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Section 330 of title 31 of the United States Code authorizes the 
Secretary of the Treasury to regulate the practice of representatives 
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 the regulations as Treasury 
Department Circular No. 230 (Circular 230). Circular 230 is 
administered by the IRS Office of Professional Responsibility (OPR).
    Section 10.4(a) of Circular 230 authorizes the IRS to grant status 
as enrolled agents to individuals who demonstrate special competence in 
tax matters by passing a written examination (Enrolled Agent Special 
Enrollment Examination (EA-SEE)) administered by, or under the 
oversight of, the IRS and who have not engaged in any conduct that 
would justify suspension or disbarment under Circular 230. Starting in 
2006, the IRS engaged the services of a third-party contractor to 
develop and administer the EA-SEE.
    After becoming enrolled, an enrolled agent must, as provided in 
Sec.  10.6(d), renew enrollment every three years to maintain active 
enrollment and to be able to practice before the IRS. To qualify for 
renewal, an enrolled agent must certify the completion of the 
continuing education requirements set forth in Sec.  10.6(e). There are 
currently approximately 55,600 enrolled agents.

[[Page 4222]]

    The EA-SEE is comprised of three parts, which are offered in a 
testing period that begins each May 1 and ends the last day of the 
following February. The EA-SEE is not available in March and April, 
during which period it is updated to reflect changes in the relevant 
law. When it determined the current fee, the IRS estimated that 
individuals would take 34,000 parts of the EA-SEE each year. That 
number of parts has not been reached in any year. In the testing 
periods beginning in 2012, 2013, and 2014, the contractor administered 
approximately 18,900, 19,500, and 22,400 parts of the EA-SEE, 
respectively. During the testing period beginning May 2016, the IRS 
estimates that individuals taking the EA-SEE will take 20,000 parts. 
More information on the EA-SEE, including content, scoring, and how to 
register, can be found on the IRS Web site at www.irs.gov/Tax-Professionals/Enrolled-Agents/.
    The Independent Offices Appropriations Act (IOAA) of 1952, which is 
codified at 31 U.S.C. 9701, authorizes agencies to prescribe 
regulations that establish charges for services they provide. These 
charges include 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, which are currently 
set forth in the Office of Management and Budget 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 the full 
cost of providing those services. In general, a user fee should be set 
at an amount that allows the agency to recover the full cost of 
providing the special service, unless the Office of Management and 
Budget grants an exception.
    As discussed above, Circular 230 Sec.  10.4(a) provides that IRS 
will grant enrolled agent status to an applicant if the applicant, 
among other things, demonstrates special competence in tax matters by 
written examination. The EA-SEE is the written examination that tests 
special competence in tax matters for purposes of that provision, and 
an applicant must pass all parts of the EA-SEE to be granted enrolled 
agent status through written examination. The IRS confers a benefit on 
individuals who take the EA-SEE beyond those that accrue to the general 
public by providing them with an opportunity to demonstrate special 
competence in tax matters by passing a written examination and 
therefore satisfying one of the requirements for becoming an enrolled 
agent under Circular 230 Sec.  10.4(a). Because the opportunity to take 
the EA-SEE is a special benefit, IRS charges a user fee to take the 
examination.
    Pursuant to the guidelines in the OMB Circular, the IRS has 
calculated its cost of providing examination services under the 
enrolled agent program. The proposed user fee will be implemented under 
the authority of the IOAA and the OMB Circular and will recover the 
full cost of overseeing the program. The current user fee is $11 to 
take each part of the EA-SEE. The contractor who administers the EA-SEE 
also charges individuals taking the EA-SEE an additional fee for its 
services. For the May 2015 to February 2016 testing period, the 
contractor's fee is $98 for each part of the EA-SEE.
    Increased costs incurred by the IRS to implement the EA-SEE program 
require an increase in the EA-SEE user fee. These increased costs are 
primarily attributable to the following: (1) The cost for background 
checks required under Publication 4812, ``Contractor Security 
Controls,'' for individuals working at the contractor's testing centers 
increased by $270,000 per year; (2) the IRS estimates that the 
contractor will administer 14,000 fewer parts of the EA-SEE per year 
than the estimated number used to calculate the $11 fee, and the total 
costs are therefore being recovered from fewer individuals; and (3) the 
IRS's costs of verifying the contractor's compliance with the 
information technology security requirements necessary to protect the 
personally identifiable information of individuals taking the EA-SEE 
have increased, because Publication 4812 has strengthened those 
requirements.
    In addition, IRS original estimates of the cost to oversee the 
contract did not cover all the work the IRS now performs. The proposed 
fee more accurately accounts for the time and personnel necessary to 
oversee the development and administration of the EA-SEE and to ensure 
the contractor complies with the terms of its contract. IRS costs for 
oversight include costs associated with: (1) Review and approval of 
materials used by the contractor in developing the EA-SEE; (2) review 
of surveys of existing enrolled agents, which help to determine the 
topics to be covered in the EA-SEE; (3) composition of potential EA-SEE 
questions in coordination with the contractor's external tax law 
experts; (4) Office of Chief Counsel review and revision of the 
potential questions for legal accuracy; and (5) analysis of the answers 
and raw scores of a testing population to determine what should be a 
passing score.
    Further, IRS personnel ensure the contractor's compliance with its 
contract by reviewing the work of the contractor using an annual Work 
Breakdown Structure--a project management tool--and reviewing and 
verifying that the contractor is in compliance with its Quality 
Assurance Plan regarding customer satisfaction and accuracy. The IRS 
incurs additional costs associated with resolution of test-related 
issues such as cheating incidents, appeals regarding scores, refund 
requests, and customer service complaints that have not been resolved 
at the contractor level.
    Taking into account the full amount of these costs, the user fee 
for the EA-SEE is proposed to be increased to $99 per part.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
this proposed regulation.
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it 
is hereby certified that this proposed regulation, if adopted, would 
not have a significant economic impact on a substantial number of small 
entities because it primarily affects individuals who take the enrolled 
agent examination and does not directly affect small entities. 
Accordingly, a regulatory flexibility analysis is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, this notice 
of proposed rulemaking has been 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 this proposed regulation is adopted as a final regulation, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in the preamble under the ADDRESSES section. 
The Treasury Department and the IRS request comments on all aspects of 
the proposed regulation. All comments

[[Page 4223]]

submitted will be made available at www.regulations.gov or upon 
request.
    A public hearing has been scheduled for February 25, 2016, 
beginning at 10:00 a.m. in the IRS Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue NW., Washington, DC. Due to building 
security procedures, visitors must enter at the Constitution Avenue 
entrance. 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 an outline of the topics to be discussed and 
the time to be devoted to each topic by February 24, 2016. A period of 
10 minutes will be allocated 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 this regulation is Jonathan R. Black of the 
Office of the Associate Chief Counsel (Procedure and Administration).

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

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

    Authority:  31 U.S.C. 9701.

0
Par. 2. Section 300.4 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec.  300.4  Enrolled agent special enrollment examination fee.

* * * * *
    (b) Fee. The fee for taking the enrolled agent special enrollment 
examination is $99 per part, which is the cost to the government for 
overseeing the development and administration of the examination and 
does not include any fees charged by the administrator of the 
examination.
* * * * *
    (d) Effective/applicability date. This section applies on and after 
the date of publication of a Treasury decision adopting this rule as a 
final regulation in the Federal Register.

Karen M. Schiller,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-01629 Filed 1-25-16; 8:45 am]
 BILLING CODE 4830-01-P