||October 2, 2006
Notice of Proposed Rulemaking and Notice of Public Hearing
User Fees for Processing Installment Agreements
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking and notice of public hearing.
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.
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.
Send submissions to: CC:PA:LPD:PR (REG-148576-05), room 5203, 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, 202-435-5514; concerning the proposed regulations, William Beard,
202-622-3620 (not toll-free numbers).
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.
These regulations are proposed to be effective thirty days after the
date of publication in the Federal Register of
the final regulations.
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 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 10:00 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.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 300 is proposed to be amended as follows:
Paragraph 1. The authority citation for part 300 continues to read
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:
§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:
§300.2 Restructuring or reinstatement of installment
* * * * *
(b) * * * Effective January 1, 2007, the fee for restructuring or reinstating
an installment agreement is $45.
* * * * *
Mark E. Matthews,
Services and Enforcement.
(Filed by the Office of the Federal Register on August 29, 2006, 8:45
a.m., and published in the issue of the Federal Register for August 30, 2006,
71 F.R. 51538)
The principal author of these regulations is William Beard, Office of
Associate Chief Counsel (Procedure and Administration), Collection, Bankruptcy
and Summonses Division.
* * * * *
Internal Revenue Bulletin 2006-40
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