The IRS on Oct. 4 issued a proposal to raise user fees for enrollment of enrolled actuaries and renewals of their enrollment. This will affect individuals who apply to become an enrolled actuary or seek to renew their enrollment.
The IRS is proposing that the enrollment and renewal of enrollment user fees for enrolled actuaries be increased from $250.00 to $680.00. The proposal is contained in RIN 1545-BQ26.
The proposal comes on the heels of the IRS having issued a final rule on Sept. 27 that raises user fees for enrolled agents and enrolled retirement plan agents from $67 to $140.
About the Enrolled Actuary User Fee
An individual who has been granted new enrollment or renewal of enrollment as an enrolled actuary by the Joint Board for the Enrollment of Actuaries may perform actuarial services under ERISA and practice before the IRS. The Secretaries of Treasury and Labor established the Joint Board under ERISA.
The enrollment confers benefits on individuals who are enrolled actuaries beyond those that accrue to the public; because of that, the IRS charges a user fee to recover what it says is the full cost associated with the administration of the enrollment and renewal of enrollment processes.
T.D. 9370 established the user fee in 2007 and set the rate at $250. The Office of Management and Budget requires the IRS to conduct biennial reviews of this user fee.
The IRS conducted the last review in 2021 and calculated its costs associated with administering the enrolled actuary enrollment and renewal of enrollment processes. To determine the labor and benefits costs incurred to provide the service of enrolling actuaries, the IRS estimated the number of full-time employees required to conduct activities related to administering the enrollment and renewal of enrollment processes.
Calculating the Fee
The IRS considers both direct and indirect expenses; when the indirect cost of a service or activity is not specifically identified from the cost accounting system, an overhead rate is added to the identifiable direct cost to arrive at full cost. Overhead is the indirect cost of operating an organization that is not specifically identifiable with a single activity. Overhead costs can include:
- general management and administrative services of sustaining and supporting organizations;
- facilities management and ground maintenance services (security, rent, utilities, and building maintenance);
- procurement and contracting services;
- financial management and accounting services;
- information technology services;
- services to acquire and operate property, plants, and equipment;
- publication, reproduction, graphics and video services;
- research, analytical, and statistical services;
- human resources/personnel services; and
- library and legal services.
To calculate the overhead allocable to a specific service, the IRS multiplies an overhead rate by the estimated direct costs of the service. The IRS calculates the overhead rate annually based on the Statement of Net Cost included in the IRS annual financial statements. The overhead rate is the ratio of the IRS’s indirect costs, divided by direct costs of its organizational units.
The baseline for the labor and benefits estimate was the actual salary and benefits for fiscal year (FY) 2021. From this baseline, the IRS estimated the direct labor and benefits costs over the next three years using an inflation factor for FYs 2022, 2023, and 2024.
Comments Welcome
The IRS will accept comments on the proposed increase in electronic or written form. They must be received by 60 days after the proposal appears in the Federal Register.
Electronic submissions are to be made via the Federal eRulemaking Portal at www.regulations.gov; indicate IRS and REG-100719-21.
Paper submissions are to be made to: CC:PA:LPD:PR (REG-100719-21), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.
Public Hearing
The IRS will hold a public hearing by teleconference on Dec. 16, 2022 at 10 a.m. EDT. The IRS must receive requests to speak and outlines of topics to be discussed at the public hearing must be received by Dec. 14, 2022. Requests to attend the public hearing must be received by 5:00 p.m. EDT on Dec. 14, 2022.
Publication
The proposal is set to appear in the Federal Register of Oct. 5, 2022.
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