IRS Raises User Fees for Enrolled Agents and Enrolled Retirement Plan Agents

The IRS on Sept. 27 announced in TD 9966 that it is raising user fees for enrolled agents (EAs) and enrolled retirement plan agents (ERPAs). These final regulations affect individuals who are, or apply to become, enrolled agents and individuals who are enrolled retirement plan agents. 

The enrollment user fee is a one-time cost, and renewal of enrollment user fees are due once every three years. The final regulations increase the following fees from $67 to $140:

• renewal user fee for ERPAs; 
• enrollment user fees for EAs; and 
• renewal of enrollment user fees for EAs. 

The IRS Return Preparer Office (RPO) determined in its 2021 biennial review of the enrollment and renewal of enrollment user fees associated with EAs and ERPAs that the full cost of administering the program had increased from $67 to $140 per application for enrollment or renewal of enrollment — a $73 increase per application for enrollment or renewal of enrollment. The increase amounts to an additional $24.33 per year for the period 2022-2025.

Background

On March 1, 2022, the IRS had issued a notice of proposed rulemaking (REG-114209-21) saying that it was proposing to increase the fees for EAs and ERPAs in the manner described in the final regulations it just issued. 

The RPO conducted its 2021 biennial review of the enrollment and renewal of enrollment user fees associated with EAs and ERPAs in accordance with OMB Circular A-25. It took into account:

• the increase in labor, benefits, and overhead costs incurred in connection with providing enrollment services to individuals who enroll or renew enrollment as EAs and renew enrollment as ERPAs since the user fee was last increased in 2019; 
• the additional staffing that the RPOs said was necessary; and  
• a reallocation of certain labor costs. 

Controversy

Some of the comments that the IRS received concerning the proposal to make these fee increases expressed concern with the overall amount of the proposed enrollment and renewal of enrollment user fees and requested information regarding why the user fees are required. 
But in TD 9966, the IRS says that it and the Treasury Department “disagree that these regulations will have a significant economic impact on a substantial number of small entities.” It continues, “As discussed in the notice of proposed rulemaking, only individuals, not businesses, can be enrolled agents or enrolled retirement plan agents. Accordingly, the user fee primarily affects individuals who are enrolled agents, apply to become enrolled agents, or are enrolled retirement plan agents.” 

Further, it asserts, “Since individuals are not ‘small entities’ for purpose of the RFA, any economic impact of the user fees on small entities generally will occur only when an enrolled agent or enrolled retirement plan agent owns a small business or when a small business employs enrolled agents or enrolled retirement plan agents and reimburses them for their user fees” and that even if a substantial number of small businesses are affected by reimbursing EAs or ERPAs for their user fees, the economic impact on them would be “not significant.”

Effective Date

The final regulations are effective 30 days after they are published in the Federal Register, which is set to take place on Sept. 29, 2022.