Source: https://www.irs.gov/irb/2016-46_IRB
Timestamp: 2017-10-21 10:12:31
Document Index: 130708358

Matched Legal Cases: ['§ 417', '§ 430', '§ 414', '§ 430', '§ 412', '§ 430', '§430', '§ 430', '§ 431', '§ 412', '§ 431', '§ 417', '§ 415', '§ 415', '§ 416', '§ 1', '§ 1', '§ 1', '§ 432', '§ 432', '§ 432', '§ 219', '§ 219', '§ 219', '§ 219', '§ 219', '§ 219', '§ 219', '§ 219', '§ 4375', '§ 4375', '§ 4375', '§ 4375', '§ 46', '§ 4375', '§ 46', '§ 4375', '§ 10', '§ 10', '§ 300']

Internal Revenue Bulletin: 2016-46 | Internal Revenue Service
Internal Revenue Bulletin: 2016-46
Notice 201661
Notice 201662
Notice 201664
REG13412215
Notice 2016–61 Notice 2016–61
This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2016 used under § 417(e)(3)(D), the 24-month average segment rates applicable for October 2016, and the 30-year Treasury rates. These rates reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP-21) and amended by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA).
Notice 2016–62 Notice 2016–62
Notice 2016–64 Notice 2016–64
Sections 4375 and 4376, added to the Code by the Affordable Care Act, impose a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). This notice provides that the adjusted applicable dollar amount that applies for determining the PCORI fee for policy years and plan years ending on or after October 1, 2016 and before October 1, 2017 is equal to $2.26. This adjusted applicable dollar amount has been determined using the percentage increase in the projected per capita amount of the National Health Expenditures published by HHS in July 2016.
REG–134122–15 REG–134122–15
The proposed regulation changes the user fee for the Enrolled Agent Special Enrollment Examination from $11 per part to $81 per part, and withdraws the proposed regulation published on January 26, 2016.
Notice 2016–61
Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006 and CSEC plans under § 414(y), § 430 of the Code specifies the minimum funding requirements that apply to single-employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins.[1] However, an election may be made under §430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.
Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from September 2016 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of September 2016 are, respectively, 1.47, 3.34, and 4.30.
The three 24-month average corporate bond segment rates applicable for October 2016 without adjustment for the 25-year average segment rate limits are as follows:
October 2016 1.52 3.78 4.76
Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for October 2016 adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates, are as follows:
2015 October 2016 4.72 6.11 6.81
2016 October 2016 4.43 5.91 6.65
2017 October 2016 4.16 5.72 6.48
Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in § 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for September 2016 is 2.35 percent. The Service determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in August 2046. For plan years beginning in the month shown below, the weighted average of the rates of interest on 30-year Treasury securities and the permissible range of rate used to calculate current liability are as follows:
October 2016 2.94 2.64 3.08
In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value segment rates determined for September 2016 are as follows:
1.47 3.34 4.30
Monthly Yield Curve for September 2016
Derived from September 2016 Data
0.5 0.90 20.5 4.04 40.5 4.33 60.5 4.43 80.5 4.48
1.0 1.09 21.0 4.05 41.0 4.33 61.0 4.43 81.0 4.48
1.5 1.26 21.5 4.06 41.5 4.33 61.5 4.43 81.5 4.49
2.0 1.39 22.0 4.07 42.0 4.34 62.0 4.44 82.0 4.49
2.5 1.49 22.5 4.09 42.5 4.34 62.5 4.44 82.5 4.49
3.0 1.56 23.0 4.10 43.0 4.35 63.0 4.44 83.0 4.49
3.5 1.63 23.5 4.11 43.5 4.35 63.5 4.44 83.5 4.49
4.0 1.70 24.0 4.12 44.0 4.35 64.0 4.44 84.0 4.49
4.5 1.78 24.5 4.13 44.5 4.36 64.5 4.44 84.5 4.49
5.0 1.88 25.0 4.13 45.0 4.36 65.0 4.45 85.0 4.49
5.5 1.99 25.5 4.14 45.5 4.36 65.5 4.45 85.5 4.49
6.0 2.11 26.0 4.15 46.0 4.36 66.0 4.45 86.0 4.49
6.5 2.24 26.5 4.16 46.5 4.37 66.5 4.45 86.5 4.49
7.0 2.37 27.0 4.17 47.0 4.37 67.0 4.45 87.0 4.50
7.5 2.50 27.5 4.18 47.5 4.37 67.5 4.45 87.5 4.50
8.0 2.63 28.0 4.19 48.0 4.38 68.0 4.45 88.0 4.50
8.5 2.76 28.5 4.19 48.5 4.38 68.5 4.46 88.5 4.50
9.0 2.88 29.0 4.20 49.0 4.38 69.0 4.46 89.0 4.50
9.5 3.00 29.5 4.21 49.5 4.38 69.5 4.46 89.5 4.50
10.0 3.11 30.0 4.22 50.0 4.39 70.0 4.46 90.0 4.50
10.5 3.21 30.5 4.22 50.5 4.39 70.5 4.46 90.5 4.50
11.0 3.30 31.0 4.23 51.0 4.39 71.0 4.46 91.0 4.50
11.5 3.39 31.5 4.24 51.5 4.39 71.5 4.46 91.5 4.50
12.0 3.46 32.0 4.24 52.0 4.40 72.0 4.46 92.0 4.50
12.5 3.53 32.5 4.25 52.5 4.40 72.5 4.47 92.5 4.50
13.0 3.60 33.0 4.25 53.0 4.40 73.0 4.47 93.0 4.51
13.5 3.65 33.5 4.26 53.5 4.40 73.5 4.47 93.5 4.51
14.0 3.70 34.0 4.27 54.0 4.41 74.0 4.47 94.0 4.51
14.5 3.75 34.5 4.27 54.5 4.41 74.5 4.47 94.5 4.51
15.0 3.79 35.0 4.28 55.0 4.41 75.0 4.47 95.0 4.51
15.5 3.83 35.5 4.28 55.5 4.41 75.5 4.47 95.5 4.51
16.0 3.86 36.0 4.29 56.0 4.41 76.0 4.47 96.0 4.51
16.5 3.89 36.5 4.29 56.5 4.42 76.5 4.48 96.5 4.51
17.0 3.91 37.0 4.30 57.0 4.42 77.0 4.48 97.0 4.51
17.5 3.93 37.5 4.30 57.5 4.42 77.5 4.48 97.5 4.51
18.0 3.96 38.0 4.31 58.0 4.42 78.0 4.48 98.0 4.51
18.5 3.97 38.5 4.31 58.5 4.42 78.5 4.48 98.5 4.51
19.0 3.99 39.0 4.31 59.0 4.43 79.0 4.48 99.0 4.51
19.5 4.01 39.5 4.32 59.5 4.43 79.5 4.48 99.5 4.51
20.0 4.02 40.0 4.32 60.0 4.43 80.0 4.48 100.0 4.51
Notice 2016–62
Effective January 1, 2017, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) is increased from $210,000 to $215,000.
For a participant who separated from service before January 1, 2017, the participant’s limitation under a defined benefit plan under § 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2016, by 1.0112.
The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $170,000 to $175,000.
The compensation amounts under § 1.61–21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $105,000. The compensation amount under § 1.61–21(f)(5)(iii) remains unchanged at $215,000.
The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under § 1.401(a)(9)–6, A–17(b)(2)(i) of the Income Tax Regulations remains unchanged at $125,000.
The Code provides that the $1,000,000,000 threshold used to determine whether a multiemployer plan is a systemically important plan under § 432(e)(9)(H)(v)(III)(aa) is adjusted using the cost-of-living adjustment provided under § 432(e)(9)(H)(v)(III)(bb). After taking the applicable rounding rule into account, the threshold used to determine whether a multiemployer plan is a systemically important plan under § 432(e)(9)(H)(v)(III)(aa) remains unchanged at $1,012,000,000.
The applicable dollar amount under § 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants in a qualified plan (or another retirement plan specified in § 219(g)(5)) filing a joint return or as a qualifying widow(er) is increased from $98,000 to $99,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all other taxpayers who are active participants (other than married taxpayers filing separate returns) is increased from $61,000 to $62,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount under § 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $184,000 to $186,000.
Accordingly, under § 219(g)(2)(A), the deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan (or another retirement plan specified in § 219(g)(5)) and have adjusted gross incomes (as defined in § 219(g)(3)(A)) between $62,000 and $72,000, increased from between $61,000 and $71,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $99,000 and $119,000, increased from between $98,000 and $118,000. For an IRA contributor who is not an active participant and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $186,000 and $196,000, increased from between $184,000 and $194,000. For a married individual filing a separate return who is an active participant, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Notice 2016–64
Adjusted Applicable Dollar Amount for Fee Imposed by §§ 4375 and 4376
This notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee imposed by §§ 4375 and 4376 of the Internal Revenue Code for policy years and plan years that end on or after October 1, 2016, and before October 1, 2017.
Section 4375 imposes a fee on the issuer of a specified health insurance policy for each policy year ending after September 30, 2012, and before October 1, 2019. Section 4376 imposes a fee on the plan sponsor of an applicable self-insured health plan for each plan year ending after September 30, 2012, and before October 1, 2019. The fee imposed by §§ 4375 and 4376 helps to fund the Patient-Centered Outcomes Research Institute (PCORI) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year. Under §§ 4375(a) and 4376(a), the applicable dollar amount is $2 for policy and plan years ending on or after October 1, 2013, and before October 1, 2014.[2] Treas.
Reg. §§ 46.4375–1(c)(4) and 46.4376–1(c)(3).
Under §§ 4375(d) and 4376(d) and Treas. Reg. §§ 46.4375–1(c)(4) and 46.4376–
1(c)(3), the applicable dollar amount for policy years and plan years ending in any Federal fiscal year beginning on or after October 1, 2014 is increased based on increases in the projected per capita amount of National Health Expenditures.
Specifically, the applicable dollar amount is the sum of –
(i) The applicable dollar amount for the policy year or plan year ending in the previous Federal fiscal year; plus
(ii) The amount equal to the product of –
(A) The applicable dollar amount for the policy year or plan year ending in the previous Federal fiscal year; and
(B) The percentage increase in the projected per capita amount of the National Health Expenditures most recently released by the Department of Health and Human Services (HHS) before the beginning of the Federal fiscal year.
Notice 2015–60, 2015–43, I.R.B. 604, provides that the adjusted applicable dollar amount for policy years and plan years that end on or after October 1, 2015, and before October 1, 2016 is $2.17.
III. ADJUSTED APPLICABLE DOLLAR AMOUNT
The applicable dollar amount that must be used to calculate the fee imposed by §§ 4375 and 4376 for policy years and plan years that end on or after October 1, 2016, and before October 1, 2017, is $2.26. The increase from the prior amount is calculated by multiplying the adjusted applicable dollar amount for policy years and plan years ending in the previous Federal fiscal year, $2.17, by the percentage increase of the projected per capita amount of National Health Expenditures published by HHS on July 12, 2016. See www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015tables.zip, Table 3. The percentage increase is calculated after adjustment to reflect updates to the data used to calculate the prior amount, $2.17, which was based on the per capita amounts of National Health Expenditures for 2015 and 2016 published by HHS on July 22, 2015.
This notice is effective for policy years and plan years ending on or after October 1, 2016.
The principal author of this notice is Stephanie L. Caden of the Office of Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this notice, contact Ms. Caden at (202) 317-5500 (not a toll free number).
[2] The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.
REG–134122–15
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 20224, 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.
Starting in 2006, the IRS engaged the services of a third-party contractor to develop and administer the EA-SEE. The EA-SEE is composed 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 recent changes in the relevant law. 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 IRS Return Preparer Office (RPO) oversees the administration of the EA-SEE.
As discussed above, Circular 230 § 10.4(a) provides that the 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 § 10.4(a). Because the opportunity to take the EA-SEE is a special benefit, the 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 2016 to February 2017 testing period, the contractor’s fee is $98 for each part of the EA-SEE. For the March 2017 to February 2019 testing periods, the contractor’s fee will be $100.94. For the March 2019 to February 2020 testing period, the contractor’s fee will be $103.97. The fee charged by the contractor is fixed by the current contract terms and therefore may not be reduced or renegotiated at this time. The contract will expire on February 29, 2020. The contract was subject to public procurement procedures, and there were no tenders that were more competitive.
The IRS has not increased the EA-SEE user fee since 2006, when it published the existing user fee regulation. Since that time, the costs incurred by the IRS to implement the EA-SEE program have increased. The IRS has recently gathered sufficient data to reliably estimate the IRS’s current costs in implementing the EA-SEE program as described in the costing analysis contained in this preamble.
The increased costs require an increase in the EA-SEE user fee. The 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 $289,000 per year; (2) the IRS estimates that the contractor will administer 12,000 fewer parts of the EA-SEE per year than the estimated 34,000 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, the scope of the work performed to oversee the contract has expanded beyond what it was in 2006. 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. The IRS’s costs for oversight now 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, the IRS’s 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 are not resolved at the contractor level.
On January 26, 2016, a notice of proposed rulemaking (REG–134122–15) proposing an increase to the EA-SEE user fee was published in the Federal Register (81 FR 4221). The January 26, 2016 notice of proposed rulemaking proposed to increase the EA-SEE user fee to $99 per part. The IRS has redetermined the user fee and now proposes to increase the user fee to $81 per part. The January 26, 2016 notice of proposed rulemaking is withdrawn.
User fee calculations begin by first determining the full cost for the service. The IRS follows the guidance provided by the OMB Circular to compute the full cost of the service, which includes all indirect and direct costs to any part of the U.S. government, including, but not limited to, direct and indirect personnel costs, physical overhead, rents, utilities, travel, and management costs. The IRS’s cost methodology is described below.
The IRS follows generally accepted accounting principles (GAAP), as established by the Federal Accounting Standards Advisory Board (FASAB) in calculating the full cost of providing services. The FASAB Handbook of Accounting Standards and Other Pronouncements, as amended, which is available at http://files.fasab.gov/pdffiles/2015_fasab_handbook.pdf, includes the Statement of Federal Financial Accounting Standards No. 4: Managerial Cost Accounting Concepts and Standards for the Federal Government (SFFAS No. 4). SFFAS No. 4 establishes internal costing standards under GAAP to accurately measure and manage the full cost of federal programs. The methodology described below is in accordance with SFFAS No. 4.
The IRS determines the cost of its services and the activities involved in producing them through a cost accounting system that tracks costs to organizational units. The lowest organizational unit in the IRS’s cost accounting system is called a cost center. Cost centers are usually separate offices that are distinguished by subject-matter area of responsibility or geographic region. All costs of operating a cost center are recorded in the IRS’s cost accounting system and allocated to that cost center. The costs allocated to a cost center are the direct costs for the cost center’s activities as well as all indirect costs, including overhead, associated with that cost center. Each cost is recorded in only one cost center.
Not all cost centers are fully devoted to only one service for which the IRS charges a user fee. Some cost centers work on a number of different services. In these cases, the IRS estimates the cost incurred in those cost centers attributable to the service for which a user fee is being calculated by measuring the time required to accomplish activities related to the service and estimating the average time required to accomplish these activities. The average time required to accomplish these activities is multiplied by the relevant organizational unit’s average labor and benefits costs per unit of time to determine the labor and benefits costs incurred to provide the service. To determine the full cost, the IRS then adds an appropriate overhead charge as discussed below.
Overhead is an indirect cost of operating an organization that cannot be immediately associated with an activity that the organization performs. Overhead includes costs of resources that are jointly or commonly consumed by one or more organizational unit’s activities but are not specifically identifiable to a single activity.
To calculate the overhead allocable to a service, the IRS first calculates the Corporate Overhead rate and then multiplies the Corporate Overhead rate by the direct labor and benefits costs determined as discussed above. The IRS calculates the Corporate Overhead rate annually based on cost elements underlying the Statement of Net Cost included in the IRS Annual Financial Statements, which are audited by the Government Accountability Office. The Corporate Overhead rate is the ratio of the sum of the IRS’s indirect labor and benefits costs from the supporting and sustaining organizational units—those that do not interact directly with taxpayers—and all non-labor costs to the IRS’s labor and benefits costs of its organizational units that interact directly with taxpayers.
Indirect Labor and Benefits Costs
$1,693,339,843
Direct Labor and Benefits Costs ÷ $6,872,934,473
The RPO is the only organization involved in overseeing the administration of the EA-SEE. The cost centers within the RPO support multiple programs and are not solely dedicated to the EA-SEE. The RPO, however, has a staff of only ten people who devote time to oversee the administration of the EA-SEE program. Because there are only a few individuals who directly handle oversight of the EA-SEE, the IRS projected the estimated costs of direct labor and benefits based on the actual labor and benefits of these specific individuals reduced to reflect the percentage of time each individual spends overseeing the EA-SEE program. The RPO’s managers are able to estimate the percentage of time these employees devote to overseeing the EA-SEE program based on their knowledge of actual program assignments. Of the ten people, eight devote seventy-five percent or more of their time to EA-SEE-related activities, and two devote approximately ten percent of their time to EA-SEE-related activities.
2017 $921,302
2018 $930,515
Total $2,763,997
The EA-SEE program incurs a cost for required background investigations performed on the employees of the contractor that administers the EA-SEE. The background investigations are not performed by the RPO, so the cost of the background investigations is not included in the direct labor and benefits costs calculated above for the ten RPO employees. The contractor administers the EA-SEE at approximately 260 domestic locations, and each employee at these locations must undergo a background investigation in order to administer the EA-SEE. The contractor’s employees are typically short-term or seasonal workers, so the IRS must perform background investigations on new employees on a continuing basis. Where permissible, the IRS will piggyback on previously completed background investigations. Typically, the IRS may rely on another government agency’s background investigation for up to two years from the date the prior investigation was completed. However, investigations performed by other organizations for the contractor’s employees generally cannot supplant the need for the IRS to perform its own investigations because the IRS’s background investigations include, among other elements, federal tax compliance checks, which are not necessarily part of investigations performed by other organizations. The EA-SEE is the only exam that the contractor administers on behalf of the IRS, so the contractor’s new hires typically have not undergone a background investigation performed by the IRS prior to being hired.
The cost for background investigations for the contractor was an average of $289,000 per year for the years 2012 through 2014, calculated as follows: The costs of all background investigations incurred on behalf of the RPO were $294,000, $259,000, and $409,000 in 2012, 2013, and 2014, respectively, for a $321,000 yearly average. Ninety percent of these background investigations were for the contractor who administers the EA-SEE. The other ten percent of these background investigations did not relate to the EA-SEE, so the IRS multiplied the $321,000 yearly average cost of background investigations by the ninety percent allocable to the contractor. The resulting average annual cost for EA-SEE background investigations for each year of the three year period was $289,000, with a total cost of $867,000. The IRS used the historical cost totals as the estimate of the 2016, 2017, and 2018 background investigations costs. Because background investigation costs may not increase as predictably as labor and benefits costs, the IRS did not apply an inflation factor.
Direct Labor and Benefits
$1,820,092
Corporate Overhead at 65.85% $1,820,092
Subtotal $4,584,089
Background Checks $867,000
Total EA-SEE Cost $5,451,089
Total EA-SEE Cost
$5,451,089
Volume ÷ 67,275
Unit Cost $81
A public hearing has been scheduled for December 29, 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.
Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG–134122–15) that was published in the Federal Register on January 26, 2016, (81 FR 4221) is withdrawn.
§ 300.4 Enrolled agent special enrollment examination fee.
(Filed by the Office of the Federal Register on October 24, 2016, 8:45 a.m., and published in the issue of the Federal Register for October 25, 2016, 81 F.R. 73363)
Bulletin 2016–27 through 2016–46