The federal government receives amounts from numerous sources in addition to tax revenues, including user fees, fines, penalties, and intragovernmental fees. Whether these collections are dedicated to a particular purpose and available for agency use without further appropriation depends on the type of collection and its specific authority. User fees: User fees are fees assessed to users for goods or services provided by the federal government. They are an approach to financing federal programs or activities that, in general, are related to some voluntary transaction or request for government services above and beyond what is normally available to the public. User fees are a broad category of collections, whose boundaries are not clearly defined. They encompass charges for goods and services provided to the public, such as fees to enter a national park, as well as regulatory user fees, such as fees charged by the Food and Drug Administration for prescription drug applications. Unless Congress has provided specific statutory authority for an agency to use (i.e., obligate and spend) fee collections, fees are deposited to the Treasury as miscellaneous receipts and are generally not available to the agency. Fines, penalties, and settlement proceeds: Criminal fines and penalty payments are imposed by courts as punishment for criminal violations. Civil monetary penalties are not a result of criminal proceedings but are employed by courts and federal agencies to enforce federal laws and regulations. Settlement proceeds result from an agreement ending a dispute or lawsuit. As with user fees, unless Congress has provided specific statutory authority for an agency to use fines, penalties, and settlements, those collections are deposited as miscellaneous receipts and are generally not available to the agency. Intragovernmental fees are charged by one federal agency to another for goods and services such as renting space in a building or cybersecurity services. Unlike user fees, fines, and penalties, unless Congress has specified otherwise, agencies generally have authority to use intragovernmental fees without further appropriation. In 2013, we identified six key fee design decisions related to how fees are set, used, and reviewed that, in the aggregate, enable Congress to design fees that strike its desired balance between agency flexibility and congressional control. Four of the six key design decisions relate to how the fee collections are used and in 2015 we reported that they are applicable to fines and penalties (see figure 1). Congress determines the availability of collections by defining the extent to which an agency may use (i.e., obligate and spend) them, including the availability of the funds, the period of time the collections are available for obligation, the purposes for which they may be used, and the amount of collections that are available to the agency. Availability. Congressional decisions about the use of a fee, fine, or penalty will determine how the funds will be considered within the context of all federal budgetary resources. Collections are classified into 3 major categories: offsetting collections, offsetting receipts, or governmental receipts. Funds classified as offsetting collections can provide agencies with more flexibility because they are generally available for agency obligation without further legislative action. In contrast, offsetting receipts and governmental receipts offer greater congressional control because, generally, additional congressional action is needed before the collections are available for agency obligation. Time. When Congress provides that an agency’s collections are available until they are expended, agencies have greater flexibility and can carry over unobligated amounts to future fiscal years. This enables agencies to align collections and costs over a longer time period and to better prepare for, and adjust to, fluctuations in collections and costs. Funds set aside or reserved can sustain operations in the event of a sharp downturn in collections or increase in costs. Carrying over unobligated balances from year to year, if an agency has multi- or no-year collections, is one way agencies can establish a reserve. Purpose. Congress sets limits on the activities or purposes for which an agency may use collections. Congress has granted some agencies broad authority to use some of their collections for any program purpose, but has limited the use of other collections to specific sets of activities. Narrower restrictions may benefit stakeholders and increase congressional control. On the other hand, statutes that too narrowly limit how collections can be used reduce both Congress’s flexibility to make resource decisions and an agency’s flexibility to reallocate resources. This can make it more difficult to pursue public policy goals or respond to changing program needs, such as when the activities intended to achieve the purposes of the related program change. Amount. Congress determines the specific level of budget authority provided for a program’s activities by limiting the amount of collections that can be collected or used by the agency; however, these limits can also pose challenges for the agency. For example, when a fee-funded agency is not authorized to retain or use all of its fee collections and no other funding sources are provided, the agency may not have the funds available to produce the goods or services that it has promised or that it is required to provide by law. Our design guides can help Congress consider the implications and tradeoffs of various design alternatives. One key design element is whether the funds will be (1) deposited to the Treasury as miscellaneous receipts for general support of federal government activities, (2) dedicated to the related program with availability subject to further appropriation, (3) dedicated to the related program and available without further congressional action, or (4) available based on a combination of these authorities. Some authorities to collect fees, fines and penalties specify that the funds will be deposited to the Treasury as miscellaneous receipts. These funds are not dedicated to the agency or program under which they were collected; they are used for the general support of federal government activities. For example, Penalties from financial institutions: Civil monetary penalty payments collected from financial institutions by certain financial regulators, including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, are deposited to the Treasury as miscellaneous receipts. In March 2016, we reported that, from January 2009 through December 2015, financial regulators and components within the Department of the Treasury deposited $2.7 billion to the Treasury as miscellaneous receipts from enforcement actions assessed against financial institutions for violations related to anti-money laundering, anti-corruption, and U.S. sanctions programs requirements. Federal Communications Commission (FCC) Application Fees: The FCC regulates interstate and international communications by radio, television, wire, satellite, and cable, and telecommunications services for all people of the United States. FCC collects application fees from companies for activities such as license applications, renewals, or requests for modification. As we reported in September 2013, these fees are deposited to the Treasury as miscellaneous receipts. Some fees, fines, and penalties cannot be used by an agency without being further appropriated to the agency. For example, Customs and Border Protection’s (CBP) Merchandise Processing Fee: Importers of cargo pay a fee to offset the costs of “customs revenue functions” as defined in statute, and the automation of customs systems. CBP deposits merchandise processing fees as offsetting receipts to the Customs User Fee Account, with availability subject to appropriation. In July 2016, we reported that in fiscal year 2014 merchandise processing fee collections totaled approximately $2.3 billion. Requiring an appropriation to make the funds available to an agency increases opportunities for congressional oversight on a regular basis. When the amount of collections exceeds the amount of the appropriation, however, unobligated collection balances that are not available to the agency may accumulate. For example, Security and Exchange Commission (SEC) Fees: When SEC collects more in Section 31 fees than its annual appropriation, the excess collections are not available for obligation without additional congressional action. In September 2015, we reported that at the end of fiscal year 2014, the SEC had a $6.6 billion unavailable balance in its Salaries and Expenses account because the fee collections exceeded appropriations. Environmental Protection Agency (EPA) Motor Vehicle and Engine Compliance Program (MVECP) Fees: MVECP fee collections are deposited into EPA’s Environmental Services Special Fund. As we reported in September 2015, according to officials, Congress had not appropriated money to EPA from this fund for MVECP purposes. EPA instead received annual appropriations which may be used for MVECP purposes. As a result, the unavailable balance of this fund steadily increased and totaled about $370 million at the end of fiscal year 2014. U.S. Army Corps of Engineers Harbor Maintenance Fee: The authorizing legislation generally designates that the purpose for the fee collections is harbor maintenance activities but, as we reported in February 2008, fee collections have substantially exceeded spending on harbor maintenance. In July 2016, we reported that the Harbor Maintenance Trust Fund had a balance of over $8 billion at the end of fiscal year 2014. U.S. Patent and Trademark Office (USPTO) Fees: In September 2013, we reported that in some years Congress chose not to make available to USPTO the full amount of its collections which, according to USPTO officials, contributed to USPTO’s inability to hire sufficient examiners to keep up with USPTO’s workload and invest in technology systems needed to modernize the USPTO. According to USPTO officials, patent fee collections can only be used for patent processes, and trademark fee collections can only be used for trademark processes, as well as to cover each processes’ proportionate share of the administrative costs of the agency. USPTO officials stated that patent and trademark customers are typically two distinct groups and this division helps to assure stakeholders that their fees are supporting the activities that affect them directly. Some programs include mechanisms to link the amount of collections with the amount of collections appropriated to the program, over time.