Rule2023-23301
User Fees Relating to Enrolled Actuaries
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 20, 2023
Effective
October 20, 2023
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
These final regulations amend existing regulations relating to user fees for enrolled actuaries. The final regulations increase both the enrollment and renewal of enrollment user fees for enrolled actuaries from $250 to $680. These regulations affect individuals who apply to become an enrolled actuary or seek to renew their enrollment. The Independent Offices Appropriation Act of 1952 authorizes charging user fees.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 202 (Friday, October 20, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Rules and Regulations]
[Pages 72366-72370]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23301]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 300
[TD 9982]
RIN 1545-BQ26
User Fees Relating to Enrolled Actuaries
AGENCY: Internal Revenue Service (IRS), Treasury.
[[Page 72367]]
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: These final regulations amend existing regulations relating to
user fees for enrolled actuaries. The final regulations increase both
the enrollment and renewal of enrollment user fees for enrolled
actuaries from $250 to $680. These regulations affect individuals who
apply to become an enrolled actuary or seek to renew their enrollment.
The Independent Offices Appropriation Act of 1952 authorizes charging
user fees.
DATES:
Effective date: These regulations are effective on October 20,
2023.
Applicability date: For the applicability dates, see Sec. Sec.
300.7(d) and 300.8(d).
FOR FURTHER INFORMATION CONTACT: Carolyn M. Lee at 202-317-6845 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to 26 CFR part 300--User Fees. On
October 5, 2022, a notice of proposed rulemaking (NPRM) (REG-100719-21)
and notice of public hearing was published in the Federal Register (87
FR 60357). The NPRM proposed amending the regulations relating to the
user fees for enrolled actuaries. The document proposed increasing the
amount of the user fee for both the new enrollment and renewal of
enrollment for enrolled actuaries from $250 to $680 per enrollment
application or renewal application. The NPRM contained a detailed
explanation of the legal background and user fee calculations regarding
the amendment to these regulations.
Four comments were submitted in response to the notice of proposed
rulemaking. There were no requests to speak at the scheduled public
hearing. Consequently, the public hearing was cancelled (87 FR 80109).
After consideration of the written comments, the Department of the
Treasury (Treasury Department) and the IRS have decided to adopt
without modification the regulations proposed by the notice of proposed
rulemaking.
Summary of Comments
The four comments submitted in response to the notice of proposed
rulemaking are available at <a href="https://www.regulations.gov">https://www.regulations.gov</a> or upon
request.
1. Comments Not Seeking Modification or Clarification of the User Fee
Some comments did not address modification or clarification of the
user fee.
One comment expressed concern about the applicability date of the
user fees for enrolled actuaries who apply to renew their enrollment
for the 2023-2025 enrollment cycle. The proposed regulation amending 26
CFR 300.8, Renewal of enrollment of enrolled actuary fee, stated the
effective date would be 30 days after the regulation is published as a
final regulation in the Federal Register. The comment noted that
applications for the enrollment renewal would be available in early
January 2023 to enrolled actuaries seeking to renew their enrollment
for the 2023-2025 enrollment cycle, and renewal of enrollment
applications and fees must be submitted by March 1, 2023, to be
effective beginning April 1, 2023. These final regulations are being
published after the close of the 2023 season for timely renewal of
enrollment. Consequently, the $250 renewal of enrollment user fee in
effect on January 1, 2023, was in effect throughout the timely renewal
season that closed March 1, 2023.
Another comment recommended adding a provision to the user fee
regulations to eliminate the in-person continuing education formal
program requirements. Continuing education requirements for enrolled
actuaries are governed by 20 CFR 901.11. The comment regarding
continuing education requirements for enrolled actuaries is outside the
scope of these regulations.
In addition, a comment recommended that the Joint Board for the
Enrollment of Actuaries (Joint Board) consider approaches to make its
cost structure more efficient, presenting as examples adopting a longer
enrollment cycle, and making the continuing professional education
(CPE) audit process more efficient for enrolled actuaries and for
qualifying sponsors of enrolled actuary continuing education. These
regulations relate to the methodology used to determine user fees for
new enrollment and renewal of enrollments. The operation of the Joint
Board is outside the scope of these regulations. Nonetheless, the IRS
continually looks for program efficiencies, which it takes into
consideration during the enrolled actuary user fee biennial review.
2. Comments Seeking Modification or Clarification of the User Fee
The summary of comments below addresses those comments that make
recommendations concerning, or seeking clarification of, the user fees
set forth in the proposed regulations relating to the user fees for new
enrollments and renewal of enrollments for enrolled actuaries.
A. Enrolled Actuary Enrollment Processes Must Be Financially Self-
Sustaining
One comment questioned why the user fee is calculated based on the
number of enrolled actuary applicants. Enrolled actuary applicants
seeking to be enrolled as new enrolled actuaries or to renew their
enrolled actuary enrollment are the principal beneficiaries of the
services provided by the Joint Board; that is, the enrolled actuary new
enrollment and renewal of enrollment processes conducted by the IRS
Return Preparer Office (RPO) under the oversight of the Joint Board. An
individual who has been granted new enrollment or renewal of enrollment
as an enrolled actuary by the Joint Board may perform pension actuarial
services under the Employee Retirement Income Security Act of 1974
(ERISA) Public Law 93-406, Title III, section 3042, Sept. 2, 1974, 88
Stat. 1002, and practice before the IRS as provided by the rules
governing practice before the IRS, published in 31 CFR subtitle A, part
10, and reprinted as Treasury Department Circular No. 230 (Circular
230). Enrollment confers special benefits on individuals who are
enrolled actuaries beyond those that accrue to the general public.
The Independent Offices Appropriation Act of 1952 (IOAA) (31 U.S.C.
9701) authorizes each agency to promulgate regulations establishing the
charge for services the agency provides (user fees). The IOAA states
that the services provided by an agency should be self-sustaining to
the extent possible. 31 U.S.C. 9701(a). The IOAA provides that user fee
regulations are subject to policies prescribed by the President. The
policies are currently set forth in the Office of Management and Budget
(OMB) Circular A-25 (OMB Circular A-25), 58 FR 38142 (July 15, 1993).
Section 6a(1) of OMB Circular A-25 states that when a service
offered by an agency confers special benefits to identifiable
recipients beyond those accruing to the general public, the agency is
to charge a user fee to recover the full cost of providing the service
(unless the agency requests, and the OMB grants, an exception to the
full-cost requirement). An agency that seeks to impose a user fee for
government-provided services must calculate the full cost of providing
those services.
In accordance with OMB Circular A-25, the RPO completed its 2021
biennial review of the enrollment and renewal of enrollment user fees
associated with enrolled actuaries. As discussed in the notice of
proposed rulemaking, during its review, the RPO took into account
[[Page 72368]]
increases in labor, benefits, and overhead costs incurred in connection
with providing enrollment services to individuals who enroll or renew
enrollment as enrolled actuaries since the user fee was promulgated in
2007. The costs include activities related to verifying that an
individual meets the requirements for enrollment or renewal of
enrollment as an enrolled actuary. The RPO also took into account a
reallocation of certain labor costs in their methodology to include
costs associated with certain human resource matters, formalizing
policies and procedures, and other administrative support. The RPO
followed the generally accepted accounting principles established by
the Federal Accounting Standards Advisory Board.
As required by section 6a(1) of OMB Circular A-25, the costs
allocated to the enrollment and renewal processes for enrolled
actuaries are borne in full by the identifiable group of actuaries who
apply for new enrollment and renewal of enrollment services.
Accordingly, the number of enrolled actuary applicants is used by the
RPO to determine the per-applicant user fee. As described in the
proposed regulations, to arrive at the total cost per application, the
IRS divided the estimated three-year total of enrolled actuary costs by
the total volume of applications expected over the same three-year
period. Based on the number of applicants, the full cost of
administering the enrollment and renewal for enrollment processes for
enrolled actuaries increased from $250 to $680 per enrollment.
B. Justification for the Increase in User Fees
Several comments were received expressing concern about the amount
by which the user fees increased, and sought clarification for what
caused the increase. One commenter requested an explanation of the
difference in outcomes between the 2019 biennial review when user fees
were not increased and the 2021 biennial review. Commenters also
inquired about the factors causing the reallocation of RPO's human
resources, resulting in RPO's correction during the 2021 biennial
review of the average time allocated to enrolled actuary enrollment and
renewal of enrollment processes from 40 percent to 65 percent. Another
commenter, questioning the increase in enrollment user fees between the
2019 biennial review and the 2021 biennial review, stated for
comparison that the Bureau of Labor Statistics (BLS) Employment Cost
Index (ECI) for private industry worker wages and salaries showed an
increase of no more than 10 percent to 15 percent from the 2020-2022
enrollment cycle to the 2023-2025 enrollment cycle. The same commenter
observed that many of the intellectual capital services the Treasury
Department and the IRS provide across the organization are not directly
relevant to enrolled actuaries and the services they provide to
qualified pension plans. In the same vein, a commenter expressed an
incorrect belief that the enrolled actuary enrollment user fees include
costs not attributable to the enrolled actuary program for government
employees who, among their overall responsibilities not allocated to
the enrolled actuary program, have duties including working for the
Joint Board.
More specifically, a commenter questioned the accuracy of the IRS's
determination that 65 percent of four RPO employees' time is dedicated
to enrollment activities during the three-year enrollment cycle, given
the unevenness in enrollments and renewals during each of the three
years. The 2021 biennial review was based on 214 applications in 2018,
132 applications in 2019, and 3,584 applications in 2020. According to
this commenter, if the volume of applications is uneven, the percentage
of time IRS employees spend working on enrollment activities would be
similarly uneven and would not average 65 percent over the three-year
enrollment cycle. Another commenter requested information about the
change in the number of applicants relative to prior years. The
commenter posited that if enrollments were decreasing, enrollment
processes costs also should decrease because there are fewer
applications to review. Enrolled actuary total new and renewal of
enrollment applications have declined. The 2021 biennial review, based
on fiscal years 2018, 2019, and 2020, showed approximately 450 fewer
enrolled actuary applicants compared to the previous cycles.
These comments generally reflect an assumption that the enrolled
actuary enrollment fees are solely attributable to enrollment
applications processing. As explained in the proposed regulations, the
methodology for calculating full costs associated with new and renewal
of enrollment applications was updated during the 2021 biennial review.
Prior costing analyses only considered the time associated with the
actual processing of new and renewal of enrollment applications.
However, application processing is only one aspect of the cost
analysis. The current increase in user fees was, in part, the result of
the RPO determining that the methodology previously used to compute
labor allocations was outdated and did not capture the full costs
associated with administering enrolled actuary enrollment and renewal
of enrollment. Under the previous methodology, the salaries and
benefits of RPO staff supporting the new and renewal of enrollment of
enrolled actuaries were computed at 40 percent of four RPO staff
members' salaries and benefits, with associated overhead. To more
accurately calculate the full RPO costs directly associated with the
enrolled actuary enrollment program, the updated costing analysis
accounts for not only the time and resources involved in application
processing, but also the additional time and resources spent to
administer the enrolled actuary program. These activities continue
throughout the three-year enrollment cycle even though enrollment
application volume fluctuates. The RPO's responsibilities with respect
to the enrolled actuary program beyond application processing include
conducting yearly tax compliance and continuing professional education
(CPE) audits of enrolled actuaries, communicating with inactive
enrolled actuaries, implementing regulatory improvements, investigating
discipline cases, and supporting the work of Joint Board Advisory
Committee members.
The 2021 biennial review established that four RPO employees
devoted an average of 65 percent of their time over the three-year
enrollment cycle to enrolled actuary enrollment activities.
Accordingly, the correct allocation of RPO's labor costs to the
enrolled actuary enrollment and renewal of enrollment processes was 65
percent of the four RPO staff members' time, which was used to
calculate the user fees in these final regulations. More specifically,
during the 2021 biennial review, the IRS projected the estimated costs
of direct labor and benefits based on the actual salary and benefits of
the four employees who devote time to conducting enrolled actuary
enrollment and renewal of enrollment processes, reduced to reflect the
percentage of time each individual actually spends on those activities.
The RPO's managers estimated the percentage of time these employees
devoted to conducting enrollment activities based on the managers'
knowledge of program assignments. In addition, the full costs of
related oversight and support costs, plus travel, training, and
supplies, were included in the 2021 biennial review user fee
computations. These costs had not been included in the user fee
computation previously.
[[Page 72369]]
Applying the refined methodology and including full costs in the
2021 biennial review resulted in the increase of $430 in new and
renewal of enrollment user fees for the three-year enrollment cycle to
$680, or $143.33 per year.
One commenter appeared to not understand that the change in the
internal allocation methodology applied only to the RPO staff who
actually provided the enrollment services. This commenter observed that
a change in the Treasury Department's and IRS's internal allocation
methodology for human resources should not result in a significant
increase in enrolled actuary user fees because many of the services the
agencies provide are not directly relevant to enrolled actuaries. Human
resource allocation throughout the Treasury Department was not used as
a cost factor attributed to the four RPO staff providing enrollment
services. Neither were costs associated with agency-wide IRS human
resource allocation; instead, those costs were one of several indirect
costs used to compute the overhead rate included in the rate
calculation methodology as described in the notice of proposed
rulemaking.
C. Impact of User Fees on New and Renewal of Enrollments
Two comments questioned whether increasing user fees may discourage
individuals from enrolling as enrolled actuaries or renewing their
enrollment. These commenters were concerned that a decline in the
number of enrolled actuaries could minimize the competition for
services, which could result in increased costs passed to the consumers
of services provided by enrolled actuaries. One commenter queried
whether there had been consideration given to phasing in the increased
user fees and implementing a cap on the user fees. The same commenter
stated that, in circumstances of declining enrolled actuary enrollment,
the remaining enrolled actuaries might in effect be penalized by
substantially increasing user fees. This commenter observed that
requiring enrolled actuaries to bear the full cost of enrollment
processing may be to the detriment, instead of the benefit, of the
enrollment of actuaries.
The Treasury Department and the IRS recognize the valuable service
enrolled actuaries provide to taxpayers. As discussed in section 2.A of
the Summary of Comments, OMB Circular A-25 states that when a service
offered by a Federal agency provides special benefits to identifiable
recipients beyond those accruing to the general public, the agency will
establish a user fee to recover the full cost to the government of
providing the service (unless the agency requests, and the OMB grants,
an exception to the full-cost requirement). Also discussed in section
2.A of the Summary of Comments, the IRS confers benefits on individuals
who are enrolled actuaries beyond those that accrue to the general
public by allowing them to perform pension actuarial services under
ERISA and to practice before the IRS. The Treasury Department and the
IRS comply with OMB Circular A-25 by charging user fees to recover the
full cost of overseeing the enrollment and renewal of enrollment
processes. Based on the 2021 biennial review, the RPO determined that
the full cost of administering the enrolled actuary new and renewal of
enrollment processes increased from $250 to $680 per enrollment
application for the three-year enrollment period. The fee is an
increase of $143.33 per year for the period. The Treasury Department
and the IRS have not requested an exception from the OMB because there
is no data that indicates the user fee for new enrollment or renewal of
enrollment is cost prohibitive or that any other condition exists that
justifies an exception.
D. Applicability of OMB Circular A-25
One commenter queried whether there should be an exemption from the
user fee in certain circumstances, as permitted by OMB Circular A-25.
As an example, the commenter described a scenario when enrolled actuary
status is required to qualify for employment but the employment
position itself does not involve providing pension actuarial services
or representing a taxpayer before the IRS. According to the commenter,
the enrolled actuary in this scenario should not be subject to the user
fee because the employer does not benefit from the performance of the
particular services the enrolled actuary status permits. This is a
misunderstanding of the role ``benefit'' plays in the OMB Circular A-25
requirement to charge a user fee. As explained in the notice of
proposed rulemaking and this preamble, the user fee is required to
recover the full cost of providing the service of new and renewal of
enrollment to an individual who has been approved by the Joint Board to
perform actuarial services required under ERISA and to represent
clients in certain circumstances before the IRS. This service confers
special benefits to the enrolled actuary. Any third-party benefit, such
as to an enrolled actuary's employer or clients, is not a consideration
with respect to the OMB Circular A-25 requirement. The scenario
presented by the commenter does not justify an exception to the full-
cost recovery requirement.
Special Analyses
I. Regulatory Planning and Review
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6(b) of Executive Order 12866, as amended. Therefore, a
regulatory impact assessment is not required.
II. Regulatory Flexibility Act (RFA)
The notice of proposed rulemaking included an initial regulatory
flexibility analysis (IRFA). No comments pertaining to the analysis
were received. Based on the IRFA, the Treasury Department and the IRS
determined the rule is not expected to have a significant economic
impact on a substantial number of small entities and a final regulatory
flexibility analysis is not required. As discussed in the IRFA, the
regulations affect actuaries who apply for enrollment as an enrolled
actuary or renewal of enrollment with the Joint Board. Only
individuals, not businesses, can apply for new enrollment or to renew
enrolled actuary certification. Therefore, the economic impact of these
regulations, an increase of $143.33 per year for the three-year
enrollment period, on any small entity generally will be the result of
an individual actuary owning a small business, or a small business
employing an actuary and requiring the individual to apply for enrolled
actuary status or renew as an enrolled actuary with the Joint Board.
Pursuant to the RFA (5 U.S.C. chapter 6), it is hereby certified that
these regulations will not have a significant economic impact on a
substantial number of small entities.
Pursuant to section 7805(f) of the Internal Revenue Code, the
notice of proposed rulemaking was submitted to the Office of Chief
Counsel for Advocacy of the Small Business Administration (SBA) for
comment on its impact on small business. The Chief Counsel for the
Office of Advocacy of the SBA did not provide any comments.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may
[[Page 72370]]
result in expenditures in any one year by a state, local, or tribal
government, in the aggregate, or by the private sector, of $100 million
in 1995 dollars, updated annually for inflation. This rule does not
include any Federal mandate that may result in expenditures by state,
local, or tribal governments, or by the private sector in excess of
that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on state and local
governments, and is not required by statute, or preempts state law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. These final regulations do not have
federalism implications and do not impose substantial direct compliance
costs on state and local governments or preempt state law within the
meaning of the Executive order.
V. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Drafting Information
The principal author of these regulations is Carolyn M. Lee, Office
of the Associate Chief Counsel (Procedure and Administration). Other
personnel from the Treasury Department and the IRS participated in the
development of the regulations.
List of Subjects in 26 CFR Part 300
Reporting and recordkeeping requirements, Use fees.
Adoption of Amendments to the Regulations
Accordingly, the Treasury Department and the IRS amend 26 CFR part
300 as follows:
PART 300--USER FEES
0
Paragraph 1. The authority citation for part 300 continues to read as
follows:
Authority: 31 U.S.C. 9701.
0
Par. 2. Section 300.7 is amended by revising paragraphs (b) and (d) to
read as follows:
Sec. 300.7 Enrollment of enrolled actuary fee.
* * * * *
(b) Fee. The fee for initially enrolling as an enrolled actuary
with the Joint Board for the Enrollment of Actuaries is $680.00.
* * * * *
(d) Applicability date. This section is applicable beginning
November 20, 2023.
0
Par. 3. Section 300.8 is amended by revising paragraphs (b) and (d) to
read as follows:
Sec. 300.8 Renewal of enrollment of enrolled actuary fee.
* * * * *
(b) Fee. The fee for renewal of enrollment as an enrolled actuary
with the Joint Board for the Enrollment of Actuaries is $680.00.
* * * * *
(d) Applicability date. This section is applicable beginning
November 20, 2023.
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
Approved: October 4, 2023.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2023-23301 Filed 10-19-23; 8:45 am]
BILLING CODE 4830-01-P
</pre></body>
</html>Indexed from Federal Register on October 20, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.