Proposed Rule2026-10963
Estate Tax Closing Letter User Fee Update
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
June 2, 2026
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains proposed regulations amending the current regulations to increase the amount of the user fee imposed on authorized persons requesting the issuance of an estate tax closing letter. The Independent Offices Appropriations Act of 1952 authorizes charging user fees in appropriate circumstances. The proposed regulations would affect persons who request an estate tax closing letter.
Full Text
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<title>Federal Register, Volume 91 Issue 105 (Tuesday, June 2, 2026)</title>
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[Federal Register Volume 91, Number 105 (Tuesday, June 2, 2026)]
[Proposed Rules]
[Pages 32909-32911]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10963]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 91, No. 105 / Tuesday, June 2, 2026 /
Proposed Rules
[[Page 32909]]
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 300
[REG-103193-26]
RIN 1545-BS10
Estate Tax Closing Letter User Fee Update
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations amending the
current regulations to increase the amount of the user fee imposed on
authorized persons requesting the issuance of an estate tax closing
letter. The Independent Offices Appropriations Act of 1952 authorizes
charging user fees in appropriate circumstances. The proposed
regulations would affect persons who request an estate tax closing
letter.
DATES: Written or electronic comments and requests for a public hearing
must be received by July 2, 2026.
ADDRESSES: Commenters are strongly encouraged to submit public comments
electronically. Submit electronic submissions via the Federal
eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (indicate IRS and
REG-103193-26) by following the online instructions for submitting
comments. Requests for a public hearing must be submitted as prescribed
in the ``Comments and Request for Public Hearing'' section. Once
submitted to the Federal eRulemaking Portal, comments cannot be edited
or withdrawn. The Department of the Treasury (Treasury Department) and
the IRS will publish for public availability any comments submitted to
the IRS's public docket. Send paper submissions to: CC:PA:01:PR (REG-
103193-26), Room 5503, Internal Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Juli Ro Kim at (202) 317-6859; concerning cost methodology, CFO Cost
and User Fees at (202) 317-6400; concerning submissions of comments or
requests for a public hearing, the Publications and Regulations Section
at (202) 317-6901 (not toll-free numbers) or by email at
<a href="/cdn-cgi/l/email-protection#f5858097999c969d9094879c9b9286b59c8786db929a83"><span class="__cf_email__" data-cfemail="8afaffe8e6e3e9e2efebf8e3e4edf9cae3f8f9a4ede5fc">[email protected]</span></a> (preferred).
SUPPLEMENTARY INFORMATION:
Authority
This notice of proposed rulemaking proposes amendments to 26 CFR
part 300 regarding user fees for authorized persons who request the
issuance of an estate tax closing letter (also referred to as the IRS
Letter 627).
The Independent Offices Appropriations Act of 1952 (IOAA) (31
U.S.C. 9701) authorizes each agency to prescribe regulations that
establish user fees for services provided by the agency. The IOAA
provides that regulations implementing user fees are subject to
policies prescribed by the President; these policies are set forth in
the Office of Management and Budget Circular A-25, 58 FR 38142 (July
15, 1993) (OMB Circular A-25).
The IOAA states that the services provided by an agency should be
self-sustaining to the extent possible. Under OMB Circular A-25,
agencies that provide services that confer special benefits on
identifiable recipients beyond those accruing to the general public
must identify those services, determine whether user fees should be
assessed for those services, and, if so, establish user fees that
recover the full cost of providing those services, unless an exception
to the full cost requirement is granted. As required by the IOAA and
OMB Circular A-25, agencies are to review user fees biennially and
update them as necessary to reflect changes in the cost of providing
the underlying services.
Background and Explanation of Provisions
A. Estate Tax Closing Letter User Fee
On September 28, 2021, the Treasury Department and the IRS
published final regulations (TD 9957) in the Federal Register (86 FR
53539) establishing a $67 user fee to apply to requests for the
issuance of an estate tax closing letter, based on a 2019 Cost Model.
Based on a 2023 Cost Model, the Treasury Department and the IRS
published in the Federal Register an interim final rule (TD 10031, 90
FR 21410) on May 20, 2025, followed by final regulations adopting the
interim final rule (TD 10038, 90 FR 55041) on December 1, 2025, which
established the current $56 user fee to apply to requests for the
issuance of an estate tax closing letter.
As explained in the Background section of the preamble of TD 9957,
the issuance of an estate tax closing letter constitutes the provision
of a service and confers special benefits to authorized persons
requesting such letters beyond those accruing to the general public.
Therefore, the IRS is authorized, pursuant to the IOAA and OMB Circular
A-25, to charge a user fee for the issuance of an estate tax closing
letter that reflects the full cost of providing this service.
In 2025, the IRS conducted a biennial review of the estate tax
closing letter user fee and issued a new Cost Model, which determined
that the full cost of issuing estate tax closing letters to authorized
persons is $76. The increase is due to a combination of operational
factors.
B. Calculation of User Fees Generally
The IRS follows generally accepted accounting principles (GAAP) in
calculating the full cost of providing services. The Federal Accounting
Standards Advisory Board (FASAB) is the body that establishes GAAP that
apply for Federal reporting entities such as the IRS. FASAB publishes
the FASAB Handbook of Accounting Standards and Other Pronouncements, as
amended, available at <a href="https://fasab.gov/accounting-standards/">https://fasab.gov/accounting-standards/</a>. The
FASAB Handbook includes the Statement of Federal Financial Accounting
Standards 4: Managerial Cost Accounting Standards and Concepts (SFFAS
No. 4) for the Federal government. 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.
1. Cost Center Allocation
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
[[Page 32910]]
organizational unit in the IRS's cost accounting system is a cost
center. Cost centers usually are 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 are allocated to that cost center. These
costs include the direct costs for the cost center's activities and all
indirect costs, including overhead, associated with that cost center.
Each cost is recorded in only one cost center.
2. Cost Estimation of Direct Labor and Benefits
Not all cost centers are fully devoted to only one service for
which the IRS charges a user fee. When cost centers include multiple
services, the IRS measures the time required to accomplish activities
associated with each service to estimate the average time spent on the
service in the related cost center. The average time devoted is
multiplied by the relevant organizational unit's average labor and
benefits cost per unit of time to determine the direct labor and
benefits cost incurred to provide the service. To determine the full
cost, the IRS then adds an appropriate overhead charge.
3. Calculating Overhead
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, such as the
following:
<bullet> General management and administration
<bullet> Rent, security, utilities and maintenance
<bullet> Procurement and contracting
<bullet> Financial management and accounting
<bullet> Information technology
<bullet> Research, analytical, and statistical
<bullet> Human resources and personnel
To calculate the overhead allocable to a service, the IRS
multiplies the current overhead rate by the direct labor and benefits
costs of the service. The overhead rate is the ratio of the IRS's
indirect labor, benefits, and non-labor costs of business divisions
that do not interact with taxpayers to the direct labor and benefits
costs of business divisions that interact with taxpayers. The IRS
calculates the 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.
For this estate tax closing letter user fee review, the fiscal year
(FY) 2025 overhead rate, based on FY 2024 costs, of 62.92 percent was
used.
C. Full Cost Determination for the Estate Tax Closing Letter User Fee
The IRS followed the guidance provided by the OMB Circular A-25
guidance to compute the full cost of issuing estate tax closing letters
to authorized persons. OMB Circular A-25 explains that the full cost
includes all indirect and direct costs to any part of the Federal
Government including, but not limited to, direct and indirect personnel
costs, physical overhead, rents, utilities, travel, and management
costs.
1. Request Processing Costs
Requests for estate tax closing letters are processed by employees
at grades 5, 8, and 11 of the general schedule (GS-5, GS-8, and GS-11).
Approximately 0.65 staff hours are required to review the return,
create the estate tax closing letters, and prepare the letters for
mailing. The IRS processed an average of 8,053 requests per year for
estate tax closing letters in FY 2023 and FY 2024, requiring 5,234
staff hours.
Total hours allocated to the cost also must include indirect hours
for campus employees, which are calculated by multiplying the direct
hours by the applicable 60 percent indirect employee rate. Using this
information, IRS determined that staff hours for processing requests
for estate tax closing letters are 8,374 annually.
Direct Staff Hours.......................................... 5,234
Indirect Hours (60%)........................................ + 3,140
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Total Hours............................................... 8,374
To determine the labor and benefits costs, the IRS divided the
8,374 total hours by 2,080 (the total annual hours worked by a full-
time employee (FTE)) to convert the hours to a 4.03 FTE equivalent. The
processing of requests for estate tax closing letters is performed at
the GS-5 level (36.85 percent), but also by employees at the GS-8 level
(35.82 percent) and GS-11 level (27.33 percent). The average salary and
benefit cost for each of those levels was multiplied by that grade's
percentage of processing time to arrive at a $92,812 total cost per
FTE. Multiplying the cost per FTE by the 4.03 FTE equivalent resulted
in a total labor and benefits cost of $374,032, as follows:
Total Cost Per FTE.......................................... $92,812
Total FTE................................................... x 4.03
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Processing Labor & Benefits............................... 374,032
2. Quality Assurance Review Costs
A sampling of issued estate tax closing letters are reviewed to
verify (1) the estate tax closing letter was authorized, (2) the
information included in the estate tax closing letter was accurate, and
(3) the address was correct.
During FY 2023 and FY 2024, 48 estates were issued estate tax
closing letters (an annual average of 24 estates) that were reviewed
for quality assurance purposes. Generally, three letters are reviewed
per estate and quality assurance professionals spend 0.5 hours
reviewing one estate tax closing letter, totaling 36 direct staff
hours. The direct staff hours were multiplied by the 60 percent
indirect employee rate for campus employees, resulting in a combined
total of 58 annual staff hours allocated for quality assurance (QA)
reviews, as follows:
Direct Staff Hours.......................................... 36
Indirect Hours (60%)........................................ + 22
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Total Hours............................................... 58
Outgoing estate tax closing letters are reviewed by quality
assurance professionals at the following Internal Revenue (IR) paybands
of the IRS Payband System: IR-10 (25 percent) and IR-06 (75 percent).
Dividing the total hours by 2,080 (the total annual hours for each FTE)
resulted in 0.03 FTEs. The average salary and benefits for both IR
paybands conducting QA reviews was multiplied by that IR payband's
percentage of processing time to arrive at the $3,818 total cost per
FTE. The total cost per FTE was then multiplied by the total FTE to
determine the labor and benefits cost for QA reviews, as follows:
Total Cost per FTE.......................................... $127,256
Total FTE................................................... x 0.03
-----------
Quality Assurance Labor & Benefits.......................... 3,818
3. Full Cost per Request Calculation
The IRS applied the 62.92 percent overhead rate to the total labor
and benefits cost to calculate the full cost of the estate tax closing
letter program.
Processing Labor & Benefits................................. $374,032
Quality Assurance Labor & Benefits.......................... + 3,818
-----------
Total Labor and Benefits.................................. 377,850
Overhead (62.92%)........................................... + 237,743
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Full Cost................................................. 615,593
The $76 cost per request was determined by dividing the full cost
by the average annual volume of processed requests, as follows:
Full Cost................................................... $615,593
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Estimated Annual Request Volume............................. / 8,053
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Cost per Request.......................................... 76
Proposed Applicability Date
These regulations are proposed to apply to requests for an estate
tax closing letter received by the IRS on or after the date that is 30
days after the date these regulations are published as final
regulations in the Federal Register.
Special Analyses
I. Regulatory Planning and Review
The OMB's Office of Information and Regulatory Analysis has
determined that this regulation is not significant and is not subject
to review under section 6(b) of Executive Order 12866.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that these proposed regulations will not have a
significant economic impact on a substantial number of small entities.
The proposed regulations, which would increase the amount of a fee to
obtain a particular service, would affect decedents' estates, which
generally are not ``small entities'' as defined under 5 U.S.C. 601(6).
Thus, these proposed regulations would have no economic impact on small
entities. Accordingly, the Secretary certifies that the rule will not
have a significant economic impact on a substantial number of small
entities.
III. Submission to Small Business Administration
Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking has been submitted to the Chief Counsel
of the Office of Advocacy of the Small Business Administration for
comment on its impact on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 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 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.
V. 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 proposed 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.
Comments and Request for Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to comments that are submitted timely to
the Treasury Department and the IRS as prescribed in this preamble
under the ADDRESSES heading. The Treasury Department and IRS request
comments on all aspects of the proposed regulations. Any electronic and
paper comments submitted will be made available at <a href="https://www.regulations.gov">https://www.regulations.gov</a> or upon request. Once submitted to the Federal
eRulemaking Portal, comments cannot be edited or withdrawn.
A public hearing will be scheduled if requested in writing by any
person that timely submits written or electronic comments. If a public
hearing is scheduled, notice of the date, time, and place for the
public hearing will be published in the Federal Register.
Drafting Information
The principal author of these proposed regulations is Juli Ro Kim
of the Office of the Associate Chief Counsel (Passthroughs, Trusts, and
Estates). However, other personnel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 300
Estate taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend
26 CFR part 300 as follows:
PART 300--USER FEES
0
Paragraph 1. The authority citation for part 300 continues to read, in
part, as follows:
Authority: 31 U.S.C. 9701.
0
Par. 2. Section 300.12 is amended by revising paragraphs (b) and (d) to
read as follows:
Sec. 300.12 Fee for estate tax closing letter.
* * * * *
(b) Fee. The fee for issuing an estate tax closing letter is $76.
* * * * *
(d) Applicability date. This section applies to requests received
by the IRS on or after [the date 30 days after the date of publication
of final regulations in the Federal Register].
Frank J. Bisignano,
Chief Executive Officer.
[FR Doc. 2026-10963 Filed 6-1-26; 8:45 am]
BILLING CODE 4831-GV-P
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