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Federal Register / Vol. 86, No. 185 / Tuesday, September 28, 2021 / Rules and Regulations
following reasons. First, the IRS views the $67 user fee as not onerous or excessive, but reasonable in relation to the service provided. Second, as also discussed in the preamble to the proposed regulations, an account transcript is a free alternative to the estate tax closing letter that provides certain return information comparable to that found in an estate tax closing letter. Account transcripts can be used to confirm that the examination of an estate tax return has been completed and the IRS file has been closed, which most often is identified as the primary purpose for requesting an estate tax closing letter. See Notice 201712, I.R.B.
20175 742 describing the utility of the account transcript in lieu of the estate tax closing letter and its availability at no charge. Thus, if affording the user fee for the issuance of an estate tax closing letter presents a challenge, an estate instead can request an account transcript free of charge. The suggestions of the commenters to reduce or eliminate the user fee, therefore, are not adopted.
2. Comments Regarding a Single User Fee When Multiple Letters Are Issued The Treasury Department and the IRS
note that the preamble to the proposed regulations incorrectly states that the estate tax closing letter is issued to each executor. Instead, regardless of who requests an estate tax closing letter, the letter generally is issued to only one of multiple executors. Generally, the executor to whom the estate tax closing letter is issued is the executor identified on line 6a of Part 1 of the Form 706, United States Estate and GenerationSkipping Transfer Tax Return; the address of such executor that is entered on line 6b becomes the estates address of record unless subsequently updated using Form 8822, Change of Address For Individual, Gift, Estate, or Generation-Skipping Transfer Tax Returns. Currently, estate tax closing letters also are sent to the recognized representative identified in Part 4 of the Form 706 and up to two representatives listed on Form 2848, Power of Attorney and Declaration of Representative.
Therefore, in almost all cases, each request and corresponding $67 user fee will generate the issuance of an estate tax closing letter to three or four persons.
One commenter referred to the costing analysis in the preamble of the proposed regulations and sought an explanation of the decision to charge the same user fee per request, regardless of the number of estate tax closing letters to be issued in response to that single request. The commenter noted the incremental cost
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impact that occurs with the need to issue multiple letters in response to a single request, and contended that requests requiring the issuance of only one letter will subsidize the user fee cost of such requests requiring the issuance of multiple letters.
The costing analysis described in part H of the Background and Explanation of Provisions of the proposed regulations is based in large part on the number of requests for estate tax closing letters, rather than the total number of letters issued. The fact that one request generates, on average, three issued letters has only a marginal impact on the calculated user fee. The number of letters factors into the costing analysis in two places: Request processing and quality assurance review.
For request processing costs, the costing analysis in the proposed regulations provides for 0.65 staff hours to review the return, create the estate tax closing letters, and prepare the letters for mailing. Although a detailed description of what each of these tasks entails and a breakdown of the time required for each task is not provided in the proposed regulations, the bulk of the time in processing the request is attributable to the research and analysis of IRS records by qualified personnel and not to the issuance of additional letters to additional persons. Thus, the incremental request processing cost of issuing the same estate tax closing letter at the same time to multiple persons is minimal.
For quality assurance review costs, the costing analysis in the proposed regulations provides that five out of every 100 estate tax closing letters are reviewed for quality assurance. While the issuance of multiple letters per request increases the number of letters reviewed for quality assurance and, therefore, increases the cost estimate for quality assurance review, the impact on the full costing is relatively small, only $3 per letter.
Notwithstanding the marginal impact of issuing multiple letters per request on the calculation of the user fee, a variable user fee structure raises significant administrability concerns. Incorrect payments of the user fee are likely to occur in the event of a variable fee because persons that request the issuance of an estate tax closing letter may not have sufficient information regarding the estates account to accurately identify the number of persons currently authorized under IRS
procedures to receive an estate tax closing letter; the determination of the number of letters to be issued sometimes depends on more information than is shown on the estate
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tax return. Thus, varying the user fee based on the number of letters to be issued would require the IRS to modify the request processing procedures to add procedures for overpayments and underpayments of the user fee and likely would cause administrative delays as the personnel processing the requests take necessary steps and wait for correction of the payment before issuing letters. The changes to the request processing procedures necessary to accommodate a variable fee in place of a fixed fee would increase the request processing costs that factor into the overall cost estimate for the user fee; it is possible that the increase caused by the changes to the request processing procedures could exceed the marginal increase of issuing multiple letters per request under a fixed fee.
Based on all of these considerations, and recognizing that most requests for estate tax closing letters will require the issuance of multiple letters, the Treasury Department and the IRS have determined that the most economical and least complex approach is to have a fixed user fee based on the average number of letters issued per request.
Thus, no change to the costing analysis is required and the proposed user fee of $67 is adopted without change.
C. Comments Regarding Procedural Aspects of Requesting Estate Tax Closing Letters and Paying the User Fee 1. Making the Request and Paying the User Fee With the Estate Tax Return Two commenters suggested amending the estate tax return or using a separate form to allow an estate to request the estate tax closing letter and pay the user fee with the filing of the estate tax return. The commenters sought to further reduce or eliminate the administrative burden on both the estate and the IRS by removing the need for a separate web-based process. Under this suggestion, an estate would not be required to make a separate request subsequent to filing the estate tax return. The commenters stated that this suggestion would allow for efficient administration of the estate and provide the IRS with immediate notice of the request.
The Treasury Department and the IRS
concur that the ability to pay the user fee and make the request for an estate tax closing letter at the time of filing the estate tax return would reduce or eliminate the burden on estates intending to make such requests.
However, estate tax closing letters are not issued by the same IRS personnel who are involved in the examination of, and the decision to close the IRS file on,
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