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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules
Background and Explanation of Provisions This document contains proposed amendments to 26 CFR part 300
regarding user fees.

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A. Enrolled Agents, Enrolled Retirement Plan Agents, and the Special Enrollment Examinations Section 330 of Title 31 of the United States Code authorizes the Secretary of the Treasury to regulate the practice of representatives before the Department of the Treasury Treasury Department and require that an individual seeking to practice demonstrate the necessary qualifications, competency, and good character, and reputation. The rules governing practice before the IRS are published in 31 CFR, Subtitle A, part 10, and reprinted as Treasury Department Circular No. 230 Circular 230.
Section 10.4a of Circular 230
authorizes the IRS to grant status as enrolled agents to individuals who demonstrate special competence in tax matters by passing a written examination, the EA SEE, and who have not engaged in any conduct that would justify suspension or disbarment under Circular 230.
The EA SEE is comprised of three parts and an applicant generally must pass all three parts within two years to be granted enrolled agent status through written examination. The EA SEE
testing period generally begins on May 1 each year and ends the last day of the following February. The EA SEE is not offered during March and April when 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 website at www.irs.gov/taxprofessionals/enrolled-agents. Since 2006, the IRS has engaged the services of a third-party contractor to develop and administer the EA SEE. The IRS
Return Preparer Office RPO oversees the development and administration of the EA SEE. As of August 30, 2021, there were 62,686 enrolled agents.
Section 10.4b of Circular 230
authorizes the IRS to grant status as enrolled retirement plan agents to individuals who demonstrate special competence in qualified retirement plan matters by passing a written examination, the ERPA SEE, and who have not engaged in any conduct that would justify suspension or disbarment under Circular 230. The IRS stopped offering the ERPA SEE as of February 12, 2016, and no longer accepts applications for new enrollment as an enrolled retirement plan agent.

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Accordingly, the proposed regulations remove the user fee for the ERPA SEE.
Individuals currently enrolled as retirement plan agents can maintain their status as enrolled retirement plan agents. As of August 30, 2021, there were 743 enrolled retirement plan agents.
B. User Fee Authority The Independent Offices Appropriation Act of 1952 IOAA 31
U.S.C. 9701 authorizes each agency to promulgate regulations establishing the charge for services provided by the agency. The IOAA states that the services provided by an agency should be self-sustaining to the extent possible.
31 U.S.C. 9701a. The IOAA provides that user fees are subject to policies prescribed by the President, which are currently set forth in the Office of Management and Budget OMB
Circular A25 OMB Circular A25, 58
FR 38142 July 15, 1993.
Section 6a1 of OMB Circular A25
states that when a service offered by an agency provides 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.
Section 8e of OMB Circular A25
requires agencies to review user fees biennially and update the fees as necessary to reflect changes in the cost of providing the underlying services.
During the biennial review, an agency must calculate the full cost of providing each service, taking into account all direct and indirect costs to any part of the U.S. government. Under section 6d1 of OMB Circular A25, the full cost of providing a service includes, but is not limited to, an appropriate share of salaries, medical insurance and retirement benefits, management costs, and physical overhead and other indirect costs, including rents, utilities, and travel, associated with providing the service.
An agency should set the user fee at an amount that recovers the full cost of providing the service unless the agency requests, and the OMB grants, an exception to the full-cost requirement.
Under section 6c2 of OMB Circular A
25, the OMB may grant exceptions when the cost of collecting the fees would represent an unduly large part of the fee for the activity or when any other condition exists that, in the opinion of the agency head, justifies an exception.
When the OMB grants an exception, the agency does not collect the full cost of providing the service and must fund the remaining cost of providing the service from other available funding sources.
Consequently, the agency subsidizes the
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cost of the service to the recipients of reduced-fee services even though the service confers a special benefit on those recipients who would otherwise be required to pay the full cost of receiving the benefit as provided for by the IOAA and OMB Circular A25.
C. The EA SEE User Fee Section 10.4a of Circular 230
provides that the IRS will grant enrolled agent status to an applicant who, among other things, demonstrates special competence in tax matters by written examination. The EA SEE is the written examination by which applicants can demonstrate special competence in tax matters, and an applicant must pass all three 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 thereby satisfy one of the requirements for becoming an enrolled agent under section 10.4a of Circular 230. Because the EA SEE is a service that provides a special benefit to test takers, the IRS charges a user fee to take the examination.
Final regulations TD 9820 published in the Federal Register 82 FR 33009
01 on July 19, 2017, established the current $81 user fee per part of the EA
SEE. At that time the Treasury Department and the IRS determined that a $81 user fee per part would recover the full direct and indirect costs the government would incur to oversee 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 2021 to February 2022 testing period, the contractors fee is $104 for each part of the EA SEE.
As required by OMB Circular A25, in 2021 the IRS conducted a biennial review of the EA SEE user fee and calculated its costs for overseeing the examination. As a result of the review, the IRS determined that its full cost for overseeing the EA SEE is $99 per part, plus an amount payable directly to a third-party contractor for its services.
The proposed regulations increase the amount of the user fee for taking the EA
SEE from $81 per part to $99 per part.
This amount is in addition to an amount payable directly to the third-party contractor for each part. The IRS does not intend to subsidize any of the cost of making the EA SEE available to examinees and is not applying for an exception to the full-cost requirement in OMB Circular A25.

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