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IRS Raises Selected User Fees in 2006

The Internal Revenue Service has announced increases in selected user fees for 2006. The new fee structure will more accurately reflect the costs of processing various applications, ruling requests, and opinion letters.

The Office of Management and Budget has directed federal agencies to charge user fees reflecting the full cost of goods or services "that convey special benefits to recipients beyond those accruing to the general public." User fees will be effective Feb. 1, 2006, except as noted.

The fee increases affect a limited population of taxpayers and tax-exempt entities with technical questions or procedural issues. Among the changes:

  • The fee for IRS Chief Counsel private letter rulings will increase from $7,000 to $10,000. Under the new fee schedule, taxpayers earning less than $250,000 can request a private letter ruling for a reduced fee of $625 while a fee of $2,500 will apply to requests from taxpayers earning from $250,000 to $1 million.

  • The fee for requests for changes in accounting methods for businesses will increase from the previous $1,500 to $2,500.

  • For corporate taxpayers, the cost of a pre-filing agreement will increase from the previous three-tiered structure, which was capped at $10,000, to a new flat fee of $50,000. Also, Advance Pricing Agreements, which previously cost from $5,000 to $25,000, will now cost from $22,500 to $50,000.

  • For employee plans, fees for opinion letters on prototype IRAs, SEPs, SIMPLE IRAs, and Roth IRAs, which were previously $125 to $2,570, will now range from $200 to $4,500. Fees for exempt organizations rulings, which previously cost $155 to $2,570, will now range from $275 to $8,700.

Some other user fees in the exempt organizations and employee plans area will increase July 1, 2006. For example, user fees for exempt organization applications and requests for group exemption letters, which currently range from $150 to $500, will increase to $300 to $900.

For more information, see http://www.irs.gov/pub/irs-news/irs_tege_user_fees.pdf. Details on increases in user fees are published in Revenue Procedures 2006-1 and 2006-8, which appeared in Internal Revenue Bulletin 2006-1 on Jan. 3, 2006. The increase in the fees for Advance Pricing Agreements is described in a separate revenue procedure, Revenue Procedure 2006-9, and appeared in Internal Revenue Bulletin 2006-2 on Jan. 9, 2006.

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