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By Kat Lucero
The IRS will charge $81 for each part of the enrolled agent exam next year, after the agency adopted its controversial proposal for the higher fee, which the IRS said covers its costs of providing the service.
The new price is to take effect March 1, 2018, for people who want to become enrolled agents—practitioners who can represent taxpayers before the Internal Revenue Service.
In final rules (T.D. 9820, RIN:1545-BN09) posted July 18, the IRS also said the third-party contractor that administers the exam would raise its service charge for each section of the three-part test called the special enrollment examination: $100.94 for the May 2017 to February 2019 testing periods and $103.97 for May 2019 to February 2020. The price was $98 for each part of the exam during the May 2016 to February 2017 period.
The price surge comes as the IRS seeks to find other funding sources in response to budget cuts ongoing since 2010. The agency is facing a fiscal year 2018 proposal that would cut $149 million from its budget. The House Appropriations Committee approved the spending package on July 13.
In October 2016, the IRS proposed raising the $11 fee to $81, drawing much opposition from tax practitioners. The proposal replaced an earlier version that would have raised the price to $99, but practitioners still pushed back, arguing that the dramatic increase would be counterproductive, discouraging candidates from becoming enrolled agents and putting taxpayers at risk.
The National Association of Enrolled Agents continued to criticize the agency’s decision.
“The IRS says they want more unenrolled preparers to become enrolled agents to enhance the tax administration system and improve compliance. Increasing the user fee will have the exact opposite effect. It just doesn’t make sense,” Jeffrey S. Trinca, vice president at Van Scoyoc Associates and legislative counsel to the NAEA, said in an email.
In an interview, Trinca said he is also concerned that Congress and the IRS may find other ways to pass on costs to taxpayers and tax practitioners during this appropriations period.
Angela Thompson, a tax resolution specialist for Rue & Associates who took the exam a few months ago, said she paid over $1,000 to become an enrolled agent. The cost included the total exam fees, which amounted to $327, the license once she passed the test, and the test preparation materials, she told Bloomberg BNA.
Thompson said she was reimbursed by her company, but that it might be difficult for people who are self-employed.
The IRS defended its final decision.
“The Treasury Department and the IRS do not intend the user fee to discourage individuals from becoming enrolled agents and have considered the possible impact of increasing the user fee on the number of individuals taking the EA-SEE,” according to the regulations.
Treasury and the IRS also “think examinees should be charged the full cost to the IRS of overseeing the administration of the EA-SEE, regardless of whether they have already taken one or two parts, given the absolute amount of the user fee ($81 per part),” the rules said
The IRS said it won’t seek an exemption from the Office of Management and Budget’s requirement that user fees recover the full cost of a service.
The final rules are scheduled for publication July 19 in the Federal Register.
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Text of T.D. 9820 is in TaxCore.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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