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Wednesday, December 21, 2005

IRS User Fees to Jump

IRS user fees are about to change - and the direction is up of course. On a percentage basis, some of these increases are quite substantial. At a time when the IRS response time on many ruling requests is longer than ever, the fee increases remind us that government enterprises are immune from the competitive market pressures that keep prices under control in the private sector.

Some key changes:
  • The fee for IRS Chief Counsel private letter rulings will increase from $7,500 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.
  • 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.
Hurry up and get those rulings in - most of these increases are effective on February 1.
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