IRS INCREASES USER FEES FOR RULING REQUESTS AND DETERMINATION LETTERS.

Rev. Proc. 90-17

SECTION 1. PURPOSE

This revenue procedure makes certain changes in the user fee program of the Internal Revenue Service that was established pursuant to section 10511 of the Revenue Act of 1987 (Title X of the Omnibus Budget Reconciliation Act of 1987), Public Law 100-203, enacted December 22, 1987. The program was previously set forth in Rev. Proc. 89-4, 1989-1 C.B. 767.

SEC. 2. CHANGES

01 FEE INCREASES. Because section 10511 of the Revenue Act of 1987 ("Act") provides that user fees are to be determined after taking into account the average time for, and difficulty of, complying with requests in each category (and subcategory), user fees should bear a direct relationship to the cost of providing the ruling, etc. After studying the direct and indirect (overhead) costs of preparing, reviewing, and processing a ruling, it became evident that most of the user fees in-the fee schedule set forth in Rev. Proc. 89-4 did not recover the cost of providing rulings, etc., or did not accurately reflect the time necessary to process the request or the complexity of the request. Consistent with section 10511 of the Act, most of the fees have been increased. However, reduced fees are provided for appropriate subcategories of cases.

The changes to the fee schedule were made only after considerable cost and other analyses and the benefit of public commentary to Announcement 89-104, 1989-35 I.R.B. 19. The announcement solicited comments concerning possible modifications to the "comfort ruling" policy, which is now described in Rev. Proc. 90-1, 1990-1 I.R.B. 8, and to other initiatives the Office of the Associate Chief Counsel (Technical) might undertake to improve the private letter ruling process. Public comments in response to Announcement 89-104 and Announcement 89-105, 1989-35 I.R.B. 20, which answers a number of commonly asked questions concerning Rev. Proc. 89-34, including how the Associate Chief Counsel (Technical)'s "comfort ruling" policy described therein is to be administered, are now being evaluated and it is possible that the Service may decide to issue "comfort rulings." If it does, section 1(c) of the fee schedule states that consideration will be given to charging a higher user fee for them.

Most of the fee revisions are effective for receipts after March 31, 1990; however, the revised fees for Employee Plans Opinion, Notification, and Determination letter requests and Exempt Organizations Determination letter requests are effective for receipts after September 30, 1990. The fees set forth in this revenue procedure that are effective after September 30, 1990, will apply only if legislation is enacted to extend the user fee program beyond September 30, 1990. The new fee schedule is provided below in section 6.03 of this revenue procedure.

02 INCORPORATION OF MODIFICATIONS OF REV. PROC. 89-4. Rev. Proc. 89-4 was modified by section 19.04 of Rev. Proc. 89-9, which prescribed the user fee applicable to advisory letters concerning a mass submitter's addition of optional provisions following the issuance of a favorable opinion letter, and by section 17 of Rev. Proc. 89-13, which prescribed the user fees applicable to sponsors of regional prototype plans, mass submitters of such plans, and adopters of such plans. Those modifications are contained in section 6.03 of this revenue procedure.

03 ADDITION OF NEW SUBCATEGORIES. "Requests for rulings under Rev. Proc. 89-35" has been added as a subcategory in the Employee Plans Rulings category, with a user fee of $100. "Requests for determination letters on multiple employer plans" has been added as a subcategory in the fee schedule, under the Employee Plans Determination Letters category. "Group exemption letters" has been added as a subcategory under the Exempt Organization Determination Letters category.

SEC. 3. BACKGROUND

01 Section 10511 of the Revenue Act of 1987 ("Act") provides that the Secretary of the Treasury or his delegate ("Secretary") shall establish a program requiring the payment of user fees for requests to the Service for rulings, opinion letters, determination letters, and similar requests. Section 10511 provides that such fees shall apply with respect to requests made on or after the 1st day of the second calendar month beginning after the date of enactment and before September 30, 1990. The fees charged under the program are to vary according to categories (or subcategories) established by the Secretary; they are to be determined after taking into account the average time for, and difficulty of, complying with requests in each category and subcategory; and they are to be payable in advance. The Secretary is to provide for such exemptions and reduced fees under the program as the Secretary determines to be appropriate, but the average fee applicable to each category must not be less than the amount specified in the statute.

02 Rev. Proc. 88-8, 1988-1 C.B. 628, which established the user fee program mandated by Section 10511 of the Act, was modified by Rev. Proc. 88-13, 1988-1 C.B. 639, and Rev. Proc. 88-27, 1988-1 C.B. 804. Rev. Procs. 88-8, 88-13 and 88-27 were superseded by Rev. Proc. 89-4 with respect to requests for rulings, determination letters, etc. received on or after February 1, 1989.

SEC. 4. RELATED REVENUE PROCEDURES AND NOTICES

01 Rev. Proc. 90-1, 1990-1 I.R.B. 6, provides, other than for international issues, procedures for issuing rulings and information letters and for entering into closing agreements on specific issues involving the interpretation or application of the federal tax laws under the jurisdiction of the Associate Chief Counsel (Technical). It also provides, other than for international issues, procedures for issuing determination letters on matters that relate to sections of the Code under the jurisdiction of the Associate Chief Counsel (Technical).

02 Rev. Proc. 90-3, 1990-1 I.R.B. 54, updates Rev. Proc. 89-3, 1989-1 C.B. 761, as amplified and modified by subsequent revenue procedures, by providing a revised list of those areas of the Code under the jurisdiction of the Associate Chief Counsel (Technical) relating to issues in which the Service will not issue advance rulings or determination letters.

03 Concerning international issues, Rev. Proc. 87-4, 1987-1 C.B. 529, as modified by Rev. Proc. 88-4, 1988-1 C.B. 586, provides procedures for obtaining rulings, closing agreements, and information letters on federal tax issues under the jurisdiction of the Associate Chief Counsel (International) and provides information concerning determination letters under the jurisdiction of the Assistant Commissioner (International) and the District Directors.

04 Rev. Proc. 90-6, 1990-3 I.R.B. 6, sets forth a list of areas under the jurisdiction of the Associate Chief Counsel (International) relating to international issues in which the Service will not issue advance rulings or determination letters.

05 Rev. Proc. 90-4, 1990-2 I.R.B. 10, sets forth the general procedures of the Service in issuing rulings, determination letters, opinion letters, notification letters, and information letters to taxpayers and in entering into closing agreements on specific issues as to the interpretation or application of the federal tax laws in the employee plans and exempt organizations areas.

06 Rev. Proc. 78-37, 1978-2 C.B. 540, sets forth the procedure by which a plan administrator or plan sponsor may obtain approval of the Secretary of the Treasury for a change in funding method as provided by section 412(c)(5) of the Code and section 302(c)(5) of the Employee Retirement Income Security Act of 1974 (ERISA).

07 Rev. Proc. 79-18, 1979-1 C.B. 525, outlines the procedure by which a plan administrator or plan sponsor may file notice with and obtain approval from the Secretary of the Treasury for a retroactive plan amendment described in section 412(c)(8) of the Code and section 302(c)(8) of ERISA.

08 Rev. Proc. 79-61, 1979-2 C.B. 575, outlines the procedure by which a plan administrator or plan sponsor may request and obtain approval for an extension of an amortization period in accordance with section 412(e) of the Code and section 304(a) of ERISA.

09 Rev. Proc. 79-62, 1979-2 C.B. 576, outlines the procedure by which a plan sponsor or administrator may request a determination that a plan amendment is reasonable and provides for only de minimis increases in plan liabilities in accordance with section 412(f)(2)(A)of the Code and section 304(b)(2)(A) of ERISA.

10 Rev. Proc. 80-30, 1980-1 C.B. 685, sets forth the general procedures of the various offices of the Service pertaining to the issuance of determination letters on the qualification of pension, annuity, profit-sharing and stock bonus plans involving sections 401, 403(a), 409 and 4975(e)(7) of the Code, and the status for exemption of any related trusts or custodial accounts under section 501(a).

11 Rev. Proc. 83-41, 1983-1 C.B. 775, as modified by Rev. Proc. 88-5, 1988-1 C.B. 587, and Rev. Proc. 88-29, 1988-1 C.B. 828, outlines the procedures of the Service with respect to applications for waivers of the minimum funding standard under either section 412(d) of the Code or section 303 of ERISA.

12 Rev. Proc. 84-46, 1984-1 C.B. 541, provides procedures for applications for recognition of exemption from federal income tax under sections 501 and 521 of the Code.

13 Rev. Proc. 87-50, 1987-2 C.B. 647, updates and consolidates in one revenue procedure the procedures of the Service relating to the issuance of rulings and opinion letters with respect to the establishment of individual retirement accounts and annuities (IRAs) under section 408 of the Code, the entitlement to exemption of related trusts or custodial accounts under section 408(e), and the acceptability of the form of prototype simplified employee pension (SEP) agreements under sections 408(k) and 415.

14 Rev. Proc. 89-9, 1989-1 C.B. 780, sets forth the procedures of the Service pertaining to the issuance of opinion letters relating to master or prototype pension, profit-sharing and annuity plans involving sections 401 and 403(a) of the Code, as amended by the Tax Reform Act of 1986 (TRA '86), the Omnibus Budget Reconciliation Act of 1986 (OBRA '86), the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), and the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), and the status for exemption of related trusts or custodial accounts under section 501(a).

15 Rev. Proc. 89-13, 1989-1 C.B. 801, sets forth the procedures of the Service for issuing notification letters relating to the qualification, as to form, of certain regional prototype defined contribution plans and defined benefit plans, and provides guidance with respect to the issuance of determination letters to employers adopting such plans as to whether the plans as adopted qualify under sections 401 and 403(a) of the Code and as to whether any related trusts or custodial accounts are exempt under section 501(a).

16 Rev. Proc. 89-35, 1989-1 C.B. 917, sets forth a procedure by which a plan administrator or plan sponsor of a qualified defined benefit pension plan may under certain circumstances satisfy the requirement that a deduction under section 404 of the Code be disallowed by the Secretary of the Treasury, thereby fulfilling a condition under which a contribution may revert to the employer without adversely affecting the plan's qualified status.

SEC. 5. SCOPE

All requests for rulings, opinion letters, notifications letters, and determination letters submitted by or on behalf of taxpayers, sponsoring organizations or other entities must be accompanied by the appropriate user fee as determined from the fee schedule set forth in section 6.03 below. User fees apply to all requests for reconsideration of rulings, determination letters or opinion letters, but may be refunded in certain situations (see section 6.13(2) below). User fees do not apply to requests for information letters.

SEC. 6. PROCEDURE

01 Definitions.

(1) The terms "adoption agreement," "advisory letter," "basic plan document," "determination letter," "information letter," "mass submitter," "master plan," "notification letter," "opinion letter," "prototype plan," "regional prototype plan," "ruling," "sponsor," and "sponsoring organization" as used in this revenue procedure have the same meaning as they have in the pertinent revenue procedure referred to in section 4 above.

(2) The term "group exemption letter" means a ruling or determination letter issued to a central organization recognizing on a group basis the exemption, under section 501(a) of the Code, of subordinate organizations on whose behalf the central organization has applied for recognition of exemption, as described in Internal Revenue Service Publication 557, tax-exempt status for your organization.

02 VOLUME SUBMITTER PLANS. The following definitions apply for purposes of determining the user fee for advisory letter requests for volume submitter specimen plans and determination letter requests upon an employer's adoption of a volume submitter specimen plan.

(a) A volume submitter plan is a profit-sharing plan, 401(k) plan, money purchase pension plan, target benefit plan, or defined benefit plan which meets certain criteria established by an individual key district office and which is submitted pursuant to procedures established by the key district office.

(b) A volume submitter specimen plan is a plan described in (a) above that is submitted to the key district office by a practitioner who certifies that no fewer than 30 employers within any two regions of the Service are expected to adopt a plan that is substantially identical to the specimen plan following the district office's approval of the specimen plan. Determination letters may be requested on Form 5307 for the adoption of such a plan.

03 FEE SCHEDULE. The amount of the user fee payable with respect to each category or subcategory of submission is as set forth in the following schedule. USER FEES WILL NOT BE REQUIRED AFTER SEPTEMBER 30, 1990, UNLESS LEGISLATION IS ENACTED TO EXTEND THE USER FEE PROGRAM BEYOND SEPTEMBER 30, 1990.

 (1) Associate Chief Counsel                  Requests  Requests

05 SUBMISSIONS INVOLVING SEVERAL CATEGORIES. If a request dealing with only one transaction involves more than one category, only one fee applies, namely the highest fee that otherwise would apply to each of the categories involved.

06 SUBMISSIONS INVOLVING SEVERAL ISSUES. If a request dealing with only one transaction involves several issues, only one fee applies, namely the fee that applies to the particular category or subcategory involved. The addition of a new issue relating to the same transaction will not result in an additional fee, except when the issue places the transaction in a higher fee category.

07 SUBMISSIONS INVOLVING SEVERAL UNRELATED TRANSACTIONS. A separate fee will apply with respect to each unrelated transaction where a request involves several unrelated transactions or the request is changed by the addition of an unrelated transaction not contained in the initial submission.

08 SUBMISSIONS INVOLVING SEVERAL ENTITIES. Each entity involved in a transaction (for example, an exempt hospital reorganization) that desires a ruling in its own name must pay a separate fee regardless of whether the transaction or transactions may be viewed as related.

09 METHOD OF PAYMENT. Each request to the Service for a ruling, determination letter or opinion letter must be accompanied by a check or money order, payable to the Internal Revenue Service, in the appropriate amount. (However, the user fee check or money order should not be attached to the Form 2553, Election by a Small Business Corporation, when it is filed at the Service Center. If on the Form 2553 the corporation requests a ruling that it be permitted to use a fiscal year under section 6.03 of Rev. Proc. 87-32, the Service Center will forward such request to the National Office. When the National Office receives the Form 2553 from the Service Center, it will notify the requester that the fee is due.) Requesters should not send cash.

10 MAILING ADDRESS FOR REQUESTING RULINGS, DETERMINATION LETTERS, ETC.

(1) A request for a ruling letter submitted pursuant to Rev. Proc. 90-1 should be sent to the Internal Revenue Service, Associate Chief Counsel (Technical), Attention: CC:CORP:T, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. The package should be marked: RULING REQUEST SUBMISSION. Requests may be hand-delivered to Room 6561, 1111 Constitution Avenue, N.W., Washington, D.C., by 4:00 p.m. on business days; after 4:00 p.m., such requests may be deposited in the lock box located just within the entrance on the 12th Street side of the building.

(2) A request for a ruling letter submitted pursuant to Rev. Proc. 87-4 should be sent to the Internal Revenue Service, Associate Chief Counsel (International), Attention: CC:CORP:T, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. The package should be marked: RULING REQUEST SUBMISSION. Requests may be hand- delivered to Room 6561, 1111 Constitution Avenue, N.W., Washington, D.C., or deposited in the lock box as described above.

(3) A request for a determination letter submitted pursuant to Rev. Proc. 90-1 or Rev. Proc. 87-4 should be sent to the District Director of Internal Revenue whose office has or will have examination jurisdiction over the requester's return.

(4) Requests for rulings, opinion letters, advisory letters, or notification letters (with respect to mass submitters' regional prototype plans) submitted pursuant to Rev. Proc. 78-37, 79-18, 79- 61, 79-62, 83-41, 87-50, 89-9, 89-13 or 90-4 should be sent to the address set forth below. Such requests may be hand-delivered to Room 6052, 1111 Constitution Avenue, N.W., Washington, D.C., by 4:00 pm. on business days; after 4:00 p.m., such requests may be deposited in the lock box as described above.

     (a) EMPLOYEE PLANS RULINGS

If entity is in this IRS Send request for

12 EFFECT OF NONPAYMENT OR PAYMENT OF INCORRECT AMOUNT. It will be the general practice of the Service that:

(1) Except in the case of requests for determination letters or opinion letters as to the qualification of employee plans (see paragraph (2) below), the respective offices within the Service that are responsible for issuing rulings, determination letters, etc. will exercise discretion in deciding whether to immediately return submissions that are not accompanied by a properly completed check or money order or that are accompanied by a check or money order for less than the correct amount. In those instances where the submission is not immediately returned, the requester will be contacted and given a reasonable amount of time to submit the proper fee. If the proper fee is not received within a reasonable amount of time, the entire submission will then be returned. However, the respective offices of the Service, in their discretion, may defer substantive consideration of a submission until proper payment has been received.

(2) If a request for a determination letter or opinion letter as to the qualification of an employee plan is not accompanied by a properly completed check or money order (for example, a check has not been signed), or if the request is accompanied by a check or money order for less than the correct amount, the entire submission will be returned to the requester, along with the check or money order.

(3) An application for a determination letter will not be returned merely because Form 8717 or Form 8718 was not attached.

(4) The return of a submission to the requester may adversely affect substantive rights if the submission is not perfected and resubmitted to the Service within 30 days of the date of the cover letter returning the submission. For example, where an application for a determination letter is submitted prior to the expiration of the remedial amendment period under section 401(b) of the Code and is returned because no user fee was attached, the submission will be timely if it is resubmitted by the expiration of the remedial amendment period or, if later, within 30 days after the application was returned.

(5) If a check or money order is for more than the correct amount, the submission will be accepted and the amount of the excess payment will be returned to the requester.

13 REFUNDS. In general, the fee will not be refunded unless the Service declines to rule on all issues for which a ruling is requested.

(1) The following are examples of situations in which the fee will not be refunded:

(a) The request for a ruling, determination letter, etc. is withdrawn at any time subsequent to its receipt by the Service, unless the only reason for withdrawal is that the Service has advised the requester that a higher user fee than was sent with the request is applicable and the requester is unwilling to pay the higher fee.

(b) The request is procedurally deficient, although accompanied by the proper fee or an overpayment and is not timely perfected by the requester. Where there is a failure to timely perfect the request, the case will be considered closed and the failure to perfect will be treated as a withdrawal for purposes of this revenue procedure.

(c) A ruling, determination letter, etc. is revoked in whole or in part at the initiative of the Service. The fee paid at the time the original ruling, determination letter, etc. was requested will not be refunded.

(d) The request contains several issues and the Service rules on some, but not all, of the issues. The highest fee applicable to the issues on which the Service rules will not be refunded.

(e) The requester asserts that a ruling the requester received covering a single issue is erroneous or not responsive (other than with respect to any issue on which the Service has declined to rule) and requests reconsideration. The Service, upon reconsideration, does not agree that the ruling is erroneous or not responsive. The fee accompanying the request for reconsideration will not be refunded.

(f) The situation is the same as described in subparagraph (e) immediately above except that the ruling covered several unrelated transactions. The Service, upon reconsideration, does not agree with the requester that the ruling is erroneous or not responsive with respect to all of the transactions, but does agree that it is erroneous with respect to one transaction. The fee accompanying the request for reconsideration will not be refunded except to the extent applicable to the transaction with respect to which the Service agrees the ruling was in error.

(g) The request is for a supplemental ruling, determination letter, etc. concerning a change in facts (whether significant or not) relating to the transaction ruled on.

(h) The request is for reconsideration of an adverse or partially adverse ruling or a final adverse determination letter, and the requester submits arguments and authorities not submitted before the original ruling or determination letter was issued.

(2) The following are examples of situations in which the fee will be refunded:

(a) In a situation to which section 6.13(1)(h) above does not apply, the requester asserts that a ruling the requester received covering a single issue is erroneous or not responsive (other than with respect to any issue on which the Service declined to rule) and requests reconsideration. The Service agrees, upon reconsideration, that the ruling is erroneous or not responsive. The fee accompanying the requester's request for reconsideration will be refunded.

(b) In a situation to which section 6.13(1)(h) above does not apply, the requester requests a supplemental ruling, determination letter, etc. to correct a mistake that the Service agrees it made in the original ruling, determination letter, etc., such as a mistake in the statement of facts or in the citation of a Code section. Once the Service agrees that it made a mistake, the fee accompanying the request for the supplemental ruling will be refunded.

(c) The requester requests and is granted relief under section 7805(b) of the Code in connection with the revocation in whole or in part, of a previously issued ruling, determination letter, etc. The fee accompanying the request for relief will be refunded.

14 EXEMPTIONS.

(1) The user fee requirement of this revenue procedure shall not apply to departments, agencies, or instrumentalities of the United States that certify that they are seeking a ruling, determination letter, opinion letter or similar letter on behalf of a program or activity funded by federal appropriations. The fact that a user fee is not charged shall have no bearing on whether an applicant is treated as an agency or instrumentality of the United States for purposes of any provision of the Internal Revenue Code.

(2) The user fee requirements of this revenue procedure shall not apply to requests as to whether a worker is an employee for federal employment taxes and income tax withholding purposes (chapters 21, 22, 23, and 24, subtitle C, of the Internal Revenue Code) submitted on Form SS-8, Information for Use in Determining Whether a Worker Is an Employee for Federal Employment Taxes and Income Tax withholding, or its equivalent.

SEC. 7. QUESTIONS AS TO APPLICABILITY OF AMOUNT OF FEE PAID

A requester that believes the user fee charged by the Service for its request for a ruling, determination letter, etc. is either not applicable or incorrect and wishes to receive a refund of all or part of the amount paid (see Refunds in section 6.13 above) may request reconsideration and, if desired, the opportunity for an oral discussion by sending a letter to the Internal Revenue Service at the applicable Post Office Box or other address given in section 6.10 above. Both the incoming envelope and the letter requesting such reconsideration should be prominently marked "USER FEE RECONSIDERATION REQUEST." No user fee is required for such requests. The request should be marked for the attention of:

If the matter involves

01 Rev. Proc. 89-4 is superseded.

02 Rev. Procs. 80-30, 84-46, 84-86, 87-4, 87-50, 89-9, 89-13, 89-35, 90-1 and 90-4 are modified and amplified to the extent that this revenue procedure provides for an additional requirement that must be satisfied in requesting a ruling letter, determination letter, opinion letter, or notification letter pursuant to this revenue procedure.

SEC. 9. EFFECTIVE DATE

This revenue procedure is effective as of the date of its publication in the Internal Revenue Bulletin.

DRAFTING INFORMATION

The principal authors of this revenue procedure are John H. Turner and William B. Hulteng of the Employee Plans Technical and Actuarial Division. For further information regarding this Revenue Procedure, contact Mr. Turner or Mr. Hulteng at (202) 343-0729 (not a toll-free number). For further information on user fee matters within the jurisdiction of the Office of the Associate Chief Counsel, contact Wayne Thomas at (202) 566-3129 (also not a toll-free number.)