IRS proposes to raise fees for enrolled agents

The Internal Revenue Service is planning to increase the enrollment and renewal fees for enrolled agents, as the user fees for examinations are also set to rise.

Last week, the IRS posted proposed regulations to increase both the enrollment and renewal user fee for enrolled agents to $140 from $67, and similarly to increase the renewal user fee for enrolled retirement plan agents to $140 from $67. The proposed regulations would affect individuals who are or apply to become enrolled agents and who are already enrolled retirement plan agents. The IRS is asking for comments on the proposal by May 11.

Some fees are already set to go up for enrolled agents, noted the Current Federal Tax Developments blog and Tax Notes. The IRS posted final regulations last week to increase the amount of the user fee for each part of the special enrollment examination for enrolled agents to $99 from $81, plus an amount payable to a third-party contractor.

Samuel Corum/Bloomberg

The IRS is seeking more revenue for dealing with its backlog of millions of unprocessed tax returns left over from last year and the many demands of the current tax season. But amid continued opposition from Republicans in Congress to increasing the agency’s budget, the agency plans to hire an additional 10,000 employees using existing funding already appropriated by Congress, according to the Washington Post, most of it coming from COVID-19 relief funds that have not yet been spent.

“The IRS is finally recognizing that this historic backlog is not due to a lack of funding, but due to its neglect in using the tools it has,” said Rep. Kevin Brady, R-Texas, the ranking Republican on the tax-writing House Ways and Means Committee, in a statement Friday. “For months, House Republicans have urged the IRS to use the remaining $1.4 billion Congress gave it to address this crisis, rather than simply seek even more money. This is a positive step forward, though we remain concerned that it took this long for the Biden administration to take action to help American taxpayers.”

The increase in fees for enrolled agents should bring in some much-needed revenue, but not enough to make a substantial impact on the IRS’s overall budget.

Meanwhile, this tax season is proving to be just as aggravating as tax preparers had predicted, according to the National Association of Tax Professionals. Ahead of the opening of tax season, the NATP conducted a survey of its members and found that only 13% of the 1,509 respondents said they think this year will be better than last year. They were most concerned about accurate reporting of economic impact payments and advance child tax credit payments, as well as reporting of Paycheck Protection Plan and other COVID-related loans. Much of the concern about increased workload came from the assumption that only 4% of taxpayers are knowledgeable about tax law changes.

Tax season is turning out to be just as frustrating as anticipated, according to Jennifer Van Elzen, director of member relations and analytics at the NATP. “Unfortunately, it looks like tax season is going about as well as our members thought it would,” she said in a statement Monday. “Serving their tax clients has been further complicated by an increase in delays and lack of IRS resources; a persistent effect from the pandemic.”