Bill Overview
Title: A bill to provide limits on the reduction of Internal Revenue Service user fees.
Description: This bill provides for a limit, through 2025, on the reduction of Internal Revenue Service user fees (e.g., fees for requests for ruling letters, opinion letters, and determination letters). Any reduced fee may not exceed 5% of the lowest fee charged for a taxpayer whose gross income is $5 million or more in a taxable year.
Sponsors: Sen. Blackburn, Marsha [R-TN]
Target Audience
Population: Individuals and businesses involved in detailed tax planning through IRS rulings
Estimated Size: 500000
- The bill imposes limits on the reduction of IRS user fees which would potentially impact anyone who pays these fees such as individuals, taxpayers, and businesses.
- IRS user fees are specifically related to requests for ruling letters, opinion letters, and determination letters, commonly used by high-income individuals and businesses for tax planning or resolving complex tax issues.
- The bill specifies a taxpayer with a gross income of $5 million or more; hence, those individuals or entities fall within a potentially impacted population.
- Globally, high-income individuals and corporations that pay IRS user fees could be impacted by the restriction in how fees are reduced.
- Corporations and high net-worth individuals involved in cross-border transactions or foreign entities dealing with IRS might be affected.
Reasoning
- The policy impacts mostly high-income individuals and businesses who regularly engage in complex tax planning requiring interaction with IRS services.
- Such individuals and corporations are likely already operating at a high level of wellbeing, and their Cantril Wellbeing scores have less room for improvement due to financial stability.
- The direct financial impact might be marginal for these individuals as the user fees are minimal compared to their overall income.
- However, those extensively utilizing the IRS services might feel more of a burden with the policy, slightly impacting their wellbeing scores.
Simulated Interviews
Tax Attorney (New York City, NY)
Age: 55 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- This policy makes it slightly tougher for clients looking for IRS advisories, as even small fee increments add up over multiple cases.
- While it's manageable for most, those constantly needing advisories might rethink their strategies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Executive at a Tech Startup (San Francisco, CA)
Age: 42 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 2.0 years
Commonness: 4/20
Statement of Opinion:
- The policy is a modest inconvenience, affecting how much budget we allocate for tax consultancy services.
- It's not significant, but every added cost reduces flexibility in operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
CEO of an Oil Company (Houston, TX)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 3/20
Statement of Opinion:
- The imposition of fees primarily impacts the company’s accounting cost structure.
- It's a small part of the overall financial strategy, but austerity should be applied wherever possible.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Entrepreneur (Chicago, IL)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 2/20
Statement of Opinion:
- I'm currently not directly impacted by this policy due to revenue size but reaching out for IRS rulings might become more costly over time as we grow.
- It's important for business planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Financial Advisor (Los Angeles, CA)
Age: 48 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- Policy changes marginally affect calculation for costs of IRS advice fees.
- Advising clients becomes slightly more challenging with higher regular costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 8 | 9 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Corporate Lawyer (Boston, MA)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- Policy could deter frequent requests for IRS letters due to cost constraints.
- Corporations might opt for comprehensive analysis to reduce frequent inquiries.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Retired Businessman (Miami, FL)
Age: 62 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- Policy doesn't directly affect me now, but during my career, dealing with IRS was routine and vital for financial management.
- Fee changes are important for long-term planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Software Engineer (Seattle, WA)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- Policy barely affects me personally, but might if my income crosses the $5 million threshold.
- Planning helps to stay conscious of all financial impacts including fees.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Real Estate Developer (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 6.0 years
Commonness: 3/20
Statement of Opinion:
- Increased fees require revisiting tax planning and financial forecasts.
- Managing costs is critical in property development.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Charity Executive Director (Denver, CO)
Age: 39 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 2/20
Statement of Opinion:
- The policy has little impact as our requests for IRS determinations are infrequent.
- Unlikely to alter operational plans significantly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $8000000)
Year 2: $5000000 (Low: $3000000, High: $8000000)
Year 3: $1000000 (Low: $500000, High: $2000000)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The IRS's ability to charge fees impacts its operational budget, affecting how it provides taxpayer services.
- Budget forecasts show fee stabilization helps maintain committed budget levels without pressuring broader fiscal frameworks.
- Policy outcomes depend on enforcement of the limitations and potential lobbying efforts by concerned high-income taxpayers.