Internal Revenue Manual - 1.33

8/3/2019 Internal Revenue Manual - 1.33

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/7/11 Inenal Reene Manal - 1.33.3 Reimbable Opeaing Gideline

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Part 1. Organiation, Finance and Management

Chapter 33. Strategic Planning, Budgeting and Performance Management Process

Section 3. Reimbursable Operating Guidelines

1.33.3 Reimbursable Operating Guidelines

1.33.3.1 O

1.33.3.2 A

1.33.3.3 R G R

1.33.3.4 D1.33.3.5 A

1.33.3.6 R

1.33.3.7 A

1.33.3.8 C

1.33.3.9 R A

1.33.3.1 (02-11-2011)

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1.33.3.2 (10-09-2009)

Authorit

1. With proper authority in place, federal agencies may perform reimbursable work for other organizations. Laws allowing the

Federal Government to use reimbursements in return for providing others with goods and/or services include:

A. Economy Act of 1932 (31 USC 1535-1536).

B. Laws establishing revolving funds such as the Treasury Working Capital Fund.

C. Stafford Act (42 USC 5147).

D. Intergovernmental Cooperation Act (31 USC 6505).

E. Intergovernmental Personnel Act of 1970 (PL 91-648).

2. Reimbursements between agencies/parties are a form of transfer. Transfers require statutory authority, as codified in 31

USC 1532. Appropriations may be used only for their intended purpose as codified in 31 USC 1301(a).

3. Before a reimbursable agreement can be established, the following four criteria must be met:

A. Specific statutory authority must exist under one or more of the following statutes:

Statutor Authorit

EconomAct, 31

USC 1535-

1536

The Economy Act authorizes the intragovernmental and intergovernmental furnishing of goods and/or

services on a reimbursable basis. The Act encourages cooperative business relationships betweenfederal agencies to minimize duplicate or overlapping activities. For example, government agencies

can obtain lower cost goods and/or services by using the contracting expertise developed in another

agency or receive quantity discounts through consolidated purchases. Stimulating cooperativearrangements may be more convenient and reduce dependence on higher cost commercial vendors.

Note: If a more specific authority exists, use that authority instead of the Economy Act.

Stafford

Disaster

Relief andEmergenc

Assistance

Act, 42

USC 5121

The Stafford Act established the Federal Emergency Management Agency (FEMA) and authorizes

FEMA to enter into reimbursable agreements with other federal agencies to provide emergencyassistance. It also allows FEMA, if requested by the President, to accept unreimbursed assistance

from other federal agencies.

Other

Legal

Authorities

• Presidential Protection Assistance Act of 1976 (PL 94-524)

• Governmental Employees Training Act (5 USC 4104)

• Intergovernmental Personnel Act of 1970 (PL 91-648)

Authorit

to Collect

Receiptsfrom Non-

Federal

Sources

Since reimbursements are offsetting collections credited to the appropriation account, the business

unit must have specific statutory authority in the appropriation act or enabling legislation to authorizethese collections.

B. The goods and/or services to be provided are in the best interest of the Federal Government. The Economy Act

authorizes agencies to place orders with any other agency for supplies or services that the performing agency

may be able to supply, render, or contract for as long as the head of an agency determines that it is in the best

interest of the government.

C. The action does not conflict with any other agencys authority or responsibility.

D. Reimbursable budget authority is apportioned. The Seller requests reimbursable authority through the

apportionment process. Obligations are limited to the lesser of the approved apportionment or the budgetary

resources available.

Note:

Documentation on statutory authorities, apportionments, contracts, legal opinions, and other substantiating

materials should be maintained by the agency/party in addition to reimbursable agreements.

1.33.3.3 (02-11-2011)

Related Guidelines and Resources

1. Financial Plan Managers and their respective reimbursable project counterparts must follow financial managementguidelines and policies that are promulgated within the IRS and Treasury, as well as applicable governmentwide

requirements and guidelines. Government agencies, such as OMB, have oversight of governmentwide financial controls

and accounting policies applicable to the proper handling of reimbursables. The Government Accountability Office (GAO),

through the issuance of Comptroller General decisions, provides guidance on the appropriate use, accounting, and legal

treatment of reimbursable funds. Refer to the following websites for these guidelines, and accounting code requirements.





A. OMB Circular A-11, Preparation, Submission, and Execution of the Budget, found on

http://www.whitehouse.gov/omb/circulars_index-budget/, Part 4, Section 150, Administrative Control of Funds.

B. GAO's Principles of Federal Appropriations Laws (otherwise known as the Red Book) found on

http://www.gao.gov/legal.htm.

C. The Treasury Department Reimbursables Handbook, found on http://intranet.treas.gov/mgt-budget/smm/ch5-6/6_27.pdf .

D. Treasury Financial Manual, Volume 1, Bulletin No. 2011-04, Intragovernmental Business Rules, dated November

8, 2010, can be found on http://fms.treas.gov/tfm/vol1/11-04.pdf .

E. Treasury Financial Manual, Volume 1, Bulletin No. 2007-06 Intragovernmental Payment and Collection (IPAC)

System - TAS/BETC Reporting found on http://fms.treas.gov/tfm/vol1/07-06.pdf .

F. IRM 1.33.4, Financial Operating Guidelines provides comprehensive internal budget execution guidance.

G. IRM 1.35.15, Administrative Accounting, Annual Close Guidelines provides annual fiscal year-end close

guidelines for reimbursable accounting and collections.

H. IRS Financial Management Codes Handbook http://cfo.fin.irs.gov/CPPD/HTML/BudgetPolicy.htm. This handbook

provides a comprehensive listing of financial codes, coding schemes, and code combinations valid for use by the

IRS.

I. Federal Account Sstem and Titles (FAST) Book I and FAST Book II . This is a Department of the Treasury,

Financial Management Service publication of the official Treasury Account Symbols for the U.S. Government. See2-digit Department Regular Codes for the IRS starting on p. A-78 at the following

website:http://www.fms.treas.gov/fastbook/fastbook_sept2010.pdf

J. IPAC TAS, BETC, and TAS Component. This is the Department of the Treasury, Financial Management Service

reference tool for locating IRS's current codes, including a crosswalk to the new TAS Component codes. Seehttps://www.fms.treas.gov/gwa/IPAC_TAS_BETC_20100831.xls, rows 24991, 24994, 24996 for the IRS codes.

K. Federal Accounting Standards Advisory Board (FASAB), Statement of Federal Financial Accounting Standards

(SFFAS) No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, issued July

1995.

L. IRM 1.32.3, Servicewide Financial Policies and Procedures, Managerial Cost Accounting (MCA). This IRM

provides guidance on federal MCA concepts and requirements for MCA within IRS.

1.33.3.4 (02-11-2011)

Definitions

1. In this IRM, the terms below have the following meanings:

A. Advance Pament a pre-payment by the Buyer for the later receipt of reimbursable goods and/or services to be

provided by the IRS. Advance payments are required for non-federal buyers.

B. Agenc Location Code (ALC) also referred to as the accounting station symbol, is used to identify each federal

agency that prepares a Financial Management Service (FMS) 224, Statement of Transactions. Treasury uses the

ALC to reconcile by account symbol its monthly deposits and disbursements by appropriation, fund, and receipts.

Budget Office Reimbursables Coordinators must include the ALC on all correspondence, forms, and other

documentation forwarded to financial institutions, FMS, and other federal agencies. The IRS ALC requested under the Agreement Covering Reimbursable Services (Form 5181) is 20090003. The eight-digit ALC is based on the

following numbering scheme:

Agenc Location Code

1.Digits 1 & 2 identify the Treasury Department.

2.Digits 3 & 4 identify the Internal Revenue Service.

3.Digits 5 & 6 identify the accounting station or processing center within the bureau.

C. Business Event Tpe Code (BETC) a four to eight -character code used in the Governmentwide Accounting

(GWA) System to indicate the type of activity being reported, such as payments, collections, disbursements,

adjustments, among others. This code must accompany the TAS and the dollar amounts in order to classify the

transaction against the Fund Balance With Treasury. The BETC replaces the transaction codes and standard

subclasses that are currently used on the central accounting reports, such as those used on the Statements of

Transactions (FMS 224). The IRS BETC requested under the Agreement Covering Reimbursable Services (Form

5181), is always COLL.

D. Business Partner Network (BPN) the single source for vendor data for the U.S. Federal Government. Thenetwork is used by the government to identify trading partners at a level in an agency where reimbursable business

is being conducted. The BPN number indicates the specific unit within an agency that is requesting the goods and

services. The BPN number is the standard name for this data element, which may be the trading partner's Data

Universal Numbering System number (DUNS) or the Department of Defense Activity Address Code (DoDAAC). In





most cases, the IRS BPN number requested under the Agreement Covering Reimbursable Services (Form 5181)

is 040539587 but there may be exceptions. To access the Business Partner Network, see http://www.bpn.gov.

E. Buer a trading partner that is purchasing goods and/or services for all types of intragovernmental activity. The

Buyer is the requesting agency (also known as the customer).

F. Collection the money collected by the Federal Government and recorded as a receipt, an offsetting collection,

or an offsetting receipt.

G. Federal Program Agenc (FPA) a permanent or semi-permanent organization of government that is responsiblefor the oversight and administration of specific functions. http://www.fms.treas.gov/asap/fpa_handbooks.html.

H. Funds Reservation a reservation or commitment of budgetary resources for anticipated but undefined

expenses for an internal order, used to enter future costs that are expected to occur at an unknown time. IFSFunds Reservation (FMX1) transaction codes are sequentially numbered 10-digit codes beginning with "92" .

I. Governmentwide Accounting provides the central/financial accounting and reporting infrastructure for federal

payments, claims, collections, central accounts and other financial transactions.

J. Government On-line Accounting Link Information Access Sstem (GOALS) II the system that allows theFinancial Management Service (FMS) to receive agency accounting data and forward the data to various systems

within FMS for final processing and distribution to be used under agency accounting reports.

http://www.fms.treas.gov/goals/index.html

K. Interagenc Agreement (Recommended Standard IAA) the recommended trading partner agreement for

reimbursable agreements. It is the standard template and communication tool between the Buyer and Seller enabling the two to agree on data elements and terms of the reimbursable transaction before business begins. The

recommended standard IAA has two sections, the General Terms and Conditions (GT&C) Section and the Order

Requirements and Funding Information (Order) Section. Each recommended standard IAA must always have oneGT&C and at least one Order. An IPAC is required for agreements between federal agencies.

L. Internal Order Code the specialized accounting code assigned to each reimbursable project (e.g.,

RA2010B399). This is a required field when entering data in IFS.

M. Intragovernmental Transaction the transaction created when a federal agency provides/receives goods and/or

services to/from another federal agency. Intragovernmental transactions include interagency agreements,reimbursable agreements, and non-procurement actions between agencies.

N. Intragovernmental Pament and Collection Sstem (IPAC) an internet-based GOALS II application that

allows for the intragovernmental transfer of funds, with descriptive data, from one FPA to another. The Beckley

Finance Center records the IPAC disbursements and collections into GOALS II, where funds are automatically

transferred from one agency's disbursement account to another agency's collection account. To view the FMSIPAC website, visit http://www.fms.treas.gov/ipac/index.html.

O. Miscellaneous Receipts any excess income or reimbursements related to reimbursable activities that must bereturned to the Buyer or deposited in the General Fund as miscellaneous receipts (unless there is legislation to the

contrary).

P. Parked Document the transaction used by the Budget Office Reimbursables Coordinator to "park" an initial

Direct Fund cost transfer to the Reimbursable Fund (FV50-BZ) for later posting by the Beckley Finance Center.

This type of "tandem" transaction requires each of two separate offices to complete its respective side of the

transaction. The Budget Office Reimbursables Coordinator "parks" or saves the transaction making it available for the second office to act on. The second office, the Beckley Finance Center, accesses the transaction, reviews for

accuracy, and approves the transaction by "posting" or saving the document. This two-step process ensures

appropriate financial controls are in place during earnings reconciliation.

Q. Posting Parked Documents the transaction used by the Beckley Finance Center to "post" or approving

expenditure transfers from the Direct Fund to the Reimbursable Fund.

R. Reimbursable Agreement the signed agreement between the IRS and an outside Buyer that sets out the terms

and conditions under which reimbursable work will be performed. Reimbursable agreements are typicallyexpenditure transfer payments. The paying account reports the obligations and outlays. The receiving account

reports the offsetting collections. For purposes of this IRM, the term reimbrsable means that the IRS is the Seller

or performing agency (not the Buyer of services or the requesting agency). In most cases, the Agreement

Covering Reimbursable Services (Form 5181) is used to execute an agreement. For a pdf version of Form 5181,

see: http://core.publish.no.irs.gov/forms/public/pdf/42330e09.pdf.

S. Reimbursable Budget Authorit the budgetary resource category on an apportionment submitted to OMB for

approval. Standard Form (SF)-132, Apportionment and Reapportionment Schedule is used to set and or adjust

reimbursable budget authority.

T. Reimbursable Forecast of Revenue and Budget Allocation the accounting transaction process under whichCorporate Budget establishes a Forecast of Revenue (FMV1) to be earned and then sub-allocates budget authority

to a business unit under a Transfer Budget (FR58) transaction to allow reimbursable costs to be incurred for work

performed under the terms of the reimbursable agreement.





. em ursa es arne a caegory a appears on e - , ppor onmen an eappor onmen c e ue

and the SF-133, Report on Budget Execution and Budgetary Resources.

V. Seller the general term used for a trading partner that is providing goods and/or services for all types of

intragovernmental activity. The Seller is also the servicing agency.

W. Tapaer Identification Number (TIN) an identification number used by the Internal Revenue Service (IRS) inthe administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A

Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS. The IRS TIN

number requested under the Agreement Covering Reimbursable Services (Form 5181) is 52-1782822.

X. Trading Partners the Buyer and Seller are collectively known as the "trading partners." For a current listing of vendors and trading partners, see: http://cfo.fin.irs.gov/IntFinMgmt/BFC/Forms/IPAC-Trading-Partners.xls

Y. Trading Partner Agreement (TPA) a requirement for all intragovernmental transactions that includes both

trading partner's accounting information, including but not limited to the Agency Location Code (ALC), BPN,

TAS/BETC, U.S. Government Standard General Ledger (USSGL), and terms and conditions of the agreement.There are many types of intragovernmental transactions, including, but not limited to reimbursable agreements.

Trading partners must mutually agree on what TPA format to use for their intragovernmental transactions. For

example, the recommended standard IAA is the TPA format for FPAs engaged in intragovernmental reimbursable

agreements.

Z. Treasur Account Smbol (TAS) a two-character agency code denoting Treasury, and a four-character account code denoting the appropriation. An additional three-character sub-account code can be added. The

Department of the Treasury's Financial Management Service assigns TAS numbers, which are a requirement of

the IPAC System. See IRM 1.33.3.3 , Relaed Gideline and Reoce. For purposes of Form 5181, the IRS

TAS number begins with 20 for Treasury, and a space, followed by the four-digit appropriation funding thereimbursable. For example, 20 0912, 20 0913, 20 0919. For a complete listing of the IRS TAS codes and updates

to the TAS numbering system, refer to the following website,http://www.fms.treas.gov/fastbook/fastbook_sept2010.pdf.

1.33.3.5 (02-11-2011)

Acronms

1. The following table contains acronyms used in this IRM:

Acronms

ALC Agency Location Code

BAC Budget Activity Code

BETC Business Event Type Code

BPN Business Partner Network

CFO Chief Financial Officer

CR Continuing Resolution

DUNS (Predecessor of BPN)Dun and Bradstreet's Data Universal Numbering System

EIN Employer Identification Number

FMS Financial Management Service

FOG Financial Operating Guidelines

FTE Full-Time Equivalent

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

GAO Government Accountability Office

GWA Governmentwide Accounting System

IFS Integrated Financial System

IPAC Intragovernmental Payment and Collection System

MOU Memorandum of Understanding

OCA Office of Cost Accounting

OMB Office of Management and Budget

RA Reimbursable Agreement

ROG Reimbursable Operating Guidelines

SFFAS Statement of Federal Financial Accounting Standards

TAS Treasury Account Symbol

TIN Taxpayer Identification Number

USC United States Code

USSGL U.S. Standard General Ledger

1.33.3.6 (02-11-2011)

Responsibilities

1. The CFO and business units have financial management responsibilities for properly executing, negotiating, billing,accounting, reporting, reconciling, and closing out reimbursable accounts at year-end. This section provides

responsibilities for the:





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B. Aociae CFO fo Copoae Bdge.

C. Aociae CFO fo Inenal Financial Managemen.

D. Dieco, Office of Financial Managemen Sem.

E. Dieco, Office of Financial Repo.

F. Dieco, Beckle Finance Cene.

G. Bine Uni.

1.33.3.6.1 (10-09-2009)

Chief Financial Officer (CFO)

1. The CFO ha eponibili fo bdgea oeigh and acconabili fo he IRS eimbable pogam. While he CFO

doe no on an of he eimbable pojec managed b bine ni, i epond o Tea and OMB on IRS

eimbable bdge ie, and o bine ni on eimbable bdge allomen, billing, collecion econciliaion,and cloeo.

2. The CFO appoe and ie he IRS financial managemen gidance goening he eimbable pogam.

1.33.3.6.2 (10-09-2009)

Associate CFO for Corporate Budget (CB)

1. Copoae Bdge:

A. Coodinae naional leel adminiaie policie and pocede goening he eimbable pogam.

B. Deelop and implemen IRS adminiaie policie and pocede goening he eimbable pogam, ch

a he ROG IRM, call memo fo pojeced pend plan, and ea-end pocede.

C. Pepae bdgea epo inended fo Tea, OMB, and ohe akeholde, ch a eimbable bdge

eimae and ependie (MAX em).

D. Pepae, bmi, and monio appoionmen fo all eimbable pojec.

E. Ceae and coodinae IFS financial code fo ne eimbable pojec (RA nmbe).

F. Ene foeca of eene, and diibe bdge and FTE o ahoi leel.

G. Repond o financial conol ie.

H. Poide oeigh ppo o bine ni on eimbable mae.

I. Monio and anale IRS eimbable pojec fo em eo and eaning poge.

J. Reole em inconiencie fo foeca of eene, fnd eeaion, and bdge.

K. Monio and ppo ea-end cloe aciiie.

1.33.3.6.3 (10-09-2009)

Associate CFO for Internal Financial Management (IFM)

1. The Aociae CFO fo IFM i eponible fo ening ha eimbable ageemen ae ecoded popel in he

adminiaie financial aemen and acconing em.

1.33.3.6.4 (02-11-2011)

Director, Office of Cost Accounting (OCA)

1. The Dieco of OCA nde he ACFO fo IFM i eponible fo:

A. Eablihing and mainaining he IRS co acconing policie and pocede.

B. Poiding adice and aiance o Financial Plan Manage, Reimbable Pojec Coodinao, and BdgeOffice Reimbable Coodinao on he coing of epecie eimbable pojec.

1.33.3.6.5 (10-09-2009)

Director, Office of Financial Management Sstems (OFMS)

1. The Dieco of he OFMS nde he ACFO fo IFM i eponible fo:

A. Eablihing and mainaining he IRS inenal financial managemen em policie and pocede.





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1.33.3.6.6 (10-09-2009)

Director, Beckle Finance Center (BFC)

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1.33.3.6.7 (02-11-2011)

Director, Office of Financial Reports (OFR)

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1.33.3.6.8 (10-09-2009)

Business Units

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1.33.3.7 (02-11-2011)

Agreements

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1.33.3.7.1 (10-09-2009)

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1.33.3.7.2 (10-09-2009)

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1.33.3.7.2.1 (02-11-2011)Federal Government (Non-Treasur)

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F M B N. 2011-04, Intragovernmental Business Rules.

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1.33.3.7.2.2 (10-09-2009)

Non-Government and State, Local, and Foreign Governments

1. T F 5181, , , , ,

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2. Advance payments are required for agreements with state, local, and foreign governments, commercial organizations, and

private businesses because their accounting systems are not interfaced with the Federal Governments accountingsystems.

1.33.3.7.2.3 (10-09-2009)

Intradepartmental (Treasur/Bureau)

1. Intradepartmental agreements require the same critical elements contained in Form 5181, including the terms and

conditions of work to be performed, cost estimate, period of performance, and final signatures.

2. Beckley Finance Center serves as an intermediary between Treasury and the business unit(s) to complete reimbursable

resource exchanges within Treasury.

1.33.3.7.3 (10-09-2009)

Agreement Covering Reimbursable Services (Form 5181)

1. The reimbursable agreement must be acceptable to both agencies/parties and properly documented. At a minimum, theagreement must contain the following specific information:

A. Citation of the legal authority for entering into the agreement.

B. Description of the scope of work, services and products that must be provided, and the period of performance.

C. Dollar amount, including appropriate ceilings when the amount is based on estimates.

D. Payment method and schedule. (The agreement should address the frequency of billings/payments; whether

payments will be in advance or monthly/quarterly/annual reimbursements.) For advance payments, the IRS must

receive payment before the work begins.

E. Proper accounting code citation to facilitate processing of billings and receipt of payment. In addition, accounting

information must be consistent with the Financial Management Codes Handbook

http://cfo.fin.irs.gov/SPB/CB_home.htm, IRM 1.33.4, Financial Opeaing Gideline, and this IRM.

F. All buyers must complete the following four mandatory data elements:

Mandator Accounting Data for Form 5181

1) Buyer/Customer Name, telephone number and billing address

2) Brief, description of the specific services to be provided

3) Account billing frequency (monthly, quarterly, advance lump-sum)

4) Taxpayer Identification Number (TIN) or Employee Identification Number (EIN)

Note:

It is especially important that all non-federal buyers provide the Taxpayer Identification Number (TIN). This code isrequired before the Buyer's master data record can be established in IFS for account billing purposes. The TIN is

also used to track and verify other related accounting data for non-federal buyers. Foreign buyers are excluded

from providing TIN numbers.

G. Federal buyers must include four additional accounting data elements:

Federal Buer Accounting Data for Form 5181

Agency Location Code (ALC)

Business Partner Network (BPN) number or Dun and Bradstreet's Data Universal Numbering System (DUNS)

number

Treasury Account Symbol (TAS)

Business Event Type Code (BETC)

H. Agency Seller, Buyer, and respective finance contacts, inc luding phone numbers and e-mail addresses to resolveaccounting questions and requests for additional information.

I. Directions on special requirements such as delivery requirements and compliance procedures.

J. Approval (signature and date) of the Buyer's financial management/budget office that funds are available.

K. Statement that the IRS and its respective business units shall resolve intragovernmental disputes and major

agreement differences through the process delineated in Treasury Financial Manual, Volume 1, Bulletin No. 2011-

04, Inagoenmenal Bine Rle found on http://fms.treas.gov/tfm/vol1/11-04.pdf.

L. Approval (signature and date) of the agreement by authorized IRS officials of the participating program

organizational units.

2. Form 5181 (Agreement Covering Reimbursable Services) includes detailed instructions on completing the form.





. . . . - -

Authoriing Officials and Delegation Orders

1. All business units executing reimbursable agreements or MOUs with federal agencies, states, and other externalstakeholders must comply with the delegation and re-delegation authorities contained in IRS Delegation Order 1-47.

IRS Delegaion Ahoiie Fo Ageemen Signae

Agreement Scope Authoriing Official

1. MOUs, implementing agreements, and other agreements with federal

agencies, states, and other external stakeholders.Deputy Commissioners

2. MOUs, implementing agreements, and other agreements that do not require

the obligation or use of Modernization and Information Technology Services

(MITS) resources, and require the obligation or use of resources of fewer thanthree IRS Operating or Functional Divisions.

Deputy Division Commissioners and

Deputy Chiefs for MOUs and

agreements requiring the obligation or use of their Divisions resources. ***

3. MOUs, implementing agreements, and other agreements that do not require or

allow for 1) the exchange of return or return information, 2) the obligation or useof MITS resources, and 3) the obligation or use of more than one IRS Operating

or Functional Division.

Directors for MOUs and agreementsrequiring the obligation or use of

resources within their jurisdiction.

Note:

***If the MOU, implementing agreement, or other agreement allows for the exchange of return or return information, the

document must be coordinated with the Director, Government Liaison and Disclosure before the delegated authority mayexecute the agreement.

1.33.3.7.5 (10-09-2009)

Reporting and Record-keeping

1. For audit and record-keeping purposes, the Reimbursable Project Coordinator must maintain a final copy of the signedreimbursable agreement, including cost calculations, and supporting documentation or basis for amendments to the

agreement.

2. Before transactions can be processed, the Reimbursable Project Coordinator must forward an electronic copy of the final

agreement to these offices:

A. Corporate Budget Reimbursable Coordinator.

B. Business Unit Budget Office Reimbursable Project Coordinator.

C. Beckley Finance Center.

1.33.3.8 (10-09-2009)

Costing

1. The Economy Act requires that both direct and indirect costs of fulfilling a reimbursable agreement be recovered from the

agency receiving the services. However there are exceptions to this provision in certain circumstances such as:

A. Agreements where the sole purpose is to detail a service employee to another federal agency, or to a state or local

government agency.

B. Agreements involving emergency appropriations.

C. An overriding provision or legal authority under the reimbursable agreement.

1.33.3.8.1 (10-09-2009)

Principles

1. Comptroller General decisions interpret the Economy Act provisions as requiring the recovery of direct and indirect costs

that:

A. Represent significant costs to the Seller in providing goods and/or services.

B. Are funded from currently available appropriations.

C. Benefit the Buyer.

D. Result from efforts to provide goods and/or services.

1.33.3.8.2 (02-11-2011)

Cost Assignment

1. The Federal Accounting Standards Advisor Board (FASAB), Statement of Federal Financial Accounting Standards

(SFFAS) No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, issued July 1995,mandates and establishes internal costing standards to accurately measure and manage the cost of federal programs.





. .accumulated costs with cost objects in specific reporting periods. There are three methods of cost assignment as follows:

A. Directly trace costs wherever feasible and economically practicable.

B. Assign costs on a cause-and-effect basis.

C. Allocate costs on a reasonable and consistent basis.

These methods should be used by all Reimbursable Project Coordinators to develop full cost projections for the cost of the

products and/or services provided during the course of the reimbursable project(s). This includes labor, services, andoverhead or facility usage costs, among other costs, required to produce the Buyer's product.

2. The cost assignment methods are consistent with the Generall Accepted Accounting Principles (GAAP).

3. One of the five standards for federal managerial cost accounting, as stated in SFFAS No. 4, is "determining the full costs

of government goods and/or services." The full cost of an output is the total amount of resources used to produce the

output. This includes direct and indirect costs that contribute to the output, regardless of funding sources. The full cost of

an output produced by a business unit is the sum of:

A. The cost of resources consumed by the business unit that directly or indirectly contribute to the output.

B. The cost of identifiable support services provided by support business units and sustaining business units within

the IRS.

4. When reimbursable projects use the same types of goods and/or services as direct-funded projects, the reimbursable

project costs will use the same rates and basis of consumption as the direct-funded projects.

5. Recognition of Earned Reimbursements: In accordance with the SFFAS No. 7, Accounting for Revenue and Other

Financing Sources and Concepts for Reconciling Budgetar and Financial Accounting , "earned" or "exchanged"revenues are earned once the Seller provides goods and/or services to the Buyer for the amount negotiated in the

agreement. In short, the payment or revenue should not be recognized until costs are incurred from providing goods andservices.

6. Agreement cost estimates will contain direct and indirect or overhead costs.

1.33.3.8.2.1 (10-09-2009)

Direct Costs

1. Direct costs are costs that can be specifically identified with a single program area, activity, product, or service. Typical

direct costs for the IRS include the following:

A. Salaries, benefits, and other employee compensation.

B. Accrued annual leave, compensatory time, etc.

C. Materials and supplies.

D. Travel and relocation costs.

E. Contractual services.

F. Various costs associated with equipment and facilities.

1.33.3.8.2.2 (10-09-2009)

Indirect/Oerhead Costs

1. The Economy Act allows for the recovery of certain indirect costs, to protect the provider of services from financing costs

already funded under the Buyers appropriation.

2. Indirect costs are the costs of resources that are jointly or commonly consumed by two or more business units' activitiesbut are not specifically identifiable to a single product or service. The IRS has two categories of indirect costs:

A. Sustaining business unit costs or costs that are centrally funded by business units, such as Agency-wide Shared

Services (AWSS), Stewardship (STWD), and MITS. These business units provide support to the IRS as a whole.

B. Support business unit costs or costs funded by business units, such as General Counsel and Appeals, that support

the delivery of Business Operating Division products and services.

3. Examples of services for which there may be indirect costs include:

A. General management and administrative services.

B. Facilities management and ground maintenance services (security, rent, utilities, and building maintenance).

C. Procurement and contracting services.





. .

E. Information technology services.

F. Services to acquire and operate property, plant and equipment.

G. Publication, reproduction, graphics and video services.

H. Research, analytical, and statistical services.

I. Human resources/personnel services.

J. Library and legal services.

4. Indirect costs can be incurred within a business unit as a result of its own activities, or when the business unit receives

products or services generated by other business units. The business units indirect costs are assigned internally in

accordance with cost allocation methodologies outlined in IRM 1.32.3.2.5, Co Allocaion Mehodologie.

5. The majority of indirect costs accumulate within identifiable business units. However, some costs such as depreciation and

facilities costs cannot be linked to an identifiable business unit. In those instances, such costs are allocated based on costallocation methodologies.

1.33.3.8.3 (10-09-2009)

Cost Estimates

1. Determining the cost estimate of a reimbursable agreement requires the identification of the projected costs of the work,

services, and facilities usage that are to be provided to the Buyer. Each reimbursable project is unique and determining

the cost estimate can vary based on the requirements of the project. Two of the many examples available for developingcost estimates are shown in the next two sections.

2. When the provider of services (IRS) is able to identify the reimbursable program by cost center:

A. Obtain cost reports from the Integrated Financial System (IFS) Cost Module for the area(s) providing the service.These reports will identify all direct, indirect, and overhead costs.

B. Work with the Office of Cost Accounting (OCA) to identify a method of projecting the future costs of providing the

product or services, if multiple services are provided by the area under analysis.

3. When labor data is available:

A. Determine the estimated direct labor and/or benefit costs for providing the service.

B. Apply an appropriate OCA-approved overhead rate factor to approximate full costs, if necessary.

4. It is not always possible to estimate all direct and indirect/overhead costs associated with a reimbursable agreement. To

prepare a cost estimate for the project, the provider of the services should compile all identified direct costs and apply anoverhead rate factor to estimate the full costs of the agreement, if applicable.

5. The overhead rate to be applied should be obtained from the OCA. OCA has developed standard overhead rates for labor

only, and labor and benefits calculations, and can assist business units.

6. Cost increases that occur during the performance of the agreement are also recoverable. Failure to account for cost

increases may penalize the provider of the services by using its authorized funds to perform another agencys work andmay augment the Buyer's appropriation. Cost estimates for reimbursable projects recurring from one fiscal year to another

should include inflation factors to account for cost increases.

1.33.3.8.3.1 (02-11-2011)

Actual and Estimated Costs

1. The Economy Act authorizes the performing agency to incur obligations or expenditures for another agency after a

reimbursable agreement is executed and before full payment is received. The Seller collects regular payments from theBuyer during the fiscal year once goods and/or services are delivered. These payments are adjusted against actual costs

as determined by the agency filling the order.

2. The Economy Act allows reimbursable payments to be made in advance or when the goods and/or services are delivered.

These payments may be for any part of the estimated or actual costs as determined by the agency filling the order.Advanced payments will be adjusted based on the actual costs incurred.

3. Comptroller General decisions provide for actual and estimated cost definitions. Under these decisions, the actual cost

method of charging is based on using pertinent, realistic costs and allows that estimated costs are acceptable for some

expenses. If capturing certain actual costs is infeasible, then a reasonable cost estimate is appropriate. This applies to

costs that are extremely time consuming or when actual costs are not yet available.

1.33.3.8.4 (10-09-2009)

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