RP-2015-39: Safe Harbor for ratable service contracts
Internal Revenue Service (IRS) sent this bulletin at 07/30/2015 10:52 AM EDT
 |
|||
|
|||
News EssentialsIRS Resources |
Issue Number: RP-2015-39Inside This IssueRevenue Procedure 2015-39 provides a safe harbor for accrual method taxpayers to treat economic performance as occurring ratably on contracts that provide services on a regular basis. In other words, under the safe harbor, a taxpayer can ratably expense the cost of regular and routine services as the services are provided under the contract. Contracts for regular janitorial or landscape maintenance services are typical examples of contractual services that may qualify for the safe harbor. A service contract that provides for a single product to be delivered to the taxpayer, such as an environmental impact study, will not satisfy the definition of a Ratable Service Contract because the contract does not provide for services to be provided on a regular basis. The revenue procedure defines a Ratable Service Contract and provides examples of contracts that will and will not satisfy the definition. The revenue procedure also includes examples of bundled service contracts, which provide for both regular and one-time services. Whether part of a bundled service contract qualifies as a Ratable Service Contract depends on whether the parties have separately priced the services specified in the contract. Revenue Procedure 2015-39 will be published in Internal Revenue Bulletin 2015-33 on Aug. 17, 2015. Thank you for subscribing to IRS GuideWire, an IRS e-mail service. If you are a Tax Professional and have a specific concern about your tax situation, call the IRS Practitioner Priority Service 1-866-860-4259. This message was distributed automatically from the IRS GuideWire mailing list. Please Do Not Reply To This Message. |