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Take Two – IRS Releases Revised Revenue Procedure on Management Contracts

On January 17, 2017, the IRS released Revenue Procedure 2017-13, the Revised Safe Harbor, which provides rules related to “management contracts” that issuers and borrowers may enter into with respect to projects financed with tax-exempt obligations. The Revised Safe Harbor replaces Revenue Procedure 2016-44, 2016-36 IRB 316, which was released in August 2016 and updated in September 2016. A short summary of the Revised Safe Harbor can be found here.

The Revised Safe Harbor applies to any management contract with a service provider entered into on or after January 17, 2017 and may be applied to contracts entered into prior to this date. In addition, issuers may continue to apply Revenue Procedure 97-13 (as modified by Revenue Procedure 2001-39 and amplified by Notice 2014-67) to any management contract entered into before August 18, 2017. For contracts entered into after this date, only the rules, definitions and safe harbors outlined in the Revised Safe Harbor will apply to determine whether management contracts result in private business use of projects financed with tax-exempt obligations.

Posted: Jan 24, 2017

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