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IRS Clarifies New Management Contract Safe Harbors

By MAXWELL D. SOLET and CHRISTIE MARTIN

In August, 2016, the IRS issued Revenue Procedure 2016-44, the first comprehensive revision of its management contract safe harbors since Revenue Procedure 97-13.  Rev. Proc. 2016-44 (see our description here) built upon and amplified principles laid out in private letter rulings issued over many years and in Notice 2014-67.  Now, less than six months later, the IRS has published Revenue Procedure 2017-13, which clarifies and supersedes Rev. Proc. 2016-44 but does not materially change the safe harbors described therein.  The clarifications are in response to questions received with respect to certain types of compensation protected under earlier safe harbors, incentive compensation, timing of payments, treatment of land when determining useful life, and approval of rates.

 

 

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Authors

Leonard Weiser-Varon serves as bond counsel, purchasers’ counsel, bondholders’ counsel and trustee’s counsel on municipal bond issues, workouts and restructurings. Len also represents state sponsors and private program managers of Section 529 and 529A savings programs.

Maxwell D. Solet

Member Emeritus

Christie L. Martin leads the Public Finance Tax Practice at Mintz and often acts as bond counsel, underwriter’s counsel and purchaser’s counsel in connection with the issuance of tax-advantaged bonds. Christie’s clients include issuers, conduit borrowers and purchasers in the health care, government, education, financial services and nonprofit sectors.