Shumaker Manufacturing

A Legal & Industry Review

“New Revenue Procedure 2017-13 Provides Clarification of Safe Harbors for Management Contracts of Tax-Exempt Financed Facilities”

The Internal Revenue Service has issued Revenue Procedure 2017-13 that clarifies certain provisions of Revenue Procedure 2016-44.  For a full explanation of the provisions of Rev. Proc. 2016-44, see our client alert of August 24, 2016, as updated September 6, 2016.

Rev. Proc. 2016-44 is modified, amplified and superseded by Rev. Proc. 2017-13.

Effective Date.    Rev. Proc. 2017-13 applies to any management contract entered into on or after January 17, 2017.  An issuer may apply Rev. Proc. 2017-13 to any management contract entered into before January 17, 2017.  In addition, an issuer may apply the safe harbors of Rec. Proc. 97-13, as modified by Rev. Proc. 2001-39 and amplified by Notice 2014-67, to a management contract entered into before August 18, 2017 that is not materially modified or extended on or after August 18, 2017 (other than pursuant to a renewal option, defined as a provision under which either party has a legally enforceable right to renew the contact.  An automatic renewal for 1-year periods absent a notice of cancellation is not a renewal option). Continue reading