Ruling allows manufacturers to accelerate cooperative advertising deductions.On July 30, 1998, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. released Rev. Rul. 98-39, which provides that a manufacturer's liability to pay a retailer for cooperative advertising is a service liability that becomes fixed under the all-events test in the year in which the advertising services are provided by the retailer. The ruling concludes that the retailer's filing of a claim for payment is not necessary to fix the manufacturer's liability. This conclusion reverses the Service's position in Letter Rulings (TAMs) 9343006, 9320001 and 9416004, in which the IRS concluded that the filing of the claim by the retailer was necessary to fix the manufacturer's liability. Rev. Rul. 98-39 provides that a change in the time for deducting the cooperative advertising liability is an accounting method change that can be made automatically under Rev. Proc. 97-37. This procedure requires that a taxpayer attach Form 3115, Application for Change in Accounting Method, to the return for the year of change and send a copy to the IRS National Office. This favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. accounting method change can be made for any tax year for which a return has not yet been filed, as long as the return will be timely filed (including extensions). The Service's new position on cooperative advertising will affect other issues involving claims submitted for payment. For example, the IRS released an Industry Specialization A career option pursued by some attorneys that entails the acquisition of detailed knowledge of, and proficiency in, a particular area of law. As the law in the United States becomes increasingly complex and covers a greater number of subjects, more and more attorneys are Program (ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. ) paper in 1997 on Medicaid rebates paid by pharmaceutical manufacturers. The Service concluded that the manufacturer's rebates to the states were deductions governed gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. by Sec. 461 and that the liability to the state was not fixed until the year in which the state submits its prescription utilization report to the manufacturer. Based on the IRS's new position on co-op advertising, the ISP paper may need to be revised to provide that the manufacturer's liability is fixed as qualified sales of the manufacturer's products occur. FROM BARBARA YOUNG Barbara Young may refer to:
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