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FROM THE OFFICE OF PUBLIC AFFAIRS
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The Treasury Department and IRS today issued guidance regarding credit card annual fees and credit card late fees.
The timing of income recognition for credit card annual fees has been a long-standing issue, said Acting Assistant Secretary for Tax Policy Gregory Jenner. The guidance issued today will reduce controversy by addressing not only this issue, but also by addressing the treatment of credit card late fees
The revenue ruling issued today holds that income from credit card annual fees is not interest. A related revenue procedure allows credit card issuers to include income from credit card annual fees ratably over the period to which the fees relate.A second revenue procedure allows credit card issuers to treat income from late fees as interest.Both revenue procedures provide the exclusive procedures to obtain automatic consent from the Commissioner to change to the methods allowed under the respective revenue procedures.
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