IRS Did Not Abuse Discretion in Denying Accounting Method Change for Credit Card Fee Income.

• Jurisdiction: United States
• Date: 01 January 2001
• Author: Weinberger, Mark

The Court of Federal Claims ruled that the IRS did not abuse its discretion by denying a request by American Express (AMEX) to change its method of accounting for annual credit card fee income (American Express Co., 47 Fed. Cl. 127 (2000)).

In 1987, AMEX requested the Service's consent to change its accounting method for annual credit card fee income from recognizing income on receipt to ratably including it over 12 months (as required by FASB Statement No. 91). The change was requested under Rev. Proc. 71-21, which allows deferred income recognition of payments received in one tax year for services to be performed in the following tax year. When the IRS denied the request, AMEX filed a refund claim. After the Service failed to act on the refund claim, AMEX petitioned the court for a refund, claiming the denial was an abuse of the IRS's discretion. The Court of Federal Claims...