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ARTICLE · 07 JANUARY 2016

IRS Issues Regulations Regarding ERP Software

Brown Smith Wallace
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IRS Chief Counsel has affirmed the application of the guidance in a 2002 letter ruling (LTR 200236028) regarding the treatment of computer-related costs, both software and hardware (CCA 201549024).

United StatesTax
Cathy B. Goldsticker, CPA
Cathy B. Goldsticker, CPA
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IRS Chief Counsel has affirmed the application of the guidance in a 2002 letter ruling (LTR 200236028) regarding the treatment of computer-related costs, both software and hardware (CCA 201549024). Although the LTR may not be used or cited as precedent, taxpayers in effect may rely on the 2002 ruling and on guidance published in Rev. Proc. 2000-50. Considering the growing cost of computer equipment and software in most businesses, the latest LTR from the IRS for the most part is welcomed news.

The 2002 ruling addresses the consequences of the purchase, development and implementation of Enterprise Resource Planning software. ERP software is a business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services and human resources. The IRS issued the following rulings:

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