In its letter, the AICPA pointed out that despite the intention of the IRS and the Department of the Treasury to make the deferral income method available to all entities, the 2011 guidance precluded a taxpayer from using the deferral income method if the gift cards service agreement was with a financially unrelated party.
The new IRS guidance, issued on July 24, 2013 in Rev. Proc. 2013-29, modifies Rev. Proc. 2011-18 and provides clarification for taxpayers who sell gift cards. Under the new rules, taxpayers will be allowed to defer recognition of income from the sale of gift cards redeemed by an unrelated third party until the year after the payment is received.
The AICPA was the only organization to raise the issue with the IRS and the Department of the Treasury.