Web Firms Hail IRS Ruling

Microsoft Corp. and other technology companies said an Internal Revenue Service decision on bartering for some Internet advertising will reduce cumbersome tax reporting requirements and remove potential legal liability. Tax law requires companies that exchange banner ads on each other’s Web sites under barter arrangements to report the value of the transactions. The IRS said it won’t require Web site owners to report any bartering transaction involving property or services less than $1. Technology firms had said that without relief, IRS rules could have compelled companies to file thousands, or even millions, of notices that inform the IRS of the ad barter agreements. The IRS notice applies to barter transactions that occurred in 1999. The IRS also said it won’t penalize companies for failing to report earlier barter agreements valued at less than $1. That exclusion would cover many ad barter arrangements, industry analysts said.