WASHINGTON -- A proposal to expand U.S. companies' ability to apply losses in 2008 or 2009 over the prior five years to get immediate cash is gaining traction in the U.S. Congress.
All companies, no matter what size, would be able to apply losses in one of those years to full year taxable income for the prior four years and to 50 percent of income in the fifth year, according to a summary of a plan backed by Senate Majority Leader Harry Reid and Senate Finance Chairman Max Baucus, both Democrats.
The proposal will be offered as an amendment to an unemployment insurance bill working its way through the Senate. Negotiations are still ongoing so the details could change.
A broad coalition of industry back the idea, including the National Association of Manufacturers. The group says the proposal is a vital tool to give cash strapped companies access to capital immediately.
Some have criticized NOL carrybacks as corporate welfare.
Representative Lloyd Doggett, a Democrat on the tax-writing House Ways and Means Committee, said as much at a reception of tax reform advocates last week.
"Corporations who paid so little in the past want to get a check back," Doggett, an advocate of cracking down on corporations who pay low tax rates, said.
The idea could also gain at least some support from Republicans, who have long supported such legislation. Republican Senator Olympia Snowe of Maine is studying the provision, according to an aide.
In the recovery act passed earlier this year, businesses with gross receipts of less than $15 million were given a 5 year carry back for 2008.
© 2009 Reuters. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
|
