A group of Democratic representatives from the House Ways and Means Committee wrote a sternly worded letter to Treasury Secretary Henry Paulson warning him against expanding a controversial IRS Notice that allows banks to write off the tax losses of other banks they acquire.
The letter from Lloyd Doggett, D-Texas (pictured), and eight other representatives, cautioned Paulson against expanding the tax guidance to allow foreign banks to also write off the built-in losses of banks they acquire in the U.S.
"We write to express our strong concern regarding the suggestion, most recently expressed in a letter to Assistant Treasury Secretary Eric Solomon from the Institute of International Bankers dated Nov. 14, 2008, that you may consider extending even further your earlier guidance that overrules established tax law," wrote the lawmakers.
"As you are no doubt aware, great concern over Notice 2008-83 has been expressed in both houses of Congress. Legislation reversing the guidance has been introduced in the House by members of the Ways and Means Committee, including Congressman Doggett, Congressman Stark, Congressman McDermott, Congressman Lewis, Congressman Blumenauer, and Congressman Pascrell who join this letter."
"Legislation addressing this issue has also been introduced in the Senate. We understand that you may receive requests to expand the scope of your guidance to other sectors; however, we strongly believe that you have already overstepped your authority in issuing the original guidance and urge you not to compound this mistake by further widening this illegal loophole. At a time when we should be working together to identify and limit tax loopholes, not creating - and then expanding them - this backdoor bailout is precisely the wrong approach. It is disappointing when those who are charged with administering the tax laws demonstrate this contempt for them."
