Senator Boxer: Providing a Key Tax Break for Businesses
Friday, November 13, 2009
This week Congress acted to provide vital tax relief for businesses that have suffered losses during the recent recession.
On Wednesday, November 4, the Senate passed legislation to expand tax deductions for net operating losses as part of H.R. 3548, the Unemployment Compensation Extension Act of 2009. Based on a bill that I am co-sponsoring, the Net Operating Loss (NOL) Carryback provision would allow qualifying businesses to offset current losses with prior taxes paid in either 2008 or 2009 for up to five years. This measure will assist distressed companies, spur job creation, and stabilize operations.
Under the current NOL provision, businesses may use losses from their current tax year to obtain refunds of taxes paid on profits from the previous two years. The American Recovery and Reinvestment Act extended the carryback period to five years, but only for businesses with $15 million or less in gross receipts over the past three years.
The new NOL provision would extend the NOL carryback period from two years to five years for all businesses. This will provide a much-needed cash infusion for any business that was profitable during the 2004-06 period but is currently suffering losses. In California, many of these enterprises are connected with the housing industry, which earned high profits through 2006 but has been hit with devastating losses since then.
The House of Representatives approved the Senate version of H.R.3548 on Thursday, and the President signed it into law on Friday. This bipartisan legislation will help thousands of American companies, providing tax relief that allows them to meet their payrolls, invest in new equipment, and create jobs in every sector of our economy.
U.S. Senator Barbara Boxer