The American Bankers Association today suggested regulators make two changes to the rules implementing the corporate alternative minimum tax, or CAMT, to reduce the compliance burden on banks.
The CAMT was created by the passage of the Inflation Reduction Act in 2022 and generally imposes a 15% minimum tax on certain corporations. When the regulations implementing the tax were first implemented during the Biden administration, ABA raised several concerns, including that they would severely complicate the compliance and reporting process for banks and partnerships investing in important social and housing projects.
The Treasury Department and IRS last year proposed simplifying some Biden-era regulations implementing the tax while rescinding others. In a letter to the IRS, ABA proposed two revisions. First, the agencies should provide an alternative “top-down election” under which the “top-down amount” equals the partner’s book income from investments made under the equity method of accounting, including the proportional amortization method.
“(I)f a CAMT entity partner is a direct partner in multiple partnerships, it should be allowed make the alternative ‘top-down election’ with respect to its investments in some partnerships and not its investments in other partnerships,” ABA said.
Second, the agencies should expand the “taxable income election” to investments in tax equity partnerships, regardless of the value of the investment or the investor’s ownership interest, ABA said.
“Utilizing taxable income for partnership investments not only would greatly reduce the regulatory burden on taxpayers — this change would also greatly benefit Treasury and the IRS,” ABA said. “Most notably, under the current CAMT rules, IRS examiners would be faced with a similar set of issues that many businesses are currently facing: attempting to compute AFSI calculations for equity investments without an available number.”
