Legislation to reinstate the net operating loss, or NOL, carryback option for certain eligible financial institutions would expand lending and credit availability for consumers and businesses across the U.S., the American Bankers Association said in a letter to the leaders of the House Ways and Means Committee.
The current prohibition on NOL carrybacks has unintended consequences that adversely affect certain financial institutions – particularly those engaged predominantly in consumer lending – by inflating required capital levels and thereby constraining their ability to lend, ABA said. H.R. 9383 would address the problem by allowing certain financial institutions to elect to carryback a NOL for two taxable years with an 80% limitation, starting in 2027, and limiting the carryover period to 20 years.
“This technical correction does not result in any reduction in federal income tax, and it would unlock billions of dollars of lending capacity and credit availability for millions of individuals and small businesses across America — stimulating economic growth and generating prosperity throughout the country,” ABA said.
Rep. Mike Carey (R-Ohio) is the lead sponsor of the bill, which has nine cosponsors from both parties.
