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Hatch is proposing corporate tax refund

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Sen. Orrin Hatch wants Congress to consider a new type of bailout for struggling businesses: Quickly refund some taxes they paid up to 15 years ago, when they were profitable.

In a letter to leaders of the Senate Finance Committee on Tuesday, Hatch, R-Utah, noted that current tax law already allows "businesses that have suffered losses to recoup federal income taxes they have paid in recent profitable years by allowing them to carry back net operating losses to previous years."

The trouble is, Hatch wrote, that net-operating losses can be carried back only two years to offset otherwise taxable income.

"However, during difficult times, many companies find that the two-year carryback period is not adequate. This is especially true for firms that have been struggling for some time," Hatch wrote. He said that in tough times, Congress has sometimes allowed a temporary rollback period of up to five years.

"I propose that we increase the carryback period to at least 10 years, and perhaps as much as 15 years. I also propose that we make this a permanent feature of our tax law," Hatch wrote.

"The economic stimulative effect of such a change could be tremendous," he said. "It would make much more potential quick cash available to millions of companies that are currently losing money."

The cash would be available within a few weeks of the time the business filed its net-operating loss carryback claim, he said. "This money could make the difference between keeping employees and laying them off, or even between staying in business and shutting the doors forever."

Hatch added that while some people may see that as "a radical and expensive change," it would be "bold but not radical," and "this is an unusual time that calls for bold measures."

Hatch said he hopes Congress will consider the proposal as part of an economic stimulus package that the new Congress is expected to consider next month, after its members are sworn into office.

Other measures most often mentioned for such a package include extra federal funding for "ready-to-go" highway, bridge and water projects, and additional federal money to states for expenses such as Medicaid and unemployment benefits.

E-MAIL: lee@desnews.com