JP Morgan Chase & Co is nearing a deal with the U.S. Treasury which would allow it to benefit from a tax refund as high as $1.4 billion, making use of a little-known provision in the American Recovery and Reinvestment Act.
The stimulus package allowed company to take losses from 2008 and 2009 and apply them against taxes paid during the previous five years instead of the previous two. JP Morgan Chase is eligible for $2.6 billion in tax refunds from Washington Mutual, which JP Morgan purchased in September of 2008.
According to the Wall Street Journal citing anonymous sources, an potential agreement would let JP Morgan Chase claim more than half of the $2.6 billion in tax refunds from Washington Mutual and the remainder would be held in FDIC receivership as part of a larger settlement with the failed company’s bondholders.
Many other companies have already benefited from the 2009 tax-refund law already. According to an analysis of security filings by the WSJ, more than 250 companies said that they already expect to get about $12 billion worth of federal tax refunds under the provision.
A join congressional committee predicted that the provision would cost taxpayers $33 billion during its first year.