[Congressional Record Volume 148, Number 25 (Friday, March 8, 2002)]
[Senate]
[Page S1702]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




CLARIFICATION REGARDING THE FIVE-YEAR CARRYBACK OF NET OPERATING LOSSES

  Mr. HATCH. Mr. President, the Job Creation and Worker Assistance Act 
of 2002, being considered by the Senate today, contains an important 
provision to extend the general net operating loss (``NOL'') carryback 
provision to 5 years (from 2 years) for NOLs arising in taxable years 
ending in 2001 and 2002. The Joint Committee on Taxation's Technical 
Explanation of the Act contains a footnote indicating that the NOL 
provision ``does not affect the terms and conditions that the Internal 
Revenue Service may impose on a taxpayer seeking approval for a change 
in its annual accounting period.''
  I want to clarify with the distinguished chairman of the Finance 
Committee, Senator Baucus, that this footnote was not intended to limit 
the Internal Revenue Service's authority to alter or modify the terms 
and conditions that may have been imposed on taxpayers that had already 
received permission to change accounting periods, particularly under 
circumstances where the events of September 11, 2001, have resulted in 
unanticipated and severe hardships, and the waiver or modification 
would not result in the planning activity that the NOL Condition was 
intended to prevent.
  Specifically, I want to clarify that the IRS has authority to permit 
an NOL incurred in a short taxable year to be carried back 
notwithstanding that the taxpayer may have agreed as a condition to 
securing the change to carry over the NOL only to future years.
  Mr. BAUCUS. I would agree that the relevant footnote merely restates 
the Internal Revenue Service's present authority, and is not intended 
to limit that authority in cases where modification of an approval is 
sought, and such a modification would be consistent with the 
government's overall response to September 11.

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