JPMorgan Chase & Co. is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic-stimulus bill.
That law let companies apply losses from 2008 or 2009 against taxes paid in the previous five years, instead of the previous two years. Failed Seattle thrift Washington Mutual is eligible for about $2.6 billion in tax refunds, thanks to big losses in 2008. Now JPMorgan, which took over WaMu’s banking operations in September 2008, is in discussions with the Federal Deposit Insurance Corp. and bondholders about the refund.
According to people familiar with the talks, an agreement under discussion would let JPMorgan claim more than half of the total, to be held in an FDIC receivership as part of a larger settlement with bondholders. JPMorgan could dip into that pot to satisfy certain claims related to WaMu’s collapse.
Many other companies have benefited from the 2009 tax-refund law already. According to an analysis of securities filings by The Wall Street Journal, more than 250 companies have so far said they expect to get about $12 billion in federal tax refunds under the law.
That remains a partial list. The Joint Committee on Taxation, a congressional committee, estimated the provision would cost $33 billion in its first year. Some critics have found the corporate-tax-refund technique wanting as a stimulus or job-creation move.
