A plan to exempt thrifts from $3 billion in back taxes was attached last week to a bill creating new adoption incentives that was approved by the Senate Finance Committee.
The plan would protect thrifts from taxes on bad debt reserves taken before 1988. The plan would also make thrifts liable for $1.5 billion in taxes on reserves taken since Jan. 1, 1988. The money would have to be repaid over the next eight years and would offset budget revenue lost as the result of a $5,000 tax credit to defray adoption costs for families earning less than $115,000.
Previously, the bad debt plan was included in health insurance legislation to pay for medical savings accounts and mental health insurance. But Republican leaders pared down the cost of the insurance bill and the bad debt funds were no longer needed.