Not everyone is joining in the jibes at Congress for starting its Republican convention recess without completing work on a tax bill. Owners and potential owners of purchased mortgage servicing rights are perfectly happy that action is delayed on a provision that would set.what they believe is an artificially long amortization period for the costs of acquiring PMSRs. This permits more time to garner support for an amendment to be offered by Sen. Paul Simon, D-Ill.

Simon's amendment would strike at the core of the provision, which is not PMSRs, but goodwill.

"Labor unions have done a very effective lobbying job by raising the threat that the provision will lead to many new mergers." conceded Gillian Spooner, director of legislative services in the National Tax Office of KPMG Peat Marwick. Spooner, a leader of the Coalition on Open Year Elections, disputes that contention, but said she thinks the argument must be answered.

The coalition compromises several large corporations, including bank holding companies and insurance companies. The group not only wants to have the measure specify that goodwill can be amortized, but also that this can be done for tax years that are still open. The Senate and House versions of the Revenue Act of 1992 (H.R. 11) have different methods of permitting some degree of open year deduction.

Spooner said the union argument about mergers is less powerful since the Tax Reform Act of 1986 made the acquisition of assets no more attractive than investment in a company's stock

But if the argument prevails and Simon's amendment to eliminate goodwill from the intangibles prevails, interest in the provision will wane. That will be just fine with participants in the PMSR market, who have become caught up in the debate because revenue estimators identified PMSRs as a source of tax revenue to balance off the drain from other items, especially goodwill.

The House version includes the cost of acquiring PMSRs as an intangible that would be amortized over 14 years, compared with the seven- to 10-year life most PMSR contracts actually experience. The House provision would result in an mismatch of costs and income. The Senate version exempts PMSRs from the intangibles provision.

"It will come down to a revenue calculation," said Curt B. Uhre, president of the Home Finance Coalition, a group of mortgage servicers.

The staff of the Joint Committee on Taxation has estimated that stretching the amortization period for the cost of acquiring PMSRs will raise $1 billion over five years.

The servicers think this is preposterous. They assert that it could well produce a revenue wash because higher taxes on PMSR earnings would result in more points being charged to borrowers, who can deduct them from gross income in the year in which the points are paid.

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