Nearly 1,500 small, privately held banks around the country could have to pay tens of millions of dollars combined in back taxes if a court ruling stands.

These banks, which are taxed under the rules of Subchapter S of the Internal Revenue Code, would not be directly on the hook for the money. This is because profits at S Corps, which can have no more than 100 shareholders each, are taxed only at the shareholder level, instead of both at the shareholder and corporate levels, as C Corps are. But most Subchapter S banks have agreements to reimburse their owners for tax mistakes.

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