NEW YORK: The US government quietly agreed to forgo about $38 billions in potential tax payment from troubled financial giant Citigroup as part of a deal that help the company repay bailout funds, a media report has said.
"The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis," the 'Washington Post' reported.
The government had injected $45 billion in the entity, hit by global financial crisis in 2008. Citi has to pay back $20 billion bailout money to the US government, since the government got a 34% stake in Citi for $25 billion.
According to the publication, the Internal Revenue Service (IRS) on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government.
The move would allow Citigroup to retain $38 billion tax breaks that otherwise would decline in value when the government sells its stake to private investors.
The decision essentially gave up a longstanding rule that disqualified certain tax breaks if a significant ownership stake changed hands in an effort to discourage outside investors from buying tax benefits.
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