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ICBA Praises Lawmakers for New S Corp Reform

Bill Contains Important Provision from Communities First Act

Washington, D.C. (August 14, 2006)—The Independent Community Bankers of America (ICBA) applauds Senators Orin Hatch (R-Utah) and Blanche Lincoln (D-Ark.) for introducing the ICBA-backed S Corporation Reform Act of 2006 (S. 3838).

"ICBA thanks Sens. Hatch and Lincoln for this bill and other beneficial S corporation reforms they helped enact in recent years," said Camden R. Fine, ICBA president and CEO. "Today more than 2,300 community banks and thrifts benefit from this tax-advantaged status. The new legislation will both help existing Subchapter S banks and make it even more attractive for community banks interested in converting to an S Corp. We are especially pleased that it includes an important provision from the ICBA-inspired Communities First Act (H.R.2061 / S.1568) that would increase the cap on bank qualified bond issues."

The new legislation contains additional provisions that will benefit community banks, including allowing the issuance of preferred stock, allowing nonresident aliens to be shareholders, recapture of bad debt reserves, and improving the treatment of S Corp. directors' shares. An S corporation is a pass-through entity that can avoid punitive double taxation by paying tax once at the shareholder level.

ICBA will continue to work with Congress to help ensure these important tax reforms are enacted.

The ICBA-backed Communities First Act (CFA) provides targeted regulatory and tax relief to help community banks serve the consumers, small businesses and local governments that depend on them for financial services.