WASHINGTON — Three national banking trade associations delivered a joint letter to the chairmen and ranking members of the House Ways & Means and Senate Finance committees encouraging them to include the Subchapter S reforms from the Senate bill in any compromise legislation.

The April 12 letter signed by the American Bankers Association, America's Community Bankers, and the Independent Community Bankers of America commended the Congress for passing the bills. "Importantly," it read, "we urge that any final House-Senate compromise on small business tax relief preserve the Subchapter S reforms in the Small Business and Work Opportunity Act of 2007 passed by the Senate. The Subchapter S provisions have bipartisan support and will help strengthen small businesses and the Subchapter S financial institutions that help finance them."

According to a Congressional Research Service summary, the bill as introduced would redefine "passive investment income" for S Corp. revocation rules to exclude gains from the sale or exchange of stock or securities as an item of passive investment income; exclude restricted bank director stock from treatment as S corporation stock; establish a special accounting rule for banks that become S corporations and that change from the reserve method of accounting for bad debts; revise the tax treatment of sales of stock of wholly-owned subsidiaries of Sub S corporations; creates a special rule for the treatment of the pre-1983 accumulated earnings and profits of certain corporations described by the Small Business Jobs Protection Act of 1996; and permit a nonresident alien to be a potential current beneficiary of an electing small business trust.