U.S. Forgoes Billions in Citi Deal

The federal government decided to give up billions of dollars this week when the IRS issued an exception to its tax rules allowing Citigroup (and a handful of other companies partially owned by the federal government) to hold on to billions of dollars in tax breaks that would otherwise lose value when the government sells its shares to private investors. Friday’s decision is part of a deal the government made with Citigroup this week. The IRS has changed several rules to reduce tax burdens on financial companies during the economic crisis. Officials said the ruling will benefit taxpayers because the public’s shares in Citigroup will be more valuable and the company will be able to pay the government back on time. "The government is consciously forfeiting future tax revenue. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," an expert on tax accounting said.