Treasury Dept Cuts Bank Taxes by Announcing “Financial Services” Don’t Include Banking: Who Knew?

by Jeff Sovern

This isn't consumer law, strictly speaking, but I thought readers of the blog might be interested to know that the Trump administration's Treasury Department thinks banking is not a financial service.  That interpretation has the effect of cutting taxes paid by banks.  David Sirota has the story, The Trump Administration Just Found a New Way to Hand Big Banks Even More Money, at  The Treasury Department proposed rule is here.  Here is a relevant passage:

Commenters requested guidance as to whether financial services includes banking. These commenters noted that section 1202(e)(3)(A) includes the term financial services, but that banking in separately listed in section 1202(e)(3)(B) which suggests that banking is not included as part of financial services in section 1202(e)(3)(A). The Treasury Department and the IRS agree with such commenters that this suggests that financial services should be more narrowly interpreted here. Therefore, proposed §1.199A-5(b)(2)(ix) limits the definition of financial services to services typically performed by financial advisors and investment bankers and provides that the field of financial services includes the provision of financial services to clients including managing wealth, advising clients with respect to finances, developing retirement plans, developing wealth transition plans, the provision of advisory and other similar services regarding valuations, mergers, acquisitions, dispositions, restructurings (including in title 11 or similar cases), and raising financial capital by underwriting, or acting as the client’s agent in the issuance of securities, and similar services. This includes services provided by financial advisors, investment bankers, wealth planners,and retirement advisors and other similar professionals, but does not include taking deposits or making loans.

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