The IRS announced in a little-publicised notice on October 3 that a temporary change in the technical language of certain CFC rules will allow foreign subsidiaries the opportunity to provide 60-day loans to their US parent companies without incurring corporate tax at 35%.

Effectively, such loans are normally treated as a taxable distribution liable to corporate tax, but current rules allow foreign subsidiaries to provide tax-free loans to parent companies provided the money is paid within 30 days and is limited to two such periods per year.

However, it is thought that billions of dollars are parked in foreign subsidiaries away from the clutches of the IRS, and by doubling the 30-day rule, the US government hopes to unlock a wave of cash that will help US companies to finance their operations with the domestic credit market all but dried up.

"Recently, circumstances affecting liquidity have made it difficult for taxpayers to fund their operations," the IRS acknowledged in a statement, which added that the new measure would help to "facilitate liquidity in the near term.”

According to the IRS, the new rule will allow companies to make an unlimited number of 60-day loans, but the activity will be limited to 180 days per year, and will be restricted to just two tax years: 2008 and 2009.