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Joint Press Release
June 13, 2014

Federal banking regulators finalize joint
supplemental guidance on income tax allocation
agreements
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
For immediate release
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Federal banking regulators on Friday issued final supplemental
guidance on income tax allocation agreements involving holding
companies and insured depository institutions. An aim of the guidance is
to reduce confusion regarding ownership of tax refunds.
The guidance supplements an interagency policy statement on income
tax allocation issued by the regulators in 1998. That statement said that
a holding company that receives a tax refund from a taxing authority
obtains these funds as agent for its subsidiary insured depository
institutions and other affiliates. The guidance supplements the policy
statement by instructing insured depository institutions and their holding
companies to review their tax allocation agreements to ensure the
agreements expressly acknowledge that the holding company receives
any tax refunds as an agent. In addition, all banking organizations are
asked to insert specific language in their tax allocation agreements to
further clarify tax refund ownership.
The guidance also clarifies how sections 23A and 23B of the Federal
Reserve Act, which establish certain restrictions on and requirements for

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transactions between depository institutions and their affiliates, apply to
tax allocation agreements.
The federal banking regulators are issuing the guidance, which is
identical to the proposal issued late last year, in response to disputes
between holding companies in bankruptcy and failed depository
institutions regarding ownership of tax refunds. Courts have come to
differing conclusions regarding the ownership of tax refunds between
holding companies and depository institutions based on their
interpretation of language in tax allocation agreements.
Institutions and holding companies should implement the guidance as
soon as reasonably possible, which the regulators expect would not be
later than October 31, 2014.
Federal Register notice: HTML | PDF
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Media Contacts:
Federal Reserve
Board
FDIC
OCC

Barbara
Hagenbaugh

202-4522955
202-898David Barr
6992
202-649Stephanie Collins
6870

Last Update: June 13, 2014

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