skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content
Board of Governors of the Federal Reserve System

Supervision and Regulation Letters

SR 14-6

Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure

July 15, 2014

Seal of the Board of Governors of the Federal Reserve System
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.  20551
DIVISION OF BANKING
SUPERVISION AND REGULATION
SR 14-6
July 15, 2014
TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK AND TO FINANCIAL INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE
SUBJECT:   Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure
Applicability:  This letter applies to all state member banks, bank holding companies, and savings and loan holding companies, supervised by the Federal Reserve, including those with $10 billion or less in total consolidated assets that file tax returns as members of a consolidated group.  The addendum and the Interagency Policy Statement in Income Tax Allocation in a Holding Company Structure do not apply to an institution, its holding company, or other affiliates if the holding company is not subject to corporate income taxes at the federal or state level.

On June 13, 2014, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (Agencies) announced the issuance of an addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (1998 Interagency Policy Statement) to ensure that insured depository institutions (IDIs) in a consolidated group maintain an appropriate relationship regarding the payment of taxes and treatment of tax refunds.1  The purpose of the addendum, which is provided as an attachment to this letter,2 is to ensure that tax allocation agreements expressly acknowledge an agency relationship between a holding company and its subsidiary IDI to protect the IDI's ownership rights in tax refunds.3  State member banks and holding companies should implement the guidance as soon as reasonably possible, which the Agencies expect would not be later than October 31, 2014.

The addendum directs institutions and their holding companies to review their agreements to ensure they achieve this objective with respect to tax refunds, and they do not contain other language to suggest a contrary intent.  The addendum also includes a sample paragraph for institutions and their holding companies to use in their tax allocation agreements.  In addition, the addendum clarifies how certain requirements of sections 23A and 23B of the Federal Reserve Act apply to tax allocation agreements between IDIs and their affiliates.

Reserve Banks are asked to distribute this letter and attachment to state member banks, holding companies, appropriate safety-and-soundness examiners, and other supervisory staff.  Questions concerning the interagency statement should be directed to the following staff in the Accounting Policy Section:  Joanne Wakim, Manager, at (202) 912-4302; or Matthew Kincaid, Senior Accounting Policy Analyst, at (202) 452-2028.  Questions can also be directed to Legal Division staff attention:  Will Giles, Counsel, (202) 4523351; Benjamin McDonough, Senior Counsel, at (202) 4522036; and Pamela Nardolilli, Senior Counsel, at (202) 4523289.  In addition, questions may be sent via the Board's public website.4

signed by
Michael S. Gibson
Director
Division of Banking
Supervision and Regulation


Cross References:
SR letter 98-38, "Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure"
 
Notes:
  1. For more information on the original interagency policy statement, see SR letter 98-38, "Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure."  Please note that this addendum clarifies and supplements but does not replace the 1998 Interagency Policy Statement. Return to text
  2. See 79 Federal Register 35228-35230, June 19, 2014 at http://www.gpo.gov/fdsys/pkg/FR-2014-06-19/pdf/2014-14325.pdf. Return to text
  3. For the purposes of this guidance, "holding companies" include bank holding companies and savings and loan holding companies. Return to text
  4. See http://www.federalreserve.gov/apps/contactus/feedback.aspx. Return to text
Last update: July 16, 2014