Agencies Propose Rule Requiring Income Tax Allocation Agreements for Consolidated Returns

The OCC, the Federal Reserve and the FDIC today proposed requiring that national banks, state banks and savings associations that file tax returns as part of a consolidated tax filing group be required to enter into tax allocation agreements with their holding companies and other members of the consolidated group that file a consolidated group tax return.

According to today’s Federal Resister notice, the proposal would “promote safety and soundness by preserving depository institutions’ ownership rights in tax refunds and ensuring equitable allocation of tax liabilities among entities in a holding company structure.” The proposal also would describe two mandatory provisions in these tax allocation agreements, including provisions addressing the ownership of tax refunds received. If adopted, the proposal would replace an interagency policy statement on tax allocation agreements that was issued in 1998 and supplemented in 2014. Comments are due 60 days from the Federal Register posting.