Bulletin outlines provisions to be included in tax allocation agreements proposal

A bulletin on a proposed rule to require banks that file tax returns are part of a consolidated tax filing group to enter into tax allocation agreements with their holding companies and other members of their consolidated group was issued Monday by the federal regulator of national banks.

Monday’s bulletin follows up on the May 10 publication of the proposal in the Federal Register, which marked the beginning of a comment period that ends July 9. It also outlines what provisions would have to be included in the agreements, including those addressing:

  • ownership, timing, and amounts of tax refunds received;
  • the timing and amounts of any payments for taxes due to taxing authorities;
  • the treatment of the sale or transfer of deferred tax assets (DTA);
  • access to tax filings and related workpapers.

The Office of the Comptroller of the Currency (OCC) said the bulletin relates to the proposal that was published May 10, but was proposed April 22. The proposal was issued jointly by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve, and the OCC. It would also describe the provisions required to be included in the tax allocation agreements and specifies regulatory reporting treatment.

The agencies last updated their joint statement on tax allocation agreements in 2014. According to a Federal Reserve memorandum, the policy statement is not enforceable, causing losses for the FDIC in some receiverships.

OCC Bulletin 2021-23: Tax Allocation Agreements: Notice of Proposed Rulemaking 

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