Proposed clarifications to call report instructions for reporting of deferred tax assets are out for comment until Sept. 20, the agencies said in a recent Federal Register notice.
The proposal, issued by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve, and Office of the Comptroller of the Currency (OCC), would be consistent with a proposed rule on tax allocation agreements and a new item related to the final rule on the Standardized Approach for Counterparty Credit Risk (SA-CCR), the FDIC said in a Financial Institution Letter (FIL) Monday to FDIC-supervised institutions.
Beginning with the Dec. 31, 2021, Call Reports, the proposal would revise the call report instructions’ glossary entry for “Income Taxes,” and Schedule RC-R, Part I, Regulatory Capital Components and Ratios, which would have a new line item 31.b, “Standardized Approach for Counterparty Credit Risk opt-in election.”
“The agencies are proposing to revise the ‘Income Taxes’ Glossary entry to address treatment of temporary difference deferred tax items and operating loss and tax credit carryforward deferred tax assets as stated in the proposed rule on tax allocation agreements,” the letter states. “The new item related to SA-CCR would identify institutions that have chosen to early adopt or voluntarily elect SA-CCR, which would allow for enhanced comparability of the reported derivative data and better supervision of the implementation of the framework at these institutions.”
The tax allocation proposed rule, issued in April, would require a bank that files tax returns as part of a consolidated tax filing group to enter into a written, comprehensive tax allocation agreement with its holding company. The agencies said this would protect the bank’s ownership rights in tax refunds that are attributable to that institution and promote safety and soundness by requiring that it be compensated for the use of its tax assets by its affiliates. The agencies also seek to reduce potential resolution-related costs to the Deposit Insurance Fund (DIF).
The call report proposal was published in the Federal Register last Thursday.