June 23, 2014

Agencies Issue Addendum to Interagency Policy Statement on Income Tax Allocation in a Holding Company (Fed. Reg.) (with Lofchie Comment)

The Board of Governors of the Federal Reserve System, FDIC, and Office of the Comptroller of the Currency (the "Agencies") jointly issued an Addendum to the "Interagency Policy Statement on Income Tax Allocation in a Holding Company". The Addendum was issued 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.

The Addendum instructs IDIs and their holding companies to review and revise their tax allocation agreements and ensure that the agreements expressly acknowledge that the holding company receives a tax refund from a taxing authority as agent for the IDI, and are consistent with the requirements of Federal Reserve Act Sections 23A and 23B.

According to the Agencies, institutions and holding companies should implement the Addendum to the Interagency Policy Statement "as soon as reasonably possible," which should not be later than October 31, 2014.

Lofchie Comment: Although this caution does not have legal application to firms that are not part of a bank holding company, the concept is equally relevant to broker-dealers that are not affiliated with banks.

See: 79 FR 35228.

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