Board of Governors of the Federal Reserve System 

Federal Deposit Insurance Corporation 

Office of the Comptroller of the Currency 

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Addendum to Interagency Policy Statement on 

Income Tax Allocation in a Holding Company Structure [Footnote 1 

- See 79 Federal Register 35228-35230, June 19, 2014. End of Footnote 1.] 

June 19, 2014 

In 1998, the Board of Governors of the Federal Reserve System (Board), the Federal 

Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) 

(collectively, the Agencies), and the Office of Thrift Supervision (OTS) issued the "Interagency 

Policy Statement on Income Tax Allocation in a Holding Company Structure" (the "Interagency 

Policy Statement"). [Footnote 2 

- 63 FR 64757 (Nov. 23, 1998). Responsibilities of the OTS were transferred to the Board, FDIC, and OCC pursuant 

to Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act. End of Footnote 2.] 

Under the Interagency Policy Statement, members of a consolidated group, 

comprised of one or more insured depository institutions (IDIs) and their holding company and 

affiliates (the Consolidated Group), may prepare and file their federal and state income tax 

returns as a group so long as the act of filing as a group does not prejudice the interests of any 

one of the IDIs. That is, the Interagency Policy Statement affirms that intercorporate tax 

settlements between an IDI and its parent company should be conducted in a manner that is no 

less favorable to the IDI than if it were a separate taxpayer and that any practice that is not 

consistent with the policy statement may be viewed as an unsafe and unsound practice prompting 

either informal or formal corrective action. 

The Interagency Policy Statement also addresses the nature of the relationship between 

an IDI and its parent company. It states in relevant part that: 

• "[A] parent company that receives a tax refund from a taxing authority obtains these 

funds as agent for the consolidated group on behalf of the group members," and 

• A Consolidated Group's tax allocation agreement should not "characterize refunds 

attributable to a subsidiary depository institution that the parent receives from a taxing 

authority as the property of the parent." 

Since the issuance of the Interagency Policy Statement, courts have reached varying 

conclusions regarding whether tax allocation agreements create a debtor-creditor relationship 

between a holding company and its IDI. [Footnote 3 

- Case law on this issue is mixed. Compare Zucker v. FDIC, as Receiver for BankUnited, 727 F.3d 1100, 1108-09 

(11th Cir. Aug. 15, 2013) ("The relationship between the Holding Company and the Bank is not a debtor-creditor 

relationship. When the Holding Company received the tax refunds it held the funds intact—as if in escrow—for the 

benefit of the Bank and thus the remaining members of the Consolidated Group.") with F.D.I.C. v. Siegel (In re 

IndyMac Bancorp, Inc.), F. App'x , 2014 WL 1568759, *2 (9th Cir. Apr. 21, 2014) (per curiam) ("The TSA does not create a trust r

a debtor-creditor relationship in California"). End of Footnote 3.] 

Some courts have found that the tax refunds in 
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question were the property of the holding company in bankruptcy (rather than property of the 

subsidiary IDI) and held by the holding company as the IDI's debtor. [Footnote 4 

- See e.g., F.D.I.C. v. Siegel (In re IndyMac Bancorp, Inc.), F. App'x , 2014 WL 1568759 (9th Cir. Apr. 21, 

2014) (per curiam). End of Footnote 4.] 

The Agencies are issuing 

this addendum to the Interagency Policy Statement (Addendum) to explain that Consolidated 

Groups should review their tax allocation agreements to ensure the agreements achieve the 

objectives of the Interagency Policy Statement. This Addendum also clarifies how certain of the 

requirements of sections 23A and 23B of the Federal Reserve Act (FRA) apply to tax allocation 

agreements between IDIs and their affiliates. 

In reviewing their tax allocation agreements, Consolidated Groups should ensure the 

agreements: (1) clearly acknowledge that an agency relationship exists between the holding 

company and its subsidiary IDIs with respect to tax refunds, and (2) do not contain other 

language to suggest a contrary intent. [Footnote 5 

- This Addendum clarifies and supplements but does not replace the Interagency Policy Statement. End of Footnote 5.] 

In addition, all Consolidated Groups should amend their 

tax allocation agreements to include the following paragraph or substantially similar language: 

The [holding company] is an agent for the [IDI and its subsidiaries] (the "Institution") 

with respect to all matters related to consolidated tax returns and refund claims, and nothing in 

this agreement shall be construed to alter or modify this agency relationship. If the [holding 

company] receives a tax refund from a taxing authority, these funds are obtained as agent for the 

Institution. Any tax refund attributable to income earned, taxes paid, and losses incurred by the 

Institution is the property of and owned by the Institution, and shall be held in trust by the 

[holding company] for the benefit of the Institution. The [holding company] shall forward 

promptly the amounts held in trust to the Institution. Nothing in this agreement is intended to be 

or should be construed to provide the [holding company] with an ownership interest in a tax 

refund that is attributable to income earned, taxes paid, and losses incurred by the Institution. 

The [holding company] hereby agrees that this tax sharing agreement does not give it an 

ownership interest in a tax refund generated by the tax attributes of the Institution. 

Going forward, the Agencies generally will deem tax allocation agreements that contain 

this or similar language to acknowledge that an agency relationship exists for purposes of the 

Interagency Policy Statement, this Addendum, and sections 23A and 23B of the FRA. 

All tax allocation agreements are subject to the requirements of section 23B of the FRA, 

and tax allocation agreements that do not clearly acknowledge that an agency relationship exists 

may be subject to additional requirements under section 23A of the FRA. [Footnote 6 

- Section 23A requires, among other things, that loans and extensions of credit from a bank to its affiliates be 

properly collateralized. 12 U.S.C. 371c(c). End of Footnote 6.] 

In general, section 

23B requires affiliate transactions to be made on terms and under circumstances that are 

substantially the same, or at least as favorable to the IDI, as comparable transactions involving 

nonaffiliated companies or, in the absence of comparable transactions, on terms and 
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circumstances that would in good faith be offered to non-affiliated companies. [Footnote 7 

- 12 U.S.C. 371c-1(a). Transactions subject to section 23B include the payment of money by a bank to an affiliate 

under contract, lease, or otherwise and transactions in which the affiliate acts as agent of the bank. Id. at § 371c1(a)(2) & (a)(4). End of Footnote 7.] 

Tax allocation 

agreements should require the holding company to forward promptly any payment due the IDI 

under the tax allocation agreement and specify the timing of such payment. Agreements that 

allow a holding company to hold and not promptly transmit tax refunds received from the taxing 

authority and owed to an IDI are inconsistent with the requirements of section 23B and subject to 

supervisory action. However, an Agency's determination of whether such provision, or the tax 

allocation agreement in total, is consistent with section 23B will be based on the facts and 

circumstances of the particular tax allocation agreement and any associated refund. 

Cross reference: 

• SR letter 98-38, "Interagency Policy Statement on Income Tax Allocation in a Holding 

Company Structure"