26 HќќѠіђџȱ юћјђџ ѢљѦȱ2014 COMPLIANCE CONNECTION QDZ We have heard that the bank regulatory agencies have issued new guidance on tax allocation agreements in a holding company structure. What actions do we need to take to comply with this new guidance? DZ On June 19, the board of governors of the Federal Reserve System, Federal Deposit Insurance ǯǰȱ Ĝȱȱȱ ȱȱ the Currency and the Department ȱȱ ¢ȱ¢ȱȱȱęȱ Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (“Addendum”).1 The Addendum ęȱȱȱȱȱ not replace the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure (“Interagency Policy Statement).2 The Addendum was issued “to explain that Consolidated Groups should review their tax allocation agreements to ensure the agreements achieve the objectives of the Interagency Policy Statement” and to clarify “how certain of the requirements of sections 23A and 23B of the Federal Reserve Act (FRA) apply to tax allocation agreements between [insured depository institutions, or ǾȱȱȱĜǯȄ3 In order to comply with the new ǰȱȱ¢ȱȱ¢ȱȱęnancial institutions and their holding companies to amend their tax alloca- ȱȱȱ¢ȱĚȱȱ intention that an agency relationship exists between the holding company and its subsidiary IDI with respect to tax refunds.4 The Addendum provides the following model language for that purpose: The [holding company] is an agent for the [IDI and its subsidiaries] (the “Institution”) with re- ȱȱȱĴȱȱȱ- solidated 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 ABOUT COMPLIANCE CONNECTION In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance ȱěȱȱȱ Ȭęȱȱ ǯȱ ȱȱĴȱȱȱǰȱ ȱ Compliance Connection will refer the bank to a law ęǯȱ ȱȱȱȱȱ ȱȱ¢ȱ ¢ȱ ǯȱ , partner with ȱ ȱ , Indianapolis, and IBA compliance consultant. Submit Compliance Connection questions to IBA’s ȱ ǯȱ ȱ ȱat avantil@indianabankers.org. © 2014 Krieg DeVault LLP THINKING BEYOND TRADITIONAL SOLUTIONS FOR FINANCIAL INSTITUTIONS FOR OVER 130 YEARS Corporate Representation Mergers and Acquisitions &DSLWDO 2ǺHULQJV Regulatory Compliance Supervision and Enforcement New Product Development Litigation Commercial/Consumer Loan Creditors’ Rights Trust Tax Securities Employment Intellectual Property One Indiana Square Suite 2800 Indianapolis, Indiana 46204 p: 317.636.4341 f: 317.636.1507 INDIANA ILLINOIS GEORGIA FLORIDA MINNESOTA www.kriegdevault.com &RQWLQXHG RQ IDFLQJ SDJH
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