Proposed Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure, 76889-76892 [2013-30130]

Download as PDF Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES materials related to the Moving Ahead for Progress in the 21st Century Act (MAP–21) Comprehensive Truck Size and Weight Limits Study, which were referenced in a notice published on November 29, 2013, at 78 FR 71707. The original meeting notice asked for comments by January 3, 2014. The extension is based on input received from DOT stakeholders that the January 3, 2014 closing date does not provide sufficient time for submission of comments to the Department. The FHWA agrees that the deadline and the comment period should be extended. Therefore, the closing date for submission of comments on the materials is extended to January 17, 2014. Late-filed comments received after this date will be considered to the fullest extent practicable until January 31, 2014. This will provide others interested in commenting additional time to submit comments while maintaining the schedule required to deliver this study to Congress within the required timeframe. DATES: Comments must be received on or before January 17, 2014 for full consideration. Late-filed comments received after this date will be considered to the fullest extent practicable, until January 31, 2014. ADDRESSES: Comments should be sent to: Email: CTSWStudy@dot.gov. Mail: Federal Highway Administration, Office of Freight Management and Operations, 1200 New Jersey Ave. SE., E84–471, Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: For questions about this program, contact Thomas Kearney, FHWA Office of Freight Management and Operations, (518) 431–8890, or by email at Tom.Kearney@dot.gov. For legal questions, please contact Michael Harkins, FHWA Office of the Chief Counsel, (202) 366–4928, or by email at Michael.Harkins@dot.gov. Business hours for the FHWA are from 8:00 a.m. to 4:30 p.m., e.t., Monday through Friday, except Federal holidays. SUPPLEMENTARY INFORMATION: Background On November 29, 2013, at 78 FR 71707, the FHWA published in the Federal Register a notice to announce two upcoming public meetings on the MAP–21 Comprehensive Truck Size and Weight Limits Study and to announce the comment period for certain material related to the study. These materials included draft Desk Scans, project plans, selected truck configurations, and an updated project schedule. The VerDate Mar<15>2010 16:41 Dec 18, 2013 Jkt 232001 materials have been posted at: http:// www.ops.fhwa.dot.gov/freight/sw/ map21tswstudy/index.htm. The original comment period for the materials referenced in the notice closes on January 3, 2014. However, DOT stakeholders have indicated that this closing date does not provide sufficient time for submission of comments to the Department. To allow time for interested parties to submit comments, while maintaining the schedule required to deliver this Study to Congress within the required timeframe, the closing date is changed from January 3, 2014, to January 17, 2014. In addition late-filed comments will be considered to the fullest extent practicable, until January 31, 2014. Authority: Section 32801 of Pub. L. 112– 141. Dated: December 13, 2013. Jeffrey Lindley, FHWA Associate Administrator for Operations. 76889 the holding company receives a tax refund from a taxing authority as agent for the IDI and are consistent with certain of the requirements of sections 23A and 23B of the Federal Reserve Act. The Proposed Addendum includes a sample paragraph that IDIs would include in their tax allocation agreements to facilitate the Agencies’ instructions. Comments must be received by January 21, 2014. ADDRESSES: Interested parties are encouraged to submit written comments jointly to all of the Agencies. You may submit comments, identified by ‘‘Addendum to the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure’’ by any of the following methods: DATES: Office of the Comptroller of the Currency Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are [FR Doc. 2013–30193 Filed 12–18–13; 8:45 am] encouraged to submit comments by BILLING CODE 4910–22–P email, if possible. Please use the title ‘‘Proposed Addendum to the Interagency Policy Statement on Income DEPARTMENT OF THE TREASURY Tax Allocation in a Holding Company Structure’’ to facilitate the organization Office of the Comptroller of the and distribution of the comments. You Currency may submit comments by any of the [Docket ID OCC–2013–0020] following methods: • Web site: Federal eRulemaking Federal Reserve System Portal—‘‘Regulations.gov’’: Go to http:// [Docket No. OP–1474] www.regulations.gov. Enter ‘‘Docket ID OCC–2013–0020’’ in the Search Box and Federal Deposit Insurance Corporation click ‘‘Search.’’. Results can be filtered using the filtering tools on the left side Proposed Addendum to the of the screen. Click on ‘‘Comment Now’’ Interagency Policy Statement on to submit public comments. Click on the Income Tax Allocation in a Holding ‘‘Help’’ tab on the Regulations.gov home Company Structure page to get information on using Regulations.gov. AGENCY: Board of Governors of the • Email: mail to: regs.comments@ Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the occ.treas.gov. • Mail: Legislative and Regulatory Comptroller of the Currency, Activities Division, Office of the Department of the Treasury. Comptroller of the Currency, 400 7th ACTION: Proposed joint guidance with Street SW., Suite 3E–218, Mail Stop request for comment. 9W–11, Washington, DC 20219. SUMMARY: The Agencies are proposing to • Fax: (571) 465–4326. issue jointly an Addendum (Proposed • Hand Delivery: 400 7th Street SW., Addendum) to the ‘‘Interagency Policy Suite 3E–218, Mail Stop 9W–11, Statement on Income Tax Allocation in Washington, DC 20219. Instructions: Because paper mail in a Holding Company Structure’’ (63 FR the Washington, DC area and at the OCC 64757, Nov. 23, 1998) to ensure that insured depository institutions (IDIs) in is subject to delay, commenters are encouraged to submit comments by the a consolidated group maintain an Federal eRulemaking Portal or email, if appropriate relationship regarding the possible. Please use the title payment of taxes and treatment of tax ‘‘Addendum to the Interagency Policy refunds. The Proposed Addendum Statement on Income Tax Allocation in would instruct IDIs and their holding companies to review their tax allocation a Holding Company Structure’’ to facilitate the organization and agreements to ensure that the distribution of the comments. In agreements expressly acknowledge that PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\19DEN1.SGM 19DEN1 76890 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. To view comments electronically: Go to http://www.regulations.gov. Enter ‘‘Docket ID OCC–2013–0020’’ in the Search box and click ‘‘Search.’’. Comments can be filtered by agency using the filtering tools on the left side of the screen. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period. You may personally inspect and photocopy comments at the OCC, 400 7th Street SW., Washington, DC. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649–6700. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments. The Board of Governors of the Federal Reserve System • Agency Web site: http:// www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/apps/ foia/proposedregs.aspx. • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • Email: regs.comments@ federalreserve.gov. Include the Board’s docket number in the subject line of the message. • Facsimile: (202) 452–3819 or (202) 452–3102. • Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551. • Instructions: All public comments are available from the Board’s Web site at http://www.federalreserve.gov/apps/ foia/proposedregs.aspx as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or VerDate Mar<15>2010 16:41 Dec 18, 2013 Jkt 232001 contact information. Public comments also may be viewed electronically or in paper form in Room MP–500 of the Board’s Martin Building (20th and C Streets NW.) between 9:00 a.m. and 5:00 p.m. on weekdays. Federal Deposit Insurance Corporation • Agency Web site: http:// www.fdic.gov/regulations/laws/federal/ propose.html. Follow instructions for submitting comments on the Agency Web site. • Email: Comments@fdic.gov. Include ‘‘Addendum to Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure,’’ on the subject line of the message. • Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429. • Hand Delivery: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m. • Instructions: All comments received must include the agency name and ‘‘Addendum to Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure.’’ All comments received will be posted without change to http://www.fdic.gov/ regulations/laws/federal/propose.html, including any personal information provided. Paper copies of public comments may be ordered from the FDIC Public Information Center, 3501 North Fairfax Drive, Room E–1002, Arlington, VA 22226, by telephone at (877) 275–3342 or (703) 562–2200. FOR FURTHER INFORMATION CONTACT: Office of the Comptroller of the Currency: Steven Key, Assistant Director for Bank Activities and Structure, Bank Activities and Structure Division, Chief Counsel’s Office, 202–649–5594 or steven.key@occ.treas.gov; Gary Jeffers, Counsel, Bank Activities and Structure Division, Chief Counsel’s Office, 202– 649–6208 or gary.jeffers@occ.treas.gov, Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219. Board of Governors of the Federal Reserve System: Laurie Schaffer, Associate General Counsel, (202) 452– 2272, Benjamin McDonough, Senior Counsel, (202) 452–2036, Pamela Nardolilli, Senior Counsel, (202) 452– 3289, or Will Giles, Counsel, (202) 452– 3351, Legal Division; or Matthew Kincaid, Sr. Accounting Policy Analyst, (202) 452–2028, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 Users of Telecommunication Device for Deaf (TDD) only, call (202) 263–4869. Federal Deposit Insurance Corporation: Robert Storch, Chief Accountant, 202–898–8906 or rstorch@fdic.gov; Mark G. Flanigan, Counsel, Legal Division, 202–898–7426 or mflanigan@fdic.gov; Jeffrey E. Schmitt, Counsel, Legal Division, 703– 562–2429 or jschmitt@fdic.gov. SUPPLEMENTARY INFORMATION: I. Background In 1998, the Agencies and the Office of Thrift Supervision issued the ‘‘Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure’’ (Interagency Policy Statement) to provide guidance to IDIs and their holding companies and other affiliates (Consolidated Groups) regarding the payment of taxes on a consolidated basis.1 One of the principal goals of the Interagency Policy Statement is to protect IDIs’ ownership rights in tax refunds, while permitting the Consolidated Group to file consolidated tax returns. The Interagency Policy Statement states that: (1) tax settlements between an IDI and its holding company should be conducted in a manner that is no less favorable to the IDI than if it were a separate taxpayer; and (2) a holding company receives a tax refund from a taxing authority as agent for the IDI. Since adoption of the Interagency Policy Statement, there have been many disputes between holding companies in bankruptcy and failed IDIs regarding the ownership of tax refunds generated by the IDIs. In these disputes, some courts have found that tax refunds generated by an IDI were the property of its holding company based on certain language contained in their tax allocation agreement that the courts interpreted as creating a debtor-creditor relationship. Accordingly, the Agencies are proposing to issue an Addendum to the Interagency Policy Statement (Proposed Addendum) to ensure that IDIs in a Consolidated Group maintain an appropriate relationship regarding the payment of taxes and treatment of tax refunds. II. Description of Proposed Addendum The Proposed Addendum is intended to clarify and supplement the Interagency Policy Statement to ensure that tax allocation agreements expressly acknowledge an agency relationship between a holding company and its subsidiary IDI to protect the IDI’s ownership rights in tax refunds. The Proposed Addendum also would clarify 1 63 E:\FR\FM\19DEN1.SGM FR 64757 (Nov. 23, 1998). 19DEN1 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Notices 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. The Proposed Addendum states that, to further the goals of the Interagency Policy Statement, IDIs and their holding companies should review and ensure that their tax allocation agreements explicitly acknowledge that an agency relationship exists between the holding company and its subsidiary IDIs with respect to tax refunds and do not contain other language to suggest a contrary intent. The Proposed Addendum includes a sample paragraph for IDIs and their holding companies to use in their tax allocation agreements, which the Agencies generally would deem to adequately acknowledge that an agency relationship exists for purposes of the Interagency Policy Statement, the Proposed Addendum, and sections 23A and 23B of the FRA. The Proposed Addendum also would clarify that 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. Moreover, the Proposed Addendum would clarify that section 23B of the FRA requires a holding company to promptly transmit tax refunds received from a taxing authority to its subsidiary IDI. The sample paragraph in the Proposed Addendum would incorporate this expectation. III. Request for Comment The Agencies invite comment on all aspects of the Proposed Addendum. 1. What other or additional mechanisms, if any, should the Agencies consider to clarify their expectations regarding tax allocation agreements between an IDI and any parent holding company? 2. What modifications, if any, could the Agencies make to the Proposed Addendum, including the sample paragraph, that would reduce burden on IDIs and their parent holding companies? IV. Administrative Law Matters emcdonald on DSK67QTVN1PROD with NOTICES Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320, Appendix A.1), the Agencies reviewed the Proposed Addendum guidance for any collection of information. The Agencies may not conduct or sponsor, and an organization is not required to respond to, an VerDate Mar<15>2010 16:41 Dec 18, 2013 Jkt 232001 information collection unless the information collection displays a currently valid Office of Management and Budget control number. There is no collection of information contained in the Proposed Addendum. V. Text of the Proposed Addendum The text of the Proposed Addendum follows: Addendum to Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure 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’’).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.3 Some courts have found that the tax 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. 3 Case law on this issue is mixed. Compare Zucker v. FDIC, as Receiver for BankUnited, 2013 WL 4106387, *6 (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 In re IndyMac Bancorp, Inc., 2012 WL 1951474, *2 (C.D. Ca. May 30, 2012) (‘‘According to both bankruptcy law and California PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 76891 refunds in 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.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.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 contract law, the [tax allocation agreement in question] creates a debtor/creditor relationship.’’). 4 See e.g., In re IndyMac Bancorp, Inc., 2012 WL 1951474 (C.D. Ca. May 30, 2012). 5 This Addendum clarifies and supplements but does not replace the Interagency Policy Statement. E:\FR\FM\19DEN1.SGM 19DEN1 76892 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Notices the FRA.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 circumstances that would in good faith be offered to non-affiliated companies.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. Dated: December 9, 2013. Thomas J. Curry, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System. December 12, 2013. Robert deV. Frierson, Secretary of the Board. By order of the Board of Directors. Federal Deposit Insurance Corporation. Dated at Washington, DC this 30th day of October, 2013. Robert E. Feldman, Executive Secretary. [FR Doc. 2013–30130 Filed 12–18–13; 8:45 am] BILLING CODE 4810–33–P;6210–01–P;6714–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service Proposed Collection; Comment Request for Form W–12 Internal Revenue Service (IRS), Treasury. ACTION: Notice and request for comments. AGENCY: The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information emcdonald on DSK67QTVN1PROD with NOTICES SUMMARY: 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). 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 § 371c–1(a)(2) & (a)(4). VerDate Mar<15>2010 16:41 Dec 18, 2013 Jkt 232001 collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form W–12 IRS Paid Preparer Tax Identification Number (PTIN). DATES: Written comments should be received on or before February 18, 2014 to be assured of consideration. ADDRESSES: Direct all written comments to Yvette Lawrence, Internal Revenue Service, room 6129, 1111 Constitution Avenue NW., Washington, DC 20224. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the form and instructions should be directed to Katherine Dean, at Internal Revenue Service, room 6242, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet at katherine.b.dean@irs.gov. SUPPLEMENTARY INFORMATION: Title: IRS Paid Preparer Tax Identification Number (PTIN). OMB Number: 1545–2190. Form Number: Form W–12. Abstract: Paid tax return preparers are required to get a preparer tax identification number (PTIN), and to pay the fee required with the application. A third party administers the PTIN application process. Most applications are filled out on-line. Form W–12 is used to collect the information required by the regulations, and to collect the information the third party needs to administer the PTIN application process. Current Actions: There is no change in the paperwork burden previously approved by OMB. This form is being submitted for renewal purposes only. Type of Review: Extension of a currently approved collection. Affected Public: Businesses and other for-profit organizations. Estimated Number of Respondents: 1,200,000. Estimated Total Annual Burden Hours: 1,464,000. The following paragraph applies to all of the collections of information covered by this notice: An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Request for Comments: Comments submitted in response to this notice will PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Approved: November 22, 2013. Yvette Lawrence, OMB Reports Clearance Officer. [FR Doc. 2013–30122 Filed 12–18–13; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service Proposed Collection; Comment Request for Regulation Project Internal Revenue Service (IRS), Treasury. ACTION: Notice and request for comments. AGENCY: The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning an existing Final Regulation, TD 9467, Measurement of Assets and Liabilities for Pension Funding Purposes. DATES: Written comments should be received on or before February 18, 2014 to be assured of consideration. ADDRESSES: Direct all written comments to Yvette Lawrence, Internal Revenue Service, room 6129, 1111 Constitution Avenue NW., Washington, DC 20224. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the regulations should be directed to Katherine Dean at Internal SUMMARY: E:\FR\FM\19DEN1.SGM 19DEN1

Agencies

[Federal Register Volume 78, Number 244 (Thursday, December 19, 2013)]
[Notices]
[Pages 76889-76892]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30130]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

[Docket ID OCC-2013-0020]

Federal Reserve System

[Docket No. OP-1474]

Federal Deposit Insurance Corporation


Proposed Addendum to the Interagency Policy Statement on Income 
Tax Allocation in a Holding Company Structure

AGENCY: Board of Governors of the Federal Reserve System, Federal 
Deposit Insurance Corporation, and Office of the Comptroller of the 
Currency, Department of the Treasury.

ACTION: Proposed joint guidance with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Agencies are proposing to issue jointly an Addendum 
(Proposed Addendum) to the ``Interagency Policy Statement on Income Tax 
Allocation in a Holding Company Structure'' (63 FR 64757, Nov. 23, 
1998) 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 Proposed Addendum 
would instruct IDIs and their holding companies to review their tax 
allocation agreements to 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 certain 
of the requirements of sections 23A and 23B of the Federal Reserve Act. 
The Proposed Addendum includes a sample paragraph that IDIs would 
include in their tax allocation agreements to facilitate the Agencies' 
instructions.

DATES: Comments must be received by January 21, 2014.

ADDRESSES: Interested parties are encouraged to submit written comments 
jointly to all of the Agencies. You may submit comments, identified by 
``Addendum to the Interagency Policy Statement on Income Tax Allocation 
in a Holding Company Structure'' by any of the following methods:

Office of the Comptroller of the Currency

    Because paper mail in the Washington, DC area and at the OCC is 
subject to delay, commenters are encouraged to submit comments by 
email, if possible. Please use the title ``Proposed Addendum to the 
Interagency Policy Statement on Income Tax Allocation in a Holding 
Company Structure'' to facilitate the organization and distribution of 
the comments. You may submit comments by any of the following methods:
     Web site: Federal eRulemaking Portal--``Regulations.gov'': 
Go to http://www.regulations.gov. Enter ``Docket ID OCC-2013-0020'' in 
the Search Box and click ``Search.''. Results can be filtered using the 
filtering tools on the left side of the screen. Click on ``Comment 
Now'' to submit public comments. Click on the ``Help'' tab on the 
Regulations.gov home page to get information on using Regulations.gov.
     Email: mail to: regs.comments@occ.treas.gov.
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW., Suite 
3E-218, Mail Stop 9W-11, Washington, DC 20219.
     Fax: (571) 465-4326.
     Hand Delivery: 400 7th Street SW., Suite 3E-218, Mail Stop 
9W-11, Washington, DC 20219.
    Instructions: Because paper mail in the Washington, DC area and at 
the OCC is subject to delay, commenters are encouraged to submit 
comments by the Federal eRulemaking Portal or email, if possible. 
Please use the title ``Addendum to the Interagency Policy Statement on 
Income Tax Allocation in a Holding Company Structure'' to facilitate 
the organization and distribution of the comments. In

[[Page 76890]]

general, OCC will enter all comments received into the docket and 
publish them on the Regulations.gov Web site without change, including 
any business or personal information that you provide such as name and 
address information, email addresses, or phone numbers. Comments 
received, including attachments and other supporting materials, are 
part of the public record and subject to public disclosure. Do not 
enclose any information in your comment or supporting materials that 
you consider confidential or inappropriate for public disclosure. To 
view comments electronically: Go to http://www.regulations.gov. Enter 
``Docket ID OCC-2013-0020'' in the Search box and click ``Search.''. 
Comments can be filtered by agency using the filtering tools on the 
left side of the screen. Click on the ``Help'' tab on the 
Regulations.gov home page to get information on using Regulations.gov, 
including instructions for viewing public comments, viewing other 
supporting and related materials, and viewing the docket after the 
close of the comment period. You may personally inspect and photocopy 
comments at the OCC, 400 7th Street SW., Washington, DC. For security 
reasons, the OCC requires that visitors make an appointment to inspect 
comments. You may do so by calling (202) 649-6700. Upon arrival, 
visitors will be required to present valid government-issued photo 
identification and submit to security screening in order to inspect and 
photocopy comments.

The Board of Governors of the Federal Reserve System

     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: regs.comments@federalreserve.gov. Include the 
Board's docket number in the subject line of the message.
     Facsimile: (202) 452-3819 or (202) 452-3102.
     Mail: Robert deV. Frierson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue NW., 
Washington, DC 20551.
     Instructions: All public comments are available from the 
Board's Web site at http://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, unless modified for technical reasons. 
Accordingly, your comments will not be edited to remove any identifying 
or contact information. Public comments also may be viewed 
electronically or in paper form in Room MP-500 of the Board's Martin 
Building (20th and C Streets NW.) between 9:00 a.m. and 5:00 p.m. on 
weekdays.

Federal Deposit Insurance Corporation

     Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on 
the Agency Web site.
     Email: Comments@fdic.gov. Include ``Addendum to 
Interagency Policy Statement on Income Tax Allocation in a Holding 
Company Structure,'' on the subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., 
Washington, DC 20429.
     Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7:00 a.m. and 5:00 p.m.
     Instructions: All comments received must include the 
agency name and ``Addendum to Interagency Policy Statement on Income 
Tax Allocation in a Holding Company Structure.'' All comments received 
will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided. 
Paper copies of public comments may be ordered from the FDIC Public 
Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, 
VA 22226, by telephone at (877) 275-3342 or (703) 562-2200.

FOR FURTHER INFORMATION CONTACT: 
    Office of the Comptroller of the Currency: Steven Key, Assistant 
Director for Bank Activities and Structure, Bank Activities and 
Structure Division, Chief Counsel's Office, 202-649-5594 or 
steven.key@occ.treas.gov; Gary Jeffers, Counsel, Bank Activities and 
Structure Division, Chief Counsel's Office, 202-649-6208 or 
gary.jeffers@occ.treas.gov, Office of the Comptroller of the Currency, 
400 7th Street SW., Washington, DC 20219.
    Board of Governors of the Federal Reserve System: Laurie Schaffer, 
Associate General Counsel, (202) 452-2272, Benjamin McDonough, Senior 
Counsel, (202) 452-2036, Pamela Nardolilli, Senior Counsel, (202) 452-
3289, or Will Giles, Counsel, (202) 452-3351, Legal Division; or 
Matthew Kincaid, Sr. Accounting Policy Analyst, (202) 452-2028, 
Division of Banking Supervision and Regulation, Board of Governors of 
the Federal Reserve System, 20th Street and Constitution Avenue NW., 
Washington, DC 20551. Users of Telecommunication Device for Deaf (TDD) 
only, call (202) 263-4869.
    Federal Deposit Insurance Corporation: Robert Storch, Chief 
Accountant, 202-898-8906 or rstorch@fdic.gov; Mark G. Flanigan, 
Counsel, Legal Division, 202-898-7426 or mflanigan@fdic.gov; Jeffrey E. 
Schmitt, Counsel, Legal Division, 703-562-2429 or jschmitt@fdic.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    In 1998, the Agencies and the Office of Thrift Supervision issued 
the ``Interagency Policy Statement on Income Tax Allocation in a 
Holding Company Structure'' (Interagency Policy Statement) to provide 
guidance to IDIs and their holding companies and other affiliates 
(Consolidated Groups) regarding the payment of taxes on a consolidated 
basis.\1\ One of the principal goals of the Interagency Policy 
Statement is to protect IDIs' ownership rights in tax refunds, while 
permitting the Consolidated Group to file consolidated tax returns. The 
Interagency Policy Statement states that: (1) tax settlements between 
an IDI and its holding company should be conducted in a manner that is 
no less favorable to the IDI than if it were a separate taxpayer; and 
(2) a holding company receives a tax refund from a taxing authority as 
agent for the IDI.
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    \1\ 63 FR 64757 (Nov. 23, 1998).
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    Since adoption of the Interagency Policy Statement, there have been 
many disputes between holding companies in bankruptcy and failed IDIs 
regarding the ownership of tax refunds generated by the IDIs. In these 
disputes, some courts have found that tax refunds generated by an IDI 
were the property of its holding company based on certain language 
contained in their tax allocation agreement that the courts interpreted 
as creating a debtor-creditor relationship. Accordingly, the Agencies 
are proposing to issue an Addendum to the Interagency Policy Statement 
(Proposed Addendum) to ensure that IDIs in a Consolidated Group 
maintain an appropriate relationship regarding the payment of taxes and 
treatment of tax refunds.

II. Description of Proposed Addendum

    The Proposed Addendum is intended to clarify and supplement the 
Interagency Policy Statement to ensure that tax allocation agreements 
expressly acknowledge an agency relationship between a holding company 
and its subsidiary IDI to protect the IDI's ownership rights in tax 
refunds. The Proposed Addendum also would clarify

[[Page 76891]]

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.
    The Proposed Addendum states that, to further the goals of the 
Interagency Policy Statement, IDIs and their holding companies should 
review and ensure that their tax allocation agreements explicitly 
acknowledge that an agency relationship exists between the holding 
company and its subsidiary IDIs with respect to tax refunds and do not 
contain other language to suggest a contrary intent. The Proposed 
Addendum includes a sample paragraph for IDIs and their holding 
companies to use in their tax allocation agreements, which the Agencies 
generally would deem to adequately acknowledge that an agency 
relationship exists for purposes of the Interagency Policy Statement, 
the Proposed Addendum, and sections 23A and 23B of the FRA.
    The Proposed Addendum also would clarify that 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. Moreover, the Proposed Addendum would 
clarify that section 23B of the FRA requires a holding company to 
promptly transmit tax refunds received from a taxing authority to its 
subsidiary IDI. The sample paragraph in the Proposed Addendum would 
incorporate this expectation.

III. Request for Comment

    The Agencies invite comment on all aspects of the Proposed 
Addendum.
    1. What other or additional mechanisms, if any, should the Agencies 
consider to clarify their expectations regarding tax allocation 
agreements between an IDI and any parent holding company?
    2. What modifications, if any, could the Agencies make to the 
Proposed Addendum, including the sample paragraph, that would reduce 
burden on IDIs and their parent holding companies?

IV. Administrative Law Matters

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR part 1320, Appendix A.1), the Agencies reviewed the 
Proposed Addendum guidance for any collection of information. The 
Agencies may not conduct or sponsor, and an organization is not 
required to respond to, an information collection unless the 
information collection displays a currently valid Office of Management 
and Budget control number. There is no collection of information 
contained in the Proposed Addendum.

V. Text of the Proposed Addendum

    The text of the Proposed Addendum follows:

Addendum to Interagency Policy Statement on Income Tax Allocation in a 
Holding Company Structure

    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'').\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.
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    \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.
---------------------------------------------------------------------------

    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.\3\ Some courts have found that the tax refunds 
in 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.\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.
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    \3\ Case law on this issue is mixed. Compare Zucker v. FDIC, as 
Receiver for BankUnited, 2013 WL 4106387, *6 (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 In re IndyMac Bancorp, Inc., 2012 WL 
1951474, *2 (C.D. Ca. May 30, 2012) (``According to both bankruptcy 
law and California contract law, the [tax allocation agreement in 
question] creates a debtor/creditor relationship.'').
    \4\ See e.g., In re IndyMac Bancorp, Inc., 2012 WL 1951474 (C.D. 
Ca. May 30, 2012).
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    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.\5\ In addition, all 
Consolidated Groups should amend their tax allocation agreements to 
include the following paragraph or substantially similar language:
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    \5\ This Addendum clarifies and supplements but does not replace 
the Interagency Policy Statement.
---------------------------------------------------------------------------

    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

[[Page 76892]]

the FRA.\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 circumstances that would in 
good faith be offered to non-affiliated companies.\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.
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    \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).
    \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 Sec.  371c-1(a)(2) & 
(a)(4).

    Dated: December 9, 2013.
Thomas J. Curry,
Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System.

    December 12, 2013.
Robert deV. Frierson,
Secretary of the Board.
    By order of the Board of Directors.

    Federal Deposit Insurance Corporation.

    Dated at Washington, DC this 30th day of October, 2013.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2013-30130 Filed 12-18-13; 8:45 am]
BILLING CODE 4810-33-P;6210-01-P;6714-01-P