RE: Proposed Rulemaking: Tax Allocation Agreements (Docket ID OCC-2020-0043; FDIC RIN 3064–AF62; FRB Docket No. R–1746; RIN 7100–AG 14)
Chief Counsel’s Office
Attention: Comment Processing
Office of the Comptroller of the Currency
400 7th Street SW, Suite 3E-218
Washington, DC 20219
James P. Sheesley
Assistant Executive Secretary
Attention: Comments – RIN 3064-
AF62 / Legal ESS
Federal Deposit Insurance Corp.
550 17th Street NW
Washington, DC 20429
Ann E. Misback
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551
Dear Sir or Madam:
On behalf of its members, the American Bankers Association (ABA)1 is pleased to submit the following comments in response to a Notice of Proposed Rulemaking that would establish requirements for tax allocation agreements between institutions and their holding companies in a consolidated tax filing group (the Proposal). With an ultimate objective of promoting safety and soundness by preserving depository institutions’ ownership rights in tax refunds and ensuring equitable allocation of tax liabilities among entities in a holding company structure, the Proposal appears to codify the principles that are contained in interagency policy statements issued in 1998 and 2014, with certain additions and modifications.
ABA members support the objective underlying the Proposal, which is to ensure separate and equitable entity treatment for insured depository institutions. However, certain new, more prescriptive requirements detailed in the Proposal are not well-suited for the complex issues that consolidated groups often face and, we believe, would lead to unintended consequences. Consistent with many principles of financial accounting and tax administration, professional judgment, applied in accordance with the underlying policy goals, should be preserved. In addition, current reporting standards for call reports and other regulatory reporting specifically designate generally accepted accounting principles (GAAP) as a cornerstone and those principles should not be changed. Therefore, new reporting requirements that may require deviation from GAAP should be reconsidered. These and additional comments are incorporated below in our responses to the specific questions presented in the Proposal.
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