35228 Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices

the system fault no longer exists, the DEPARTMENT OF THE TREASURY Board of Governors of the Federal TPMS telltale will no longer flash, and Reserve System: Laurie Schaffer, the ‘‘Service TPM System’’ message will Office of the Comptroller of the Associate General Counsel, (202) 452– no longer display. Currency 2272, Benjamin McDonough, Senior Counsel, (202) 452–2036, Pamela In addition to the TPMS telltale [Docket ID OCC–2013–0020; Docket No. Nardolilli, Senior Counsel, (202) 452– alerting the operator of a significant loss OP–1474] 3289, or Will Giles, Counsel, (202) 452– of tire pressure, or a TPMS malfunction BOARD OF GOVERNORS OF THE 3351, Legal Division; or Matthew as required, the EVIC messages and FEDERAL RESERVE SYSTEM Kincaid, Sr. Accounting Policy Analyst, owner’s manual provide more than the (202) 452–2028, Division of Banking RIN 7100–AD 87 minimum level of information required Supervision and Regulation, Board of aiding the operator’s association of the FEDERAL DEPOSIT INSURANCE Governors of the Federal Reserve illuminated telltale with an appropriate CORPORATION System, 20th Street and Constitution response. Avenue NW., Washington, DC 20551. Chrysler also made reference to a Addendum to the Interagency Policy Users of Telecommunication Device for previous petition for inconsequential Statement on Income Tax Allocation in Deaf (TDD) only, call (202) 263–4869. noncompliance that addressed labeling a Holding Company Structure Federal Deposit Insurance issues that NHTSA granted. Corporation: Robert Storch, Chief AGENCY: Board of Governors of the Accountant, 202–898–8906 or rstorch@ Chrysler has additionally informed Federal Reserve System, Federal Deposit fdic.gov; Mark G. Flanigan, Counsel, NHTSA that it has corrected the Insurance Corporation, and Office of the Legal Division, 202–898–7426 or noncompliance so that all future Comptroller of the Currency, [email protected]; Jeffrey E. Schmitt, production vehicles will comply with Department of the Treasury (Agencies). Counsel, Legal Division, 703–562–2429 FMVSS No. 101. ACTION: Final Addendum to Interagency or [email protected]. In summation, Chrysler believes that Policy Statement. SUPPLEMENTARY INFORMATION: the described noncompliance of the SUMMARY: The Agencies are issuing I. Background subject vehicles is inconsequential to jointly an Addendum (Addendum) to In 1998, the Agencies and the Office motor vehicle safety, and that its the ‘‘Interagency Policy Statement on of Thrift Supervision issued the petition, to exempt Chrysler from Income Tax Allocation in a Holding ‘‘Interagency Policy Statement on providing recall notification of Company Structure’’ to ensure that Income Tax Allocation in a Holding noncompliance as required by 49 U.S.C. insured depository institutions (IDIs) in Company Structure’’ (Interagency Policy 30118 and remedying the recall a consolidated group maintain an Statement) to provide guidance to noncompliance as required by 49 U.S.C. appropriate relationship regarding the insured depository institutions (IDIs) 30120 should be granted. payment of taxes and treatment of tax and their holding companies and other refunds. The Addendum instructs IDIs NHTSA notes that the statutory affiliates (Consolidated Groups) and their holding companies to review provisions (49 U.S.C. 30118(d) and regarding the payment of taxes on a and revise their tax allocation 30120(h)) that permit manufacturers to consolidated basis.1 One of the agreements to ensure that the file petitions for a determination of principal goals of the Interagency Policy agreements expressly acknowledge that inconsequentiality allow NHTSA to Statement is to protect IDIs’ ownership the holding company receives a tax exempt manufacturers only from the rights in tax refunds, while permitting refund from a taxing authority as agent the Consolidated Group to file duties found in sections 30118 and for the IDI and are consistent with consolidated tax returns. The 30120, respectively, to notify owners, certain of the requirements of sections Interagency Policy Statement states that: purchasers, and dealers of a defect or 23A and 23B of the Federal Reserve Act. (1) Tax settlements between an IDI and noncompliance and to remedy the The Addendum includes a sample its holding company should be defect or noncompliance. Therefore, any paragraph that IDIs could include in conducted in a manner that is no less decision on this petition only applies to their tax allocation agreements to favorable to the IDI than if it were a the subject vehicles that Chrysler no facilitate the Agencies’ instructions. separate taxpayer; and (2) a holding longer controlled at the time it DATES: The Agencies expect institutions determined that the noncompliance company receives a tax refund from a and holding companies to implement taxing authority as agent for the IDI. existed. However, any decision on this fully the Addendum to the Interagency petition does not relieve vehicle Since adoption of the Interagency Policy Statement as soon as reasonably Policy Statement, there have been many distributors and dealers of the possible, which the Agencies expect disputes between holding companies in prohibitions on the sale, offer for sale, would not be later than October 31, bankruptcy and failed IDIs regarding the or introduction or delivery for 2014. ownership of tax refunds generated by introduction into interstate commerce of FOR FURTHER INFORMATION CONTACT: the IDIs. In these disputes, some courts the noncompliant vehicles under their Office of the Comptroller of the have found that tax refunds generated control after Chrysler notified them that Currency: Steven Key, Assistant Director by an IDI were the property of its the subject noncompliance existed. for Bank Activities and Structure, Bank holding company based on certain Authority: (49 U.S.C. 30118, 30120: Activities and Structure Division, Chief language contained in their tax delegations of authority at 49 CFR 1.95 and Counsel’s Office, 202–649–5594 or allocation agreement that the courts 501.8) [email protected]; Gary Jeffers, interpreted as creating a debtor-creditor Counsel, Bank Activities and Structure relationship. Accordingly, the Agencies Jeffrey M. Giuseppe, Division, Chief Counsel’s Office, 202– are issuing an Addendum to the Acting Director, Office of Vehicle Safety 649–6208 or [email protected], Interagency Policy Statement Compliance. Office of the Comptroller of the (Addendum) to ensure that IDIs in a [FR Doc. 2014–14285 Filed 6–18–14; 8:45 am] Currency, 400 7th Street SW., BILLING CODE 4910–59–P Washington, DC 20219. 1 63 FR 64757 (November 23, 1998).

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Consolidated Group maintain an from a financial institution trade information. The Agencies may not appropriate relationship regarding the association, which also did not suggest conduct or sponsor, and an organization payment of taxes and treatment of tax any modifications to the Proposed is not required to respond to, an refunds. Addendum. However, this trade information collection unless the association requested that the Agencies information collection displays a II. Description of Addendum provide institutions until the end of currently valid Office of Management The Addendum is intended to clarify calendar year 2014 to amend their tax and Budget control number. There is no and supplement the Interagency Policy allocation agreements, as necessary, to collection of information contained in Statement to ensure that tax allocation ensure consistency with the Proposed the Addendum. agreements expressly acknowledge an Addendum. This commenter also V. Text of the Addendum agency relationship between a holding suggested that this time period is company and its subsidiary IDI to appropriate because the Proposed The text of the Addendum follows: protect the IDI’s ownership rights in tax Addendum will require reviews of Addendum to Interagency Policy refunds. The Addendum also clarifies existing tax allocation agreements and Statement on Income Tax Allocation in how certain of the requirements of may require institutions and holding a Holding Company Structure sections 23A and 23B of the Federal companies to receive board of directors’ Reserve Act (FRA) apply to tax approvals to amend both their In 1998, the Board of Governors of the allocation agreements between IDIs and agreements and internal tax processes. Federal Reserve System (Board), the their affiliates. The Agencies understand that Federal Deposit Insurance Corporation The Addendum states that, to further institutions and holding companies (FDIC), the Office of the Comptroller of the goals of the Interagency Policy require time to revise their tax the Currency (OCC) (collectively, the Statement, IDIs and their holding allocation agreements, that some Agencies), and the Office of Thrift companies should review and revise institutions and holding companies may Supervision (OTS) issued the their tax allocation agreements to ensure wish to consult with tax counsel, and ‘‘Interagency Policy Statement on their tax allocation agreements that more complex banking Income Tax Allocation in a Holding explicitly acknowledge that an agency organizations with multiple subsidiaries Company Structure’’ (the ‘‘Interagency 4 relationship exists between the holding and affiliates may require additional Policy Statement’’). Under the company and its subsidiary IDIs with time to obtain all required approvals of Interagency Policy Statement, members respect to tax refunds and do not the members of the Consolidated Group. of a consolidated group, comprised of contain other language to suggest a Accordingly, the Agencies encourage one or more insured depository contrary intent. The Addendum institutions and holding companies to institutions (IDIs) and their holding includes a sample paragraph for IDIs begin promptly the efforts to review and company and affiliates (the and their holding companies to use in revise their tax allocation agreements. In Consolidated Group), may prepare and their tax allocation agreements, which this regard, the Agencies expect file their federal and state income tax the Agencies generally would deem to institutions and holding companies to returns as a group so long as the act of adequately acknowledge that an agency implement fully the Addendum to the filing as a group does not prejudice the relationship exists for purposes of the Interagency Policy Statement as soon as interests of any one of the IDIs. That is, Interagency Policy Statement, the reasonably possible, which the Agencies the Interagency Policy Statement affirms Addendum, and sections 23A and 23B expect would not be later than October that intercorporate tax settlements of the FRA. 31, 2014. between an IDI and its parent company The Addendum also clarifies that all The Agencies also received some should be conducted in a manner that tax allocation agreements are subject to informal inquiries regarding the is no less favorable to the IDI than if it the requirements of section 23B of the applicability of the Addendum to were a separate taxpayer and that any FRA, and tax allocation agreements that holding companies that have elected S practice that is not consistent with the do not clearly acknowledge that an corporation status for federal income tax policy statement may be viewed as an agency relationship exists may be purposes.3 The Addendum and unsafe and unsound practice prompting subject to additional requirements Interagency Policy Statement concern either informal or formal corrective under section 23A of the FRA. tax allocation agreements between an action. The Interagency Policy Statement also Moreover, the Addendum clarifies that IDI, its parent company, and its addresses the nature of the relationship section 23B of the FRA requires a affiliates. Accordingly, the Addendum between an IDI and its parent company. holding company to promptly transmit and Interagency Policy Statement does It states in relevant part that: tax refunds received from a taxing not apply to an IDI, its holding • authority to its subsidiary IDI. The ‘‘[A] parent company that receives a company, or other affiliates if the tax refund from a taxing authority sample paragraph in the Addendum holding company is not subject to incorporates this expectation. obtains these funds as agent for the corporate income taxes at the federal or consolidated group on behalf of the III. Summary of Comments state level. group members,’’ and • The Agencies issued the Addendum IV. Administrative Law Matters A Consolidated Group’s tax allocation agreement should not in proposed form with a request for Paperwork Reduction Act comment (Proposed Addendum) on ‘‘characterize refunds attributable to a December 19, 2013.2 The comment In accordance with the Paperwork subsidiary depository institution that period closed on January 21, 2014. The Reduction Act of 1995 (44 U.S.C. 3506; the parent receives from a taxing Agencies received two comment letters 5 CFR part 1320, Appendix A.1), the authority as the property of the parent.’’ on the Proposed Addendum—one from Agencies reviewed the Addendum Since the issuance of the Interagency an individual who viewed the Proposed guidance for any collection of Policy Statement, courts have reached Addendum favorably and did not 3 S corporations are corporations that elect to pass 4 63 FR 64757 (Nov. 23, 1998). Responsibilities of suggest any modifications, and another corporate income, losses, deductions, and credits the OTS were transferred to the Board, FDIC, and through to their shareholders for federal tax OCC pursuant to Title III of the Dodd-Frank Wall 2 78 FR 76889 (December 19, 2013). purposes. Street Reform and Consumer Protection Act.

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varying conclusions regarding whether The [holding company] is an agent for on terms and under circumstances that tax allocation agreements create a the [IDI and its subsidiaries] (the are substantially the same, or at least as debtor-creditor relationship between a ‘‘Institution’’) with respect to all matters favorable to the IDI, as comparable holding company and its IDI.5 Some related to consolidated tax returns and transactions involving nonaffiliated courts have found that the tax refunds refund claims, and nothing in this companies or, in the absence of in question were the property of the agreement shall be construed to alter or comparable transactions, on terms and holding company in bankruptcy (rather modify this agency relationship. If the circumstances that would in good faith than property of the subsidiary IDI) and [holding company] receives a tax refund be offered to non-affiliated companies.9 held by the holding company as the from a taxing authority, these funds are Tax allocation agreements should IDI’s debtor.6 The Agencies are issuing obtained as agent for the Institution. require the holding company to forward this addendum to the Interagency Policy Any tax refund attributable to income promptly any payment due the IDI Statement (Addendum) to explain that earned, taxes paid, and losses incurred under the tax allocation agreement and Consolidated Groups should review by the Institution is the property of and specify the timing of such payment. their tax allocation agreements to ensure owned by the Institution, and shall be Agreements that allow a holding the agreements achieve the objectives of held in trust by the [holding company] company to hold and not promptly the Interagency Policy Statement. This for the benefit of the Institution. The transmit tax refunds received from the Addendum also clarifies how certain of [holding company] shall forward taxing authority and owed to an IDI are the requirements of sections 23A and promptly the amounts held in trust to inconsistent with the requirements of 23B of the Federal Reserve Act (FRA) the Institution. Nothing in this section 23B and subject to supervisory apply to tax allocation agreements agreement is intended to be or should be action. However, an Agency’s between IDIs and their affiliates. construed to provide the [holding determination of whether such In reviewing their tax allocation company] with an ownership interest in provision, or the tax allocation agreements, Consolidated Groups a tax refund that is attributable to should ensure the agreements: (1) income earned, taxes paid, and losses agreement in total, is consistent with Clearly acknowledge that an agency incurred by the Institution. The [holding section 23B will be based on the facts relationship exists between the holding company] hereby agrees that this tax and circumstances of the particular tax company and its subsidiary IDIs with sharing agreement does not give it an allocation agreement and any associated respect to tax refunds, and (2) do not ownership interest in a tax refund refund. contain other language to suggest a generated by the tax attributes of the Dated: May 15, 2014. contrary intent.7 In addition, all Institution. Thomas J. Curry, Consolidated Groups should amend Going forward, the Agencies generally Comptroller of the Currency. their tax allocation agreements to will deem tax allocation agreements that include the following paragraph or contain this or similar language to By order of the Board of Governors of the substantially similar language: acknowledge that an agency Federal Reserve System, June 12, 2014. relationship exists for purposes of the Robert deV. Frierson, 5 Case law on this issue is mixed. Compare Interagency Policy Statement, this Secretary of the Board. Zucker v. FDIC, as Receiver for BankUnited, 727 Addendum, and sections 23A and 23B By order of the Board of Directors. F.3d 1100, 1108–09 (11th Cir. Aug. 15, 2013) (‘‘The of the FRA. relationship between the Holding Company and the Federal Deposit Insurance Corporation. Bank is not a debtor-creditor relationship. When the All tax allocation agreements are Holding Company received the tax refunds it held subject to the requirements of section Dated at Washington, DC, this 23rd day of the funds intact—as if in escrow—for the benefit of 23B of the FRA, and tax allocation May 2014. the Bank and thus the remaining members of the Consolidated Group.’’) with F.D.I.C. v. Siegel (In re agreements that do not clearly Robert E. Feldman, IndyMac Bancorp, Inc.), ll F. App’x ll, 2014 acknowledge that an agency Executive Secretary. WL 1568759, *2 (9th Cir. Apr. 21, 2014) (per relationship exists may be subject to [FR Doc. 2014–14325 Filed 6–18–14; 8:45 am] curiam) (‘‘The TSA does not create a trust additional requirements under section BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P relationship. The absence of language creating a 8 trust relationship is explicitly an indication of a 23A of the FRA. In general, section 23B debtor-creditor relationship in California’’). requires affiliate transactions to be made 9 12 U.S.C. 371c–1(a). Transactions subject to 6 See e.g., F.D.I.C. v. Siegel (In re IndyMac section 23B include the payment of money by a ll ll Bancorp, Inc.), F. App’x , 2014 WL 8 Section 23A requires, among other things, that bank to an affiliate under contract, lease, or 1568759 (9th Cir. Apr. 21, 2014) (per curiam). loans and extensions of credit from a bank to its otherwise and transactions in which the affiliate 7 This Addendum clarifies and supplements but affiliates be properly collateralized. 12 U.S.C. acts as agent of the bank. Id. at § 371c–1(a)(2) & does not replace the Interagency Policy Statement. 371c(c). (a)(4).

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