Tax Allocation Agreement Sample
Sections 23A and 23B apply to institutions supervised by the agencies.  In addition to the distribution and allocation of tax refunds, tax allocation treaties should also explicitly state whether the parent company receives refunds in its capacity as group representative or whether the group intends the parent company to own the amounts refunded. In the absence of language that clearly communicates the group`s intentions, a parent company is more likely to be considered the owner if an agreement gives the parent company discretion as to whether to pay a subsidiary its share of a refund or offset that amount with the subsidiary`s future tax payments. Some courts have also argued that a parent company will be treated as the owner, unless the agreement explicitly requires refunds to be separated or restricted in use. The main objective of the proposal is to further clarify the relationship between institutions supervised by agencies (including insured depositaries and uninsured institutions) and affiliated companies or parent companies that are part of a consolidated tax reporting group with regard to the treatment of tax obligations, tax refunds and related intra-group transactions. Tax allocation agreements between institutions and their holding companies and other affiliates are important safeguards to ensure compliance by institutions with Articles 23A and 23B, as well as certain other agency rules that ensure that holding companies in a consolidated group promptly submit the appropriate portion of a consolidated group`s tax refund to their subsidiaries. One of the benefits of filing a consolidated income tax return is that members` losses can be used to protect other members` income. However, if a member`s loss is absorbed by the consolidated group, the member may not use that loss to protect income generated in the future. Therefore, tax allocation treaties should specify whether and how class members are compensated for the use of their tax attributes (p.B. operating losses, excess capital losses, tax credits).
D. Income tax remittance operation. A tax allocation agreement may allow a subsidiary [BANK] to pay to a parent company less than the total amount of current income tax that the [BANK] would have owed if it had been calculated on the basis of a separate entity. Unless the parent company subsequently requires [BANK] to pay the remainder of that independent current tax debt, the [BANK] must register that outstanding debt as having been paid to the [BANK] with a simultaneous capital contribution from the parent undertaking. On the other hand, since a parent company cannot exempt a [BANK] from the future tax liability to a tax authority, a [BANK] cannot enter into a transaction in which one of the parent companies claims to waive part or all of [BANK`s] deferred tax obligation by capital injection or otherwise. As supervised institutions, their affiliated entities and holding companies do not already implement the principles set out in the existing non-codified guidelines, the proposal entails two main costs. First, the parent companies and affiliates of the covered institutions could lose some discretion as to the timing, scale and direction of cash flows between group members. Second, regulatory costs related to the preparation of agreements would be incurred, as well as ongoing compliance or reporting costs. These issues are discussed in more detail below. “The [name of holding company] is an agent for the [name of institution] (the “institution”) with respect to all matters relating to consolidated income tax returns and claims, and nothing in this Agreement shall be construed as modifying or modifying that agency relationship. If the [name of holding company] receives a tax refund from a tax authority [attributable income, taxes paid or losses incurred by the institution], these funds will be received as a representative of the institution.
Any refund of tax due to income, taxes paid or losses incurred by the institution is the property of the institution and its property and must be held in trust by the [name of holding company] for the benefit of the institution. The [name of the holding company] must immediately transmit to the institution the amounts kept on the home page of the printed page 24769. Nothing in this Agreement shall or be construed as granting participation [name of holding company] in any tax refund by reason of income, taxes paid or losses incurred by the institution. The [name of holding company] hereby agrees that this tax-sharing agreement does not confer on it any interest in any tax refund generated by the tax attributes of the institution. This amended and restated Agreement will be effective on November 21, 2013 by and between Ameren Corporation, a Missouri Corporation, and its affiliates, as set forth in Appendix A to this Agreement (collectively, the “Group”; individually, “Group Member”). .