The FDIC Board of Directors has approved the attached revision to the FDIC's policy statement on income taxes of holding companies' bank subsidiaries. The revised policy statement is being issued on an interagency basis with the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.

This interagency policy statement replaces the FDIC's Statement of Policy on "Income Tax Remittance by Banks to Holding Company Affiliates," originally adopted in 1978. The revised policy is effective November 23, 1998.

The interagency policy statement provides uniform guidance to all insured depository institutions on the allocation and payment of taxes by a holding company and its depository institution subsidiaries when they file tax returns as members of a consolidated group. This guidance does not change the FDIC's position on intercorporate tax payments and tax allocation agreements as expressed in the 1978 policy statement. Rather, this policy statement reiterates that, in general, intercorporate tax settlements between an institution and its parent company should be conducted in a manner that is no less favorable to the institution than if it were a separate taxpayer.

For more information, please contact Robert F. Storch, Chief of the Accounting Section in the FDIC's Division of Supervision (DOS), on (202) 898-8906 or Carol L. Liquori, Examination Specialist in DOS, on (202) 898-7289.

Nicholas J. Ketcha Jr.
Director

Distribution

FDIC-Supervised Banks (Commercial and Savings)

Note

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).