Document background
Tax Allocation Agreements are essential documents for U.S. corporate groups filing consolidated tax returns. These agreements become necessary when multiple entities operate under common control and file consolidated returns. A Tax Allocation Agreement defines how tax liabilities and benefits are allocated among group members, establishes payment mechanisms, and outlines responsibilities for tax compliance. It helps prevent disputes, ensures regulatory compliance, and provides clarity on how tax attributes are shared. The agreement is particularly important for satisfying IRS requirements and maintaining proper intercompany accounting.
