This is an agreement whereby the parent company in a consolidated group is
responsible, on behalf of the group, for the payment of income tax related liabilities. If
the parent company fails to fully discharge its obligation to pay the group’s tax liability,
subsidiary members that were part of the group become jointly and severally liable.
This agreement can be used by small businesses or other entities that have subsidiary
group members and want to ensure the prompt and timely tax payments on behalf of
the entire group.
TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement") will take effect as of
_____________(“Effective Date”), and is made by and between
____________________[PROVIDE NAME OF PARENT COMPANY] with its offices at
___________[ADDRESS OF PARENT COMPANY] and _________________ [GIVE
NAME OF MEMBER(S), OR REFER TO MEMBERS OR ENTITIES LISTED ON
SCHEDULE "A"] entities listed on Schedule A annexed hereto, as amended from time to time.
WHEREAS, ______________________ [PARENT COMPANY] is the parent of an
affiliated group of corporations, as defined in section 1504(a) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, _____________________________[HEAD COMPANY], on behalf of its
affiliated group, is required to file consolidated federal income tax returns in accordance with
section 1501 of the Code and may be required to file consolidated federal income tax returns for
subsequent taxable years; and
WHEREAS, the parties wish to provide for the allocation between them of consolidated
federal income tax Liability, state and local income tax liability, and certain related matters.
NOW, THEREFORE, in consideration of the foregoing premises and of the mutual
covenants and agreements contained herein, the parties agree as follows:
(a) "Group" shall mean Parent (as hereinafter defined) and all other corporations
(whether now existing or hereafter formed or acquired) that are required to join with Parent in
filing a consolidated federal income tax return.
(b) "Group Tax Liability" shall mean the consolidated federal income tax Liability of
the Group reported on the Group's consolidated federal income tax return filed for the taxable
year.
(c) "Member" shall mean any corporation that is required to join with Parent in filing
a consolidated federal income tax return, as listed on Schedule A, as amended from time to time.
1. Filing Of Returns.
(a) Parent shall, on a timely basis, file or cause to be filed, consolidated federal income
tax returns which will include income, loss, or credit against tax of the member, and estimated
tax returns for each taxable year during the term of this Agreement and shall pay in full any tax
shown as due thereon. ____________________ [HEAD COMPANY] shall prepare and file
such returns and any other returns, documents, or statements required to be filed with the Internal
Revenue Service with respect to the determination of the Group Tax liability of the Group. With
respect to such return preparation, - ___________________ [HEAD COMPANY] shall act in
good faith with regard to the Member included in an applicable return. Member shall prepare,
effect and file such consents, elections, and other documentation as may be required or
appropriate for the proper filing of such returns. Member shall also maintain such books and
records and provide such information that Parent may request in connection with the matters
contemplated by this Agreement.
(b) Parent shall have the sole right and discretion with respect to any consolidated
federal income tax return that it has filed or will file to determine in good faith, (i) any elections
which are employed in the filing of such returns, including any elections denominated as such in
the Code and choice of methods of accounting and depreciation; (ii) the manner in which such
returns shall be prepared and filed, including without limitation, the manner in which any item of
income, gain, loss, deduction or credit shall be reported; (iii) contest, compromise or settle any
adjustment or deficiency proposed, asserted or assessed as a result of any audit of any such
returns; (iv) file, prosecute, compromise or settle any claim for refund; (v) whether any refunds
to which the Group may be entitled shall be paid by way of refund or credit against the federal
income tax liability of the Group; (vi) whether any extensions should be requested and (vii)
whether any refunds shall be received by way of refund or credited against tax liabilities.
(c) The Group will jointly file state, local and foreign tax returns on a combined,
consolidated, unitary, or other method that Parent determines in its sole discretion results in a
lower overall tax liability for the Group. In the event any such state or local tax returns are filed,
all of the provisions of this Agreement shall apply to the extent determined by Parent to the
allocation, preparation, filing and payment related to such state and local taxes and returns and
shall be applied as