Proposed IRS Nonresident Alien Deposit
Information Reporting Regulation

On January 7th the IRS published REG-146097-09, a proposal to require reporting of deposit interest paid to nonresident aliens. This proposal is a retread of a Clinton-era regulation that CF&P opposed, and was eventually shelved. Since the U.S. does not tax such deposit interest, the IRS has no use for this information, but it has decided to place the interests of foreign tax collectors ahead of the U.S. economy. Should this regulation be finalized, it will drive foreign capital out of the U.S. in favor of jurisdictions respecting financial privacy.

For more background, see CF&P’s Facts About IRS’s Proposed Regulation Reporting of Deposit Interest Paid to Nonresident Aliens.

Opposition from Members of Congress and Regulators

• Florida U.S. House Delegation
• U.S. House Members Letter to Secretary Geithner and IRS Commissioner Shulman
• Florida Office of Financial Regulation (Plus follow-up)
• Senator Rubio (FL)
• Senators Hutchison (TX) and Cornyn (TX)
• Rep. Boustany Letter to Secretary Geithner asking for correspondence relating to determination that IRS regulation is not a “significant regulatory action”

Opposition from Financial Industry

• American Bankers Association
• BBVA Compass
• Credit Union National Association
• EastWest Bank
• Florida Bankers Association
• Florida International Bankers Association
• Independent Bankers Association of Texas
• Independent Community Bankers of America
• New York Bankers Association
• Zions Bancorporation

Opposition from Public Policy Groups

• Coalition for Tax Competition
• Center for Freedom and Prosperity, Andrew Quinlan
• Hispanic Chamber of Commerce
• National Taxpayers Union
• San Antonio Hispanic Chamber of Commerce
• U.S. Chamber of Commerce

See here for all public comments that were submitted.

May 2011 IRS Hearing Testimony

In opposition

• Andrew Quinlan, President, Center for Freedom and Prosperity
• Brian Garst, Director of Government Affairs, Center for Freedom and Prosperity
• Bradley Jansen, Director, Center for Financial Privacy and Human Rights
• John Berlau, Director of the Center for Investors and Entrepreneurs, Competitive Enterprise Institute
• Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council
• Stephen Entin, President & Executive Director, Institution for Research on the Economics of Taxation
• Florida International Bankers Association
• Florida Bankers Association
• State of Florida Office of Financial Regulation
• American Bankers Association

In support

• Rebecca Wilkins, FACT Coalition
• Elise J. Bean, Representative of Senator Carl Levin

October 2011 Congressional Hearing

Archived Webcast of the hearing.

Opposition Testimony

• Mr. J. Thomas Cardwell, Former Commissioner, Florida Office of Financial Regulation
• Mr. Alejandro “Alex” Sanchez, President and Chief Executive Officer, Florida Bankers Association
• Mr. Gerry Schwebel, Executive Vice President, International Bancshares Corporation

Supporting Testimony

• Ms. Rebecca J. Wilkins, Senior Counsel, Federal Tax Policy, Citizens for Tax Justice

Legislation

Legislation has been introduced in the 112th Congress to prohibit implementation of the regulation. S.1506 is sponsored by Senator Marco Rubio (R-FL), and H.R. 2568 is sponsored by Representative Bill Posey (R-FL).

The Florida legislature also passed House Memorial 1047, calling on the Treasury Department to withdraw the proposed regulation.

Op-eds and Blogs

• Richard Rahn, “Geithner’s Willful Negligence,” Washington Times, April 30, 2012.
• Ryan Young, “CEI Podcast for March 8, 2012: IRS Moves to Fund Foreign Dictators,” CEI, March 8, 2012.
• Iain Murray, “New IRS Rule Benefits Only Foreign Dictators,” The American Spectator, March 8, 2012.
• Hans Bader, “New IRS Rule Would Benefit Foreign Dictators, Drive $87 Billion Out of U.S. Economy, Could Cause Bank Failures” Open Market, March 8, 2012.
• Sen. Marco Rubio and Rep. Bill Posey, “A destructive IRS mandate,” The Miami Herald, March 7, 2012.
• Ike Brannon and Sam Batkins, “Obama Burdens the Banks,” The Weekly Standard, January 23, 2012.
• Andrew Quinlan, “CF&P Objections to IRS Regulation Take Center Stage at Congressional Hearing,” October 28, 2011.
• Dan Mitchell, “Obama Tried to Put Foreign Tax Law Above U.S. Tax Law,” Big Government, September 29, 2011.
• Richard Rahn, “Banking on national economic suicide,” Washington Times, May 23, 2011.
• Daniel J. Mitchell, “Lawmakers Fight IRS Proposal For Banks To Report Interest Earned By Foreigners,” Forbes, April 24, 2011.
• Brian Garst, “Why is the IRS Putting Foreign Tax Collectors Ahead of US Interest?” April 4, 2011.

News Clips

• Anna Edgerton, “Miami’s international banking clients move money to protect financial privacy,” Miami Herald, July 31, 2012.
• “House votes to postpone IRS rule on foreign deposits in U.S. banks,” Orlando Sentinel, July 26,2012.
• Mike Godfrey, “IRS Non-Resident Reporting Rule Questioned Again,” Tax-News.com, May 16, 2012.
• Mike Godfrey, “IRS Hears Opposition to Reporting Rule,” Tax-News.com, May 23, 2011.
• Patrick Danner, “Texas Banks fret over proposed IRS rule,” Houston Chronicle, April 22, 2011.
• Sean Higgins, “Florida Banks, Lawmakers Fear IRS-Led Capital Flight,” Investors Business Daily, March 10, 2011.
• “Fla. delegation to Obama: Lay off foreign depositors,” South Florida Business Journal, March 4, 2011.
• Kevin Gray, “Florida banks oppose foreigner accounts proposal,” Reuters, February 1, 2011.