» IRS’s Information Sharing Regulation » Center for Freedom and Prosperity

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 Letters
May 2011 IRS Hearing Testimony
- In Opposition
- In Support
October 2011 Congressional Hearing
- Opposition Testimony
- Supporting Testimony
Legislation
Op-ed and Blogs
News Clips

Opposition from Members of Congress and Regulators

Opposition from Financial Industry

Opposition from Public Policy Groups

See here for all public comments that were submitted.

May 2011 IRS Hearing Testimony

In opposition

In support

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

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

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.

Coalition for Tax Competition Letter Seeks Withdrawal of Destructive IRS Interest-Reporting Regulation

February 21, 2012

The Center for Freedom and Prosperity Foundation, joined by 23 of the country’s most influential free market and taxpayer rights organizations, sent a letter to Treasury Secretary Timothy Geithner urging withdrawal of an Internal Revenue Service (IRS) regulation that would discourage capital from the U.S. economy and weaken the American financial system.

The IRS Running Amok: Forcing American Banks to Put Foreign Tax Law Above U.S. Tax Law

April 11, 2011

Even though it violates existing law, the IRS is seeking to impose a regulation that will discourage foreign investment in the U.S. economy and undermine the competitiveness of American banks. This CF&P Foundation video provides five reasons why this proposal is misguided, including the risk to innocent people living under corrupt and tyrannical governments.

Congressional Hearing on IRS Nonresident Alien Interest Reporting Proposal

November 16, 2011

The proposed IRS non-resident alien interest deposit reporting requirement received an unfriendly reception at an October 27 hearing held by a subcommittee of the House Financial Services Committee. We were on hand to represent CF&P, and noted that the hearing was both a testament to our success in disseminating the many arguments against the proposed regulation, as well as affirmation of the need to continue fighting vigorously against the IRS proposal.

Who Writes the Law: Congress or the IRS?

February 15, 2003

The Internal Revenue Service has proposed a regulation (133254-02) that would require U.S. financial institutions to report bank deposit interest paid to certain nonresident aliens. The IRS admits that the information is not needed to enforce U.S. tax law, and instead seeks to collect the information so it can be provided to the tax authorities of 15 specified nations. But since nonresident alien depositors easily can shift their funds to other jurisdictions if they wish to protect their privacy, the regulation has attracted considerable opposition. Critics fear the regulation would drive capital from the U.S. economy and undermine the competitiveness of American financial institutions.