August 15, 2001
Joint Letter to Secretary of Treasury
Interest Paid on Deposits to Non-Resident Aliens
August 15, 2001
The Honorable Paul O’Neill
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Ave., N.W.
Washington, DC 20220
Dear Mr. Secretary:
The undersigned associations are writing to express strong opposition to proposed regulations requiring U.S. financial institutions to report bank deposit interest paid to all nonresident alien depositors. These proposed regulations, which were published on January 17, 2001, have been subject to public comment by various industry groups and lawmakers. We respectfully request that the Department of Treasury withdraw the proposed regulations..
There is no reasonable policy or administrative justification for requiring banks to report bank deposit interest of $10 or more paid to nonresident aliens. Under the tax laws, bank deposit interest paid to nonresident aliens is not subject to U.S. tax. We understand that the objective of the proposed regulations is to promote voluntary compliance through the sharing of nonresident alien bank deposit information with other countries. Such an objective unnecessarily imposes additional costly reporting requirements on banking institutions, jeopardizes their core deposit base, and does not further any revenue collection purpose.
The required reporting of foreign bank deposit interest deviates from longstanding policies designed to encourage foreign investment in U.S. banks. If finalized, the proposed regulations would not only result in significant withdrawals of foreign deposits from U.S. banks, but place U.S. banks at a competitive disadvantage in the global marketplace. Therefore, the undersigned banking associations strongly urge you to withdraw the proposed onerous regulations.
American Bankers Association
Independent Community Bankers of America