January 24, 2004
Chairman Manzullo: Time to Bury IRS
Proposed Information Sharing Regulation
Don Manzullo, Chairman of the House of Representatives Small Business Committee, was asked by CF&P to comment on the third anniversary of the proposed IRS interest reporting regulation. According to the Chairman:
"This week marks the dark, three-year anniversary of an Internal Revenue Service attempt to require American financial institutions to conduct special reporting of
interest paid to nonresident aliens (REG-133254-02). The Treasury Department reports that foreigners have placed more than $2 trillion in American financial institutions. Only a portion of this money is directly
affected by the IRS regulation, but it is foolish to push a proposal that jeopardizes US competitiveness as capital quickly evaporates from our banks and will instead be deposited in other foreign banks if this
rule becomes law.
"This costly and burdensome regulation is overstepping the IRS's authority. Collecting this information for tax purposes goes against Congressional intent, when
Congress 80 years ago agreed not to report and tax accounts held by non-resident aliens
"As Chairman of the Small Business Committee, I call on the IRS to withdraw this burdensome regulation and bury it before it sucks out capital needed for growing this
Information on Proposed Regulation
The proposed regulation (REG-133254-02) would require U.S. banks to report to the IRS the amount of bank deposit interest paid to
foreign depositors, even though the IRS admits that this information is not needed to enforce U.S. tax law and is being requested solely for the benefit of foreign governments.
The proposed regulation is based on a similar regulation (REG-126100-00) proposed during the final days of the Clinton Administration. The only significant difference is that the
original Clinton regulation required reporting on all foreign depositors, whereas the latest proposal targets residents of 15 major nations.
IRS Proposed Regulation:
For More Information on the Regulation:
CF&P's Dedicated IRS Interest Reporting Regulation Web Page
Complete List of Opposition to Regulation
For more information please contact:
Center for Freedom and Prosperity