September 10, 2003
The Honorable John Snow
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Ave., N.W.
Washington, D.C. 20220
Dear Mr. Secretary:
The undersigned associations are writing to express strong opposition to the proposed regulation requiring U.S. financial institutions to report bank deposit interest paid to nonresident
alien depositors. This proposed regulation, which was published on January 17, 2001, has been subject to public comment by various industry groups and lawmakers.
We respectfully request that the Department of Treasury withdraw the proposed regulation.
There is no reasonable policy or administrative justification for requiring banks to report bank deposit interest 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 regulation is to promote voluntary compliance through the sharing of nonresident alien bank
deposit information with other countries. Such an objective unnecessarily imposes additional reporting requirements on banking institutions and does not further any revenue collection purpose. The
required reporting of foreign bank deposit interest also deviates from longstanding policies designed to encourage foreign investment in U.S. banks. If finalized, the proposed regulation 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 regulation as soon as possible.
We understand that the Fiscal Affairs Committee within the Organization of Economic Cooperation and Development (OECD) will meet on September 16 in Paris, with the Treasury representing
the U.S. and President Bush on this committee.
We urge you to work with the Treasury participant for this meeting and have him or her articulate opposition to the rule if the committee discusses information exchange efforts. We believe such a declaration would send a clear signal to both U.S. bankers and foreign investors that the U.S. is committed to the attraction of foreign investment.
Thank you for your consideration of our views.