December 18, 2002
The Honorable Peter Fisher
Undersecretary for Domestic Finance
Department of the Treasury
1500 Pennsylvania Avenue
Washington, D.C. 20220
Dear Undersecretary Fisher:
I am writing to express my concern regarding a proposed IRS Regulation (REG 133254-02) that would compel U. S. banks to report the deposit interest paid to nonresident aliens.
This new proposal is not needed to enforce any U.S. tax law, and I am concerned that it will put our financial markets at a competitive disadvantage and harm our economy by driving much needed capital elsewhere.
It is important to note that Congress has examined the tax treatment of indirect foreign investment in our domestic economy on several occasions. On each occasion, it was determined that the benefit from
attracting capital to the U.S. far exceeded any revenue that would be gained from taxing bank deposit interest paid to nonresident aliens.
For that reason Congress has repeatedly decided not to require the reporting of this income.
Furthermore, you may recall that when the money-laundering bill was written, Congress specifically rejected
the use of money-laundering powers to enforce the tax laws of foreign governments.
I continue to believe that it is not the responsibility of either the U.S. government or the U.S. based financial institutions to enforce the tax laws of other nations. Unless there is some benefit I am unaware of, I urge you to withdraw the proposed regulation at least until Congress has the opportunity to review the issue more directly and completely.
United States Senator
Cc:Joshua Bolten, Deputy Chief of Staff for Policy
Pam Olson, Assistant Secretary of Treasury for Tax Policy