Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia 22310-9998
Phone: 202-285-0244
Fax: 208-728-9639
                                            

U.S. Representative Jack Kingston

[PDF Version]

November 14, 2002

Alexandra K. Helou
Office of Associate Chief Counsel (International).
Internal Revenue Service
P. O. Box 7604, Ben Franklin Station
Washington, DC 20044

Dear Alexandra:

Congress has provided the IRS with significant budgetary increases in recent years in the hope that this would improve enforcement of existing law and create a more customer-friendly agency. Unfortunately, it appears that these additional resources are being misused. More specifically, the IRS's recent re-release of a Clinton-era regulation governing deposit interest paid to foreign owners of America bank accounts is a major lapse in judgment.

Simply stated, the IRS is supposed to enforce the law, not create new law to satisfy an ideological agenda. To help attract capital to the U.S. economy, Congress has chosen not to tax foreign-owned bank accounts and not to require the reporting of interest income paid to these accounts. It is therefore quite disturbing that the IRS is trying to unilaterally overturn this policy particularly since the agency openly admits that it is pursing this policy to help foreign governments tax U.S.-source income.

I strongly urge the IRS to withdraw this regulation. This proposed rule is a misallocation of IRS resources, and it will impose significant costs on banks if it is implemented. But these paperwork costs will be trivial compared to the loss of international competitiveness since banks in London, Zurich, and Hong Kong will be delighted to accept deposits that will flee America if this regulation is finalized.

Sincerely,

Jack Kingston
Member of Congress

 

JK:leq

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