November 5, 2002
Alexandra K. Helou
Office of Associate Chief Counsel (International).
Internal Revenue Service
P. O. Box 7604, Ben Franklin Station
Washington, DC 20044
VIA FAX: 622-4733
Dear Ms. Helou,
I am writing to express my strong opposition to the IRS's recently reissued regulation that would require the reporting of bank deposit
interest paid to nonresident aliens. This regulation would significantly harm the competitiveness of America's financial institutions, which would directly harm millions of America's borrowers. As Chairman of the
House Small Business Committee, I am concerned that U.S. small businesses, typically those most in need of financial backing, will have their access to growth capital evaporate during these difficult economic
times. This hardly seems the ideal time to promulgate a regulation that will drive more capital out of the American economy.
I find it troubling that you chose to reissue an old proposal that Congress
has already determined to be bad for America and in conflict with Congressional intent. Congress has discussed this issue on many occasions in the past, an in every instance has chosen not to require the
reporting of this income paid to nonresident aliens. In April of 2002, I joined nearly 50 of my colleagues in opposition to this regulation the last time you proposed it.
The letter urged the President to permanently withdraw the proposed IRS regulation. The regulation was withdrawn, but then re-released to only apply the reporting requirement to citizens of 15 specific countries. You may have modified the focus of the regulation, but you did nothing to mitigate the damage this regulation will assuredly cause America.
I urge the IRS to withdraw this regulation. It is a misuse of the regulatory process and is in direct conflict with America's economic interests.
Don A. Manzullo
Member of Congress
Cc:Treasury Secretary Paul O'Neill
CEA Chairman Glenn Hubbard
Economic Advisor Larry Lindsey
Commissioner Charles Rossotti