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

U.S. Representative Ron Paul

[PDF Version]

November 13, 2002

Ms. Alexandra K. Helou
Internal Revenue Service
Office of Associate Chief Counsel International
Room 5226
P. O. Box 7604, Ben Franklin Station
Washington, DC 20044

Dear Ms. Helou,

I am writing to urge the Internal Revenue Service (IRS) to officially withdraw the proposed regulation compelling US financial institutions to report bank deposit interest paid to foreign account holders. As you know, this regulation initially was proposed in 2001 but subsequently was withdrawn. Unfortunately, the regulation has been reissued with some cosmetic changes.

These cosmetic changes in no way alter the regulation's destructive nature. This proposed regulation contradicts the long-standing  desire of Congress to ensure that tax policies will attract low-cost funds to America's financial system. Instead of attracting capitol into the financial system, this regulation could drive billions of capitol out of the US economy. Finally, the proposed regulation is bad tax policy since it is based on the assumption that saved income should be subject to double-taxation, and because it assumes that other countries should be able to tax income earned in America.

If this regulation is not withdrawn, it will create uncertainty among international investors. Many of them will react by placing their funds in foreign institutions, thus undermining the competitiveness of US banks. This regulation is particularly ill-timed given the recent downturn in the US economy. Therefore, I once again respectfully urge you to officially withdraw the proposed regulation requiring US financial institutions to report bank deposit interest paid to foreign account holders. Thank you for your consideration of my views.

Sincerely,

Ron Paul

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