For Immediate Release
Thursday, June 21, 2001

CFP's Quinlan Testifies Against IRS Effort to
Make U.S. Banks Informers for Foreign Tax Collectors

Washington, DC (June 21, 2001) – The Internal Revenue Service today held a public hearing on a proposed regulation to require the reporting of bank deposit interest paid to nonresident aliens (REG – 126100-00). The Center for Freedom and Prosperity called for the withdrawal of the regulation. According to Andrew Quinlan, President of the Center, "The Center for Freedom and Prosperity views this initiative as a part of the international assault on tax competition, financial privacy and fiscal sovereignty. As such, we are opposing this regulation with the same intensity that we are bringing to the battle against the OECD and EU anti-tax competition and information exchange initiatives."

The IRS asserts that the information should be reported so that it can be provided to other governments. But Quinlan said, "U.S. banks and financial institutions benefit greatly from the deposits of nonresident aliens. These deposits, in turn, help every American by helping to create jobs, finance small business loans and improve the general welfare of all. For decades, United States lawmakers have understood the importance of attracting capital to America, which is why Congress has chosen not to tax the interest paid on bank deposits of nonresident aliens and, the further step, of not reporting this deposit income to their home governments."

Not one speaker at the hearing spoke in favor of the regulation. Dan Mitchell, senior fellow at the Heritage Foundation, also condemned the IRS proposal. "The Treasury Department should withdraw this misguided, Clinton-era regulation. As witness after witness explained at the public hearing, reporting bank deposit interest paid to nonresident aliens will drive capital out of the U.S. economy and undermine the safety and soundness of financial institutions. Indeed, this proposed regulation is an abuse of the regulatory process since it attempts to circumvent existing law."

Quinlan and Mitchell both called upon the Treasury Department to withdraw the proposed regulation, as did many of the speakers representing the financial services industry.

TESTIMONY

Link to Quinlan's full testimony:
http://www.freedomandprosperity.org/Papers/aq06-21-01/aq06-21-01.shtml

Link to Mitchell's full testimony:
http://www.freedomandprosperity.org/Papers/dm06-21-01/dm06-21-01.shtml

The Center for Freedom and Prosperity is an Alexandria, Virginia-based, 501(c)(4) nonprofit, nonpartisan organization that lobbies Congress and the Administration on tax competition, financial privacy and fiscal sovereignty.

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