For Immediate Release
Thursday, October 3, 2002
202-285-0244
www.freedomandprosperity.org

Key Lawmaker Condemns IRS Regulation: Florida Banks are Ultimate Target

Washington (October 3, 2002) – Representative Mark Foley of Florida, member of the House of Representatives' powerful tax-writing committee, is "greatly troubled" by the Internal Revenue Service's recent proposal to require the reporting of interest paid to nonresident aliens (REG-133254-02).  Congressman Foley stated in a letter sent to the IRS that, "Deposits from overseas are a critical source of funds for United States financial institutions and these monies benefit the American economy."

Mark Foley's opposition to the proposed regulation is critical since the IRS and Treasury were hoping to neutralize opposition from Florida by temporarily exempting deposits from Latin America. Rep. Foley, who represents part of south Florida, correctly dismisses this bait-and-switch ploy: "I realize that the Service already has withdrawn this regulation one time, but the decision to only apply the reporting requirement to citizens of 15 specific countries is not an acceptable compromise. First, it is obvious that the IRS intends to add other nations to the list in the near future. This will be harmful to Florida banks because of our competitiveness for Latin American investors."

Commenting on Mr. Foley's letter, Andrew Quinlan, President of the Center for Freedom and Prosperity, said "The new IRS regulation is based on the same bad tax policy as the previous Clinton-era version of the regulation. Rep. Foley is right to point out that the changes are only cosmetic and that the IRS will require reporting of Latin American deposits in the near future."

Dan Mitchell from the Heritage Foundation said, "The IRS is letting ideology drive policy – even if that means issuing regulations that flout existing law. This is why it is so important to stop this regulation. Otherwise, it will be just a matter of a few short years before the IRS imposes a reporting requirement for depositors from all nations."

Veronique de Rugy of the Cato Institute added, "The Treasury Department has failed to exert proper oversight of the IRS. As a result, we have a rogue agency that is trying to help foreign government tax U.S.-source income."

Quinlan added, "Over the next two-months, CFP will be working hard to educate policy makers, lawmakers and taxpayers on why this regulation should be withdrawn."

Link to the full text of Rep. Foley's letter:
http://www.freedomandprosperity.org/ltr/foley-irs/foley-irs.shtml

CFP's dedicated web page on withdrawing the proposed IRS regulation:
http://www.freedomandprosperity.org/update/irsreg/irsreg.shtml

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Links to additional information:

IRS Regulation:
http://www.treasury.gov/press/releases/reports/po33011.pdf

Link to Rep. Crane's letter:
http://www.freedomandprosperity.org/ltr/crane-irs/crane-irs.shtml

Letter from House Ways and Means Committee Chairman Bill Thomas – July 22, 2002
http://www.freedomandprosperity.org/ltr/thomas/thomas.shtml

Letter from 46 Lawmakers Urging Withdrawal of Clinton-Era IRS Regulation: Accuse IRS of Putting Foreign Tax Collectors Ahead of US Economic Interests – April 5, 2002
http://www.freedomandprosperity.org/press/p04-09-02/p04-09-02.shtml

Letter from 27 of the Country's Most Prestigious Free Market Groups Urging the Bush Administration to Oppose the Clinton-Era IRS Bank Deposit Interest Regulation – December 19, 2001:
http://www.freedomandprosperity.org/ltr/daniels/daniels.shtml

CFP and the Coalition for Tax Competition advocate pulling IRS regulationon the reporting of bank deposit interest paid to nonresident aliens in a letter to the Senate – November 1, 2001
http://www.freedomandprosperity.org/press/p11-06-01/p11-06-01.shtml

For additional comments:

Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org
Dan Mitchell can be reached at 202-608-6224, dan.mitchell@heritage.org
Veronique de Rugy can be reached at 202-218-4601, vderugy@cato.org

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