STEP

Title Research

US Internal Revenue Service wants banks to report all foreign interest payments

13 January 2011

The US government has proposed a new regulation that would force banks to file annual reports of all interest payments they make to non-resident foreigners.

The current law only requires reporting of interest paid by banks to US persons, or to foreigners ("non-resident aliens") living in Canada.

The proposal was quietly revealed in a Federal Register notice posted by the US Treasury on 6 January. Its stated justification is that it will prevent US persons falsely claiming to be foreigners in order to avoid reporting interest income to the Internal Revenue Service. It will also support the US's drive towards more comprehensive global tax information exchange.

According to Jerald David August of Fox Rothschild LLP, the new reporting requirement was first proposed back in 2001, when it was watered down  after strong opposition from business. That opposition is expected to be renewed against the newly-resurrected version, especially in the light of the FATCA Act's onerous reporting duties on banks.

 

 

Sources

 

Fox & Rothschild

KPMG (PDF file)

CCH Group

Federal Register

 

 


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