Industry Seeks Withdrawal of Proposal to Require U.S. Banks to Report Interest Paid to Nonresident Alien Depositors

At a May 18 IRS hearing, opponents of proposed regulations cautioned that rules that would require U.S. banks to report interest paid to nonresident alien depositors will lead to large-scale withdrawals from U.S. banks. Current rules only require interest reporting when the depositor is a U.S. person or a resident of Canada. According to representatives of the Florida banking industry, adoption of the proposed rule change could reduce lending, cost jobs, and potentially lead to the collapse of some banks due to  the loss of foreign deposits. See, IRS HEARS OF DIRE CONSEQUENCES FROM NONRESIDENT ALIEN INTEREST REPORTING, 2011 TNT 97-1 .