Thursday, March 22, 2012

Bank Deposit Reporting Rule Reciprocal For Tax Treaty Partners?

Information gleaned from a controversial Internal Revenue Service regulation that would require U.S. banks to report interest on deposits held by nonresident aliens could lay the groundwork for reciprocation as the United States continues its efforts to build cooperation with other countries to stop global tax evasion, IRS Commissioner Douglas Shulman told a House subcommittee March 21.

“This regulation lays the groundwork for some reciprocation” Shulman said at a hearing on IRS's fiscal year 2013 budget request before the House Appropriations Subcommittee on Financial Services and General Government.  

Shulman mentioned reciprocation in that context, but said such reciprocation would only occur with countries with which the United States already has tax treaties.

The commissioner stressed that the main goal of the nonresident alien bank deposit interest regulation is to collect the information. “We don't have the intention of endangering taxpayers.

Shulman said he worries that federal budget cuts could start to erode tax enforcement and voluntary compliance.

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