Congressional Committee Chairman Complains Interest Reporting Measure To IRS

Tax-News.com, Washington

11 November 2002

Following four other Congressmen who have recently written to the IRS complaining about its reissue of a regulation proposing the reporting of bank deposit interest paid to nonresident aliens, Illinois Representative Don Manzullo, Chairman of the House Small Business Committee, sent a letter last week seeking the withdrawal of the proposed regulation.

Rep. Manzullo stated that that the proposed rule " is a misuse of the regulatory process and is in direct conflict with America's economic interests." Manzullo, a
champion for small business, warns that the regulation will chase away capital, money that is needed in America for the creation and expansion of small businesses.

The full text of Representative Manzullo's letter:

Alexandra K. Helou
Office of Associate Chief Counsel (International).
Internal Revenue Service
CC:DOM:ITA:RU (REG-133254-02)
Room 5226
P. O. Box 7604, Ben Franklin Station
Washington, DC 20044

VIA FAX: 622-4733

Dear Ms. Helou,

I am writing to express my strong opposition to the IRS's recently reissued regulation that would require the reporting of bank deposit interest paid to nonresident aliens. This regulation would significantly harm the competitiveness of America's financial institutions, which would directly harm millions of America's borrowers. As Chairman of the House Small Business Committee, I am concerned that U.S. small businesses, typically those most in need of financial backing, will have their access to growth capital evaporate during these difficult economic times. This hardly seems the ideal time to promulgate a regulation that will drive more capital out of the American economy.

I find it troubling that you chose to reissue an old proposal that Congress has already determined to be bad for America and in conflict with Congressional intent. Congress has discussed this issue on many occasions in the past, an in every instance has chosen not to require the reporting of this income paid to nonresident aliens. In April of 2002, I joined nearly 50 of my colleagues in opposition to this regulation the last time you proposed it. The letter urged the President to permanently withdraw the proposed IRS regulation. The regulation was withdrawn, but then re-released to only apply the reporting requirement to citizens of 15 specific countries. You may have modified the focus of the regulation, but you did nothing to mitigate the damage this regulation will assuredly cause America.

I urge the IRS to withdraw this regulation. It is a misuse of the regulatory process and is in direct conflict with America's economic interests.

Sincerely,

Don A. Manzullo
Member of Congress

Cc:

Treasury Secretary Paul O'Neill
CEA Chairman Glenn Hubbard
Economic Advisor Larry Lindsey
Commissioner Charles Rossotti

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