Experts Criticise Proposed Reporting Requirements For NRAs

by Philip Morton, Investors Offshore.com

25 June 2001

Expert witnesses at an IRS hearing on June 21st strongly criticised proposed regulations on reporting requirements for non-resident aliens (NRAs) in the US, and stated that the regulations should be withdrawn, as the costs in both time and resources would greatly outweigh the benefits.

The proposed regulations would extend the information reporting requirement for bank deposit interest paid to NRAs. However, the witnesses believed that the resultant administrative burden and potential capital flight would have a devastating impact on US banks, and by extension the communities they serve.

Lawrence R. Uhlick, from the Institute of International Bankers, said that it would be counterproductive for the US to unilaterally agree to provide foreign governments with information on the savings income of NRAs. He suggested that it would be unwise for the country to increase its reporting requirements at all, unless some kind of multi-lateral agreements were put in place which would 'diminish the incentives for forum shopping by depositors.' A spokesman for the Florida International Bankers Association also condemned the proposed regulations, suggesting that if enacted, they would harm competitiveness, and impose a significant compliance burden on already beleagured US banks.

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