House Chairman Will Hold Hearings On Interest Reporting Issue

by Mike Godfrey, Tax-News.com, New York

07 February 2003

It looks as though the unremitting efforts being made in the US by opponents of the IRS's proposed bank interest reporting rules are finally beginning to pay off. Last week, Senate Budget Committee Chairman and Senate Finance Committee Member, Senator Don Nickles of Oklahoma, asked new Treasury Secretary John Snow during his confirmation hearing to take a hard look at the regulation and report back to the Committee. And now US House of Representatives Small Business Committee Chairman Donald Manzullo (Rep - Ill) says he plans to hold hearings on the issue.

The proposed rules would require US banks to report interest paid on deposits by nonresident aliens in 16 countries, including the EU member states which have just adopted information-sharing rules under the Savings Directive.

Senator Nickles noted that the regulations were proposed by the previous administration in its final days and would cause an exodus of foreign deposits from the US Mr. Snow said that he would review the public comments. This is good news, says leading opponent, the Centre for Freedom and Prosperity, since more than 99 percent of the public comments were against the regulation. More than 50 members of Congress and most every major banking group is in opposition to the regulation.

Although no time frame has been set, Manzullo told the Bureau of National Affairs he is planning hearings because he believes the rules would have a detrimental effect on the US economy, thus negatively impacting small businesses. "We think the rules would drive foreign capital out of the United States, and that would leave less money for loans to small businesses," Manzullo said.

Other prominent committee chairmen standing out against the rules include House Financial Services Committee Chairman Michael Oxley (Rep - Ohio) and Senate Judiciary Committee Chairman Orrin Hatch (Rep - Utah).

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