Institute For Economic Freedom To Challenge Qualified Intermediary Programme

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

20 August 2001

Dr Gilbert NMO Morris announced recently that the Bahamas based Institute For Economic Freedom, in conjunction with legal experts from around the world, is planning to launch a legal challenge to the IRS initiated Qualified Intermediary Programme which has been imposed on financial institutions and intermediaries in many offshore jurisdictions.

Supporting the IEF in its challenge, and providing expert analysis on the effects of OECD and FATF initiatives on the US economy is a prestigious task force, headed by Senators Mack Mattingly, Jack Kemp, and Edwin Meese, and advised by the former US Attorney General.

The task force will present the issue to the White House and to Congress, as the Institute believes that the US Treasury Secretary Paul O'Neill has previously been ambivalent in his attitude towards the OECD and FATF because he has lacked a context in which decisive action could be taken. A court case, put forward jointly by the Institute and the US task force, it is believed, would provide such a context, as it would allow the Treasury Secretary to respond to a US body expressing US concerns, rather than to a foreign institution.

Dr Morris is confident that the legal challenge will prove successful: 'There can be no compromise on this question,' he explained. 'The heart must be cut out of the QI programme. It is illegal on several fronts easily demonstrable in a court of law.'

However, Dr Morris denied that the move was a radical or confrontational one, describing relations between the IEF and the US Treasury as 'unequivocally cordial'. 'In countries with sophisticated legal cultures, this is expected,' he observed. 'Here in America, colleagues are often working with legislators to challenge legislation, if only to test its constitutionality.'

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