More Congressional Opposition To IRS Tax Information Proposal

Tax-News.com, Washington

04 October 2002

After Representative Phil Crane, Vice Chairman of the House's Ways and Means Committee, asked the Internal Revenue Service to withdraw its proposed regulation that would require the reporting of bank deposit interest paid to nonresident aliens, Representative Mark Foley of Florida, a member of the House of Representatives' powerful tax-writing committee, has now weighed in against the measure, saying he is "greatly troubled" by the IRS proposal.

Congressman Foley stated in a letter sent to the IRS that, "Deposits from overseas are a critical source of funds for United States financial institutions and these monies benefit the American economy."

The Centre for Freedom and Prosperity says that Mark Foley's opposition to the proposed regulation is critical since the IRS and Treasury were hoping to neutralize opposition from Florida by temporarily exempting deposits from Latin America. Rep. Foley, who represents part of south Florida, correctly dismisses this bait-and-switch ploy: "I realize that the Service already has withdrawn this regulation one time, but the decision to only apply the reporting requirement to citizens of 15 specific countries is not an acceptable compromise. First, it is obvious that the IRS intends to add other nations to the list in the near future. This will be harmful to Florida banks because of our competitiveness for Latin American investors."

Commenting on Mr. Foley's letter, Andrew Quinlan, President of the Center for Freedom and Prosperity, said, "The new IRS regulation is based on the same bad tax policy as the previous Clinton-era version of the regulation. Rep. Foley is right to point out that the changes are only cosmetic and that the IRS will require reporting of Latin American deposits in the near future."

Dan Mitchell from the Heritage Foundation said, "The IRS is letting ideology drive policy - even if that means issuing regulations that flout existing law. This is why it is so important to stop this regulation. Otherwise, it will be just a matter of a few short years before the IRS imposes a reporting requirement for depositors from all nations."

Veronique de Rugy of the Cato Institute added, "The Treasury Department has failed to exert proper oversight of the IRS. As a result, we have a rogue agency that is trying to help foreign government tax U.S.-source income."

Quinlan added, "Over the next two-months, CFP will be working hard to educate policy makers, lawmakers and taxpayers on why this regulation should be withdrawn."

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