US Banks Disclose Foreign Deposits: Congress Tells IRS To Wait

Recently, the IRS has stepped up its efforts to crack down on “tax evaders” beyond our shores. A number of restrictive regulations and reporting requirements are currently in place. Many taxpayers and business officials have complained about the restrictive requirements with little to show for their efforts. However, recently the House of Representatives took action in regards to a specific set of regulations that require US Banks Disclose Foreign Deposits. The Boston Herald reports:


"A new IRS rule designed to find tax cheats got a thumbs-down Thursday from the U.S. House, which moved to delay its implementation over fears it would hurt the economy.


By a 251-165 vote, the U.S. House backed a measure sponsored by U.S. Rep. Bill Posey, R-Fla., that would postpone the IRS regulation – which will shine more light on foreign deposits in U.S. banks – until the nationwide unemployment rate improves to 6 percent; it now sits at 8.2 percent.


"My hope is that at the end of the day people will say this is not a good time to do this," Posey said. The regulation, set to go in effect next January, requires that U.S. banks disclose to the IRS the identities of foreigners with deposits.


It’s a major shift – as these profiles have been secret for decades – but a necessary one, said administration officials, because they can trade the list with foreign governments for information about U.S. tax cheats abroad.


"This rule simply requires the same reporting on foreign depositors that we require on our own citizens, and delaying it will only delay our efforts to crack down on offshore tax evasion," responded the Treasury Department in a statement.


But critics, including Florida banks and lawmakers, have warned the regulation would prompt foreign depositors to put their money elsewhere – thereby diminishing banks’ ability to loan money."


Is this a sign that Congress will block additional IRS efforts to regulate offshore activity? It’s too soon to say—but many business owners and international investors certainly consider this a step in the right direction.