January 18, 2011 - Phil Hodgen

IRS wants US banks to report interest earned by nonresidents

Our government is in the throes of attempting to force U.S. banks to report interest earned by nonresident depositors.  This is stupid on stilts.

  • Bank interest earned by nonresidents is not taxed in the USA.  This is built into the Internal Revenue Code.
  • If nonresidents have a choice where to put their money (and they do), they will deposit their money where they won’t get taxed.
  • If US banks don’t get deposits, they’ll be weakened.  Or to use Wall Street jargon, they’ll get more weakerer.

It is as obvious as sunrise what will happen if the Department of Treasury does this.  Money will flee from U.S. banks.

Dan Mitchell has written up a nice little summary titled “The IRS Run Amok” that will give you a brief overview of the situation.

Look at this latest effort, and look at the way the government bureaucrats are going after grannies and immigrants in the Offshore Voluntary Disclosure Program.  Memo to Washington:  get out of the building and walk around a bit.  There is a whole set of reality that you cannot see.  You’re causing damage.

Nonresidents with US Activities Voluntary Disclosure