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Congressman Bill Posey (R-FL) has rallied the entire Florida Delegation in signing a letter to the Administration opposing a proposed IRS change to the United States’ longstanding policy of encouraging foreigners to put their money in U.S. Banks. For nearly 100 years, the U.S. has allowed foreigners to deposit their money in U.S. banks where they earn interest tax free. America gets the benefit of having that capital put to work in the U.S, while the depositors get a safe confidential investment. The IRS has proposed changing the rules so that this interest will now be reported to the country of origin, leading many to remove their money from the U.S. to another tax free confidential country.

“This rule has the potential to be very damaging to our already struggling economy,” said Congressman Posey. “The current confidentiality practice is a major incentive for wealthy foreigners to invest their money here in the United States, making capital more available for loans to businesses for expansion and job creation.”

“When you understand what the impact would be of what the IRS is proposing, you can see how devastating this would be for our economy. Foreigners would just take their money out of U.S. banks and move it to another country. At the end of the day, all that would be accomplished is driving several hundred billion dollars out of the U.S. economy. It’s clear that Congress and the Administration rejected this idea when it was first proposed by the IRS in 2001 and why it should be stopped again.”

For more than 90 years, the United States has recognized the importance of foreign deposits and has refrained from taxing the interest earned or requiring that to be reported to the IRS or their home country. This new rule proposed by the IRS (REG-146097-09) would overturn this long-standing practice and will likely result in the flight of hundreds of billions of dollars from U.S. financial institutions. This regulation requires the reporting of bank deposit interest paid to foreign account holders so that this information can be made available to the countries of origin of the nonresident alien account holders.

“Many nonresident alien depositors are from countries with unstable governments or political environments where personal security is a major concern,” said Members of the Florida Delegation in their letter to the Administration. “They are concerned that their personal bank account information could be leaked by unauthorized persons in their home country governments to criminal or terrorists groups upon receipt from U.S. authorities, which could result in kidnappings or other terrorist actions being taken against them and their family members in their home countries; a scary scenario that is very real.”

A copy of the full letter can be viewed HERE.